CITIES CASHING IN ON RELOCATION BATTLES
(FORTUNE Magazine) – A renewed turf war has broken out between New York City and towns in Connecticut and New Jersey intent on siphoning off its jobs. It's symptomatic of unceasing job relocation auctions nationwide.
Recently, two commodities exchanges, fixtures in lower Manhattan since the 19th century, announced plans to hop the Hudson River for New Jersey. The Coffee, Sugar & Cocoa Exchange and the New York Cotton Exchange will build a nine-story, $115 million complex in Jersey City, and bring at least 3,000 Wall Streeters with them starting in 1998. Last year Swiss Bank said it will leave town and move some 1,600 jobs to Stamford, Connecticut, collecting up to $96 million in incentives on the way out.
Angry New York officials thought a neutrality agreement with their neighbors banned company raids. But Connecticut officials say they agreed only to refrain from badmouthing the Big Apple in ads. One city official called the Swiss Bank move "Pernicious poaching that will ultimately cost Connecticut taxpayers millions."
New York remains a global financial center, has surprisingly low crime, and has unlimited cultural attractions--but high costs are killing it. Stamford, by contrast, offers, er, lower costs, and that's often enough. New York officials believe that keeping the financial industry is vital. The administration of Mayor Rudolph Giuliani has devised a retention program that, it claims, will keep 12 corporations of various stripes and 39,000 jobs in the city.
CS First Boston, for example, is moving downtown to the art deco-style Met Life Building on Madison Avenue, a 1930s classic. The price for saving 3,000 jobs: $50.5 million in incentives, or roughly $17,000 per job.
That's a bargain. Healthcare giant Columbia/HCA is relocating to Nashville from Louisville. Why? A deal worth $116 million. With 1,600 jobs at stake, that figures to $72,500 per job. In June, Trico Steel, a new company forged from a partnership of British Steel, LTV, and Sumitomo Metal Industries, chose an area near Decatur, Alabama, for a mini-mill that will employ 320. A reported $112 million package cemented the deal--$350,000 per job. "When one happens, it's more competitive than ever," says James Renzas, a principal at the Wadley-Donovan Group, a corporate-site scout. Oregon, famous once for asking everyone to keep out, has earned the nickname "Silicon Forest" by landing chipmaking facilities. Fujitsu, Intel, and LSI Logic each recently said they'll make chips near Portland; all will collect tax incentives. LSI, for example, stands to receive $113 million for providing up to 2,000 jobs, or $56,500 per.
- Justin Martin