Rumor has it one of the restless companies is Phoenix-based Honeywell. Honeywell employs 1,000 workers at their plant in Redmond, where they manufacture airplane flight recorders ("black boxes"). (KPMG, by the way, is also from Arizona.) Honeywell spokesperson Ron Crotty denied any move. But the particular company isn't the point. State and city officials are freaked that any company, in the wake of Boeing's move to Chicago, is holding hush-hush meetings and even considering splitting town.
When Boeing announced a few months ago it was leaving Seattle, it was a wake-up call to city and state officials. For years, businesses have complained that major issues like transportation and slow permitting processes would eventually force companies to relocate. Many in the local business community feel Washington is falling behind as an attractive place to do business.
In every state across the country, officials offer cash, cheap property, or tax breaks. When Boeing finally picked Chicago a few months back, it was later learned the Windy City gave Boeing $60 million as an incentive. "That's small potatoes for Boeing," says Ben Wolters, spokesperson for Seattle's Office of Economic Development, "but it shows what some cities are willing to give." In a letter sent to the City of Seattle last year, Larry Gigerich, senior vice president of public affairs for Illinois company RealMed Corporation, explained that RealMed was moving to Atlanta over Seattle because of Seattle's "lack of financial assistance programs." When all incentives were tallied up, Atlanta was offering RealMed $42 million compared to Seattle's $1.5 million.
Washington state does not give cold-cash incentives to persuade companies to move or stay. Washington offers a Business and Occupation tax break to high-tech start ups, and gives the University of Washington substantial tax breaks and state grants for research and development, but no cash. Many question whether Washington's "no cash" policy is in need of an overhaul.
"You can only sell the view of Mount Rainier so many times," says Mike Roben, an attorney for local consulting firm Anderson LLP, which bargains with other states on behalf of local companies thinking of relocating. Roben says Seattle and Washington state have been relying on natural landscape and quality of life as sales pitches for too long. "Washington does not have very good incentives," he says, from his downtown office in the Norton Building.
Lack of cash incentives is just one of many obstacles. Roben also points to inadequacies in job training programs, tax incentives, and transportation.
While most folks agree that transportation and education are problems worth tackling, there's still disagreement about revising the current incentive and "no cash" strategy. "We just don't cut checks here," says Wolters about Seattle's business policy. "We have a highly educated workforce, a good market, and quality of life," he says. "Our strategy has been to retain existing companies and work with them to expand locally. We just won't be able to compete with other cities, like in the Midwest, who can offer incredibly cheap property. But where we fall short, I think we make up in other areas." It's a slippery slope between addressing legitimate business concerns and being blackmailed. (Did somebody say Mariners?)
In the current economic climate, though, it will be a lot easier for companies to get what they want. Just a few weeks ago, Governor Locke formed an emergency council with members of city and state economic offices, as well as CEOs from major companies like Washington Mutual, to address their concerns.
