State eyes headquarters for spinoff
As Maryland ramps up its marketing efforts to attract businesses, a major high-tech company's plans for a spinoff may become the first test case for those efforts.
ITT Corp. of White Plains, N.Y., has announced its decision to split into three separate publicly traded companies, including one specializing in military work. ITT, with 60 employees already at its military segment's headquarters in McLean, Va., plans to rename and rebrand the division, with new headquarters in the Washington, D.C., region.
"We want to stay in the D.C. metro area since we're close to our customers here," ITT spokesman David Albritton said. "We already have offices in and around D.C., so we will look at our footprint and see if there are any economies of scale and to see what is most cost-effective."
The new headquarters could have as many as 150 employees, as ITT adds staff in various corporate functions, Albritton said. About 2,000 of ITT's 21,000 military segment workers are in the Washington region, including in Annapolis Junction and Columbia, he said.
ITT officials hope to complete the deal within a year and plan to contact regional economic officials as soon as possible, Albritton said. The company will be assembling project teams to cover the various aspects.
"We have a lot to get done with this spinoff," he said.
Maryland officials are still assessing how the ITT changes will affect its presence in the state, Karen Glenn Hood, spokeswoman for the state Department of Business and Economic Development, said in an e-mail, adding that DBED helped ITT with expansions in both Howard and Anne Arundel counties last year.
"We have not spoken to the company as of yet, but plan to work with our local economic development partners to develop a plan to move forward with [the spinoff] once we understand if and how the company's Maryland operations will be impacted," she wrote.
Greg LeRoy, executive director of Good Jobs First, said that when dealing with neighboring jurisdictions, the job return of relocation might not always be what people expect. He said many of the employees working at the McLean facility might already live in Maryland, so the state would not pick up many new workers by landing the new headquarters.
County officials also are expressing their willingness to work with the state on this venture.
"We are going to be in touch with them to see what their plans are," said Steven A. Silverman, executive director of Montgomery County Department of Economic Development. "We would like to have an opportunity for them to come to Montgomery County. ... It's unclear what their timeline is, but we're going to work with the state to put together an aggressive plan."
State and Montgomery County officials insist they put together aggressive plans to woo Hilton Hotels and Northrop Grumman over the last two years when those companies were relocating headquarters from Southern California to the Washington region. The plans for Northrop Grumman included recruiting Maryland CEOs and other executives to help in the planning and outreach efforts, but both companies chose Northern Virginia.
Last year, in courting Northrop Grumman, Virginia Gov. Robert F. McDonnell (R) said his state's corporate and other tax rates, which are lower than Maryland's, were just some of its selling points. He cited other factors, including fewer regulations than Maryland and strong right-to-work laws. The win means 300 jobs averaging about $200,000 in annual salary, he said.
Maryland officials said tax incentives, which ranged from $12 million to $15 million from Virginia, plus lower real estate costs across the Potomac were key factors.
But tax incentives offered by Maryland and Montgomery County of about $22 million exceeded Virginia's package, and average lease rates in Montgomery County were not far off Fairfax County's and were lower than Arlington County's, leaving some to conclude that the main factor was location, as Northrop Grumman like ITT already had a significant presence in Northern Virginia.
Prince George's County officials also have been in touch with the state about ITT, said Kwasi G. Holman, executive director of the county's economic development corporation. He said the county has many things to consider now, including how to match ITT's employment needs with available space in the county and whether ITT would be eligible for any types of incentives.