Calling Alabama Home
In recent years, Alabama has racked up an impressive roster of companies relocating their headquarters here. There’s a variety of reasons, but common to all are some native advantages.
Viper Motorcycle Co. founder John Silseth and one of his company’s specialty bikes in the new headquarters that moved from Minnesota to Auburn in 2011.
Photo by Robert Fouts
Just like us regular folks who relocate for a variety of reasons — jobs, weather, retirement or simply a fresh start — companies, too, pull up stakes when the grass looks greener on the other side of the corporate fence.
Cost of living, operating expense, quality of life, available workforce, tax environment, air transportation and mergers and acquisitions are among the many factors steering companies to greener pastures.
And Alabama has been that greener pasture for a number of companies in recent years — all of them sharing the belief that the state’s a great place for their home base.
Curse Inc., one of the world’s largest gaming-information companies, in 2013 moved its corporate headquarters from San Francisco to downtown Huntsville. The company still maintains an office in San Francisco (and in New York and Europe), yet decided to relocate its center of operations to the Rocket City directly across from the Huntsville Museum of Art.
“For a media and technology company, Huntsville has a lot to offer, and we’ve been impressed with the incredible talent pool, the support of local organizations and the overall economic climate,” says Chief Technology Officer Michael Comperda. “On top of all that, the cost of doing business here and the cost of living extended to our staff are among the best in the country.”
Comperda says in San Francisco the competition for talent created by Google, Facebook, Twitter and many startups is a considerable challenge, as is the rapidly rising cost of living.
Curse attracts more than 30 million online visitors monthly and consists of community sites, tools, databases, videos, guides, live streaming and eSports teams. And online gaming enthusiasts use Curse to take their gaming to the next level.
About 50 people work at the Huntsville headquarters. The company worked closely with the Huntsville Chamber of Commerce and the City of Huntsville to create a competitive incentives package to ease the financial impact of the corporate relocation.
“We’re growing, fast,” says Comperda. “The morale of our staff has never been higher, and we’re now in a great position to strategically hire the best people we can find. The move has been a great success.”
Wise Metals Group moved its corporate headquarters in 2011 from Baltimore to Muscle Shoals, a decision made primarily because the company’s holdings have increasingly become more centered in northwest Alabama and other Southern states, says Sandra Scarborough, senior vice president of corporate human resources and community relations. Top-tier management now has better access to the company’s operating plants.
“It made sense to move our corporate headquarters here, to be near the majority of multiple divisions of our company — Wise Alloys, Alabama Electric Motor Services (AEMS), Total Maintenance Center (TMC). Alabama has been good to Wise, and the Shoals area offers everything our company and our people need for the location of its corporate headquarters.”
Wise employs about 1,400 people and nearly 1,300 of them work in Muscle Shoals, Sheffield and Mobile. While there were no incentives directly associated with the move, Scarborough says state and local incentives were provided for expanding operations in Colbert County.
Viper Motorcycle Co. was launched in 2002 with the belief that the motorcycle industry lacked high-performance bikes with innovative style, great handling and the dependability of an OEM (original equipment manufacturer). Founder John Silseth says he moved Viper’s headquarters from Minnesota to Auburn in 2011 because “the corridor of 500 miles from Auburn represents about 50 percent of our market.”
Weather also factored in the move. There are more months to ride and test Viper’s super-cruiser motorcycles in southeast Alabama than in snowbound Minnesota. The opportunity to establish a relationship with Auburn University’s College of Engineering also was reason to head south.
The city of Auburn provided a small moving allowance grant, a $200,000 loan (repaid) for equipment and a generous build-out allowance for the 63,000-square-foot Auburn manufacturing facility, which Silseth expects to be fully operational later this year. The state provided training grants.
BASS (Bass Anglers Sportsman Society), sponsor of the Bassmaster Classic — the Super Bowl of bass fishing — moved its corporate headquarters in 2011 from Orlando to Birmingham. Once owned by ESPN/Disney, the fishing and media company is now co-owned by Alabama native and former chief of Time Inc. Don Logan, who now lives in Birmingham.
CEO Bruce Akin says the new headquarters makes BASS more centrally located and accessible to its members, professional anglers and tournaments. Akin says no state or local incentives factored in the decision to move.
About 50 people are employed in the new Birmingham corporate headquarters, where services include publishing Bassmaster, BASS Times and Fishing Tackle Retailer. Tournament and event operations are also handled at the new headquarters, along with membership and online management. BASS’s television production division remains in Little Rock.
Proximity also was important in Walter Energy’s decision to move from Tampa to Birmingham, in 2009. Vice President of Corporate Communications Tom Hoffman says Birmingham put Walter Energy closer to its metallurgical coal mines, and its coke and natural gas businesses. “The move met all the criteria; close to principal mining operations, access to an airport and a city large enough to appeal to executive families.”
Walter Energy was more diversified in Tampa where it began as a homebuilding business, and the company is now focused on its role as a leading producer and exporter of metallurgical coal for the global steel industry. The Birmingham corporate office employs 114 people.
Alabama has gained national recognition as a pro-business state. For the fourth consecutive year, Area Development magazine in 2013 ranked Alabama among the top five states for doing business. Also in 2013, Alabama was ranked a Top 10 state for business by Chicago-based Pollina Corporate Real Estate and the American Economic Development Institute.
Says Alabama’s Secretary of Commerce Greg Canfield, “Alabama offers an ideal environment for corporate operations because of the state’s business-friendly policies, low cost of living and high quality of life.”
J. Michael Hardin, dean of Culverhouse College of Commerce at the University of Alabama, identifies three main areas driving a company’s decision to locate its headquarters in Alabama — business friendliness, university systems that have proven records of partnering with businesses and quality of life. “Our universities have a history of supporting businesses and companies. We also produce top-notch competitive graduates that are career ready.”
Companies also are establishing regional headquarters in Alabama. LMI, a McLean, Va.–based government consulting firm, opened its Southeast headquarters in Huntsville in 2012 after acquiring Belzon Inc., a government consultancy in Huntsville. No new investments were made other than the acquisition itself and updating the IT structure. The company’s biggest customer is the U.S. Army, which makes Huntsville a strategic location.
Senior Vice President Jeff Bennett calls LMI’s Southeast headquarters “a huge success.” Belzon had 42 employees at the time of the purchase and the office has grown to 90. “I’d like to double in size every two years like the last two years,” says Bennett. “Huntsville has been the best regional decision we’ve ever made.”
In 2000, German-based MAHA established MAHA USA in Pinckard, where vehicle lifts are manufactured in its 90,000-square-foot production facility. The German headquarters is in a rural setting, and its founder and owner wanted a similar site in the United States. The Pinckard area has sufficient infrastructure and local suppliers for outsourcing needs, and real estate and taxes are lower than in neighboring states such as Florida, explains Managing Director Wolfgang Raffler.
Proximity to major cities and ports was a factor in the location decision since MAHA USA exports nearly two-thirds of production to more than 150 countries. Tax abatements and start-up help was provided by state and local government. Raffler says opening a subsidiary in the United States has made MAHA a full-fledged global company.
Another German-based company recently opened its U.S. headquarters in Alabama. Automotive supplier RAPA (Rausch & Pausch) selected Auburn from 68
potential sites. Managing Director Roman Pausch says Auburn’s focus on midsize companies, Auburn University’s strong technical reputation and being located in the “new automotive South” were among the reasons for selecting Auburn.
Two out of three cars from the German OEMs are no longer produced in Germany, so globalization is a must for an automotive supplier to be a partner for their customers in all major markets, he adds. Total investment in the first phase was $18 million. “Since this is our first venture within the U.S., we had established no credit history so the entire investment had to be paid with shareholder equity, meaning the Pausch family’s money.”
No incentives were received for the plant, which started production in January. “I strongly believe that a business should never rely on subsides. But it was extremely helpful that the city of Auburn planned and built the plant for us. This happened under open book conditions, meaning we did not receive cash incentives, but it helped us stretch the investment. We certainly are no experts at building plants in the U.S., yet.”
Trends in corporate headquarters site selection? Mark Sweeney, senior principal at McCallum Sweeney Consulting in Greenville, S.C., which provides site selection services to firms nationwide, says communication technology and the ability to work remotely is calling into question the need for a single, fully aggregated headquarters.
Although this concept is appealing, Sweeney acknowledges the benefits of direct interaction. “I expect some companies will pursue disaggregated headquarters, resulting in a very small physical headquarter presence. However, I think most firms will stick with an aggregated single-location headquarters.”
Jessica Armstrong is a freelance writer for Business Alabama. She lives in Auburn.