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Unilever Shifting 1,000 Jobs to SW Connecticut
by JACK LYNE, Site Selection Executive Editor of Interactive Publishing
TRUMBULL, Conn. With relatively little fanfare, Unilever (www.unilever.com) is building a king-size employee concentration in a small southwest Connecticut city.
The food and consumer goods giant has announced that it's shifting more than 1,000 existing jobs to Trumbull, Conn., (www.trumbullct.com). The process will partially begin in second-quarter 2004, company officials said.
The move by Unilever's North American Home and Personal Care unit is part of its consolidation of its East Coast headquarters office space. The unit has been based in Greenwich, Conn., 31 miles (50 kilometers) to the southwest.
The Anglo-Dutch company already employs 600 workers in Trumbull. Adding 1,000 more will make Unilever's cluster big enough to populate a small village. And it's a particularly noticeable corporate concentration in Trumbull, a modestly sized city of some 36,000 residents.
Only about 100 of Trumbull's 1,000 additional jobs are coming from Greenwich, Unilever officials said. The rest of the massive migration will come from jobs relocated from Unilever sites in two New Jersey cities, Englewood Cliffs and Edgewater. Both towns sit some 59 miles (94 kilometers) southwest of Trumbull.
Unilever's five-year "Path to Growth" plan paved the project's road. Initiated in 2000, the strategy set ambitious goals for cost and debt reductions, operating margins, cash flow, and sales growth.
The Trumbull consolidation will advance the plan's cost-cutting goal of slashing operating assets to 20 percent of sales from 2001's 29 percent. Unilever expects considerable savings from the economies of scale in its consolidated headquarters space. More revenue will flow in from the company's planned sale of its 233,757-sq.-ft. (21,038-sq -m.) headquarters facility in Greenwich. And by bolstering work-process efficiencies, the clustering will also boost the plan's other goals, explained Charles B. Strauss, president and CEO of Unilever United States.
"The benefits of such a move are clear," said Strauss. "It will minimize investment, as well as simplifying the way we work with each other, enabling us to focus on our brands, collaborate and make decisions faster."
Available Acreage, Tax AbatementsSeveral factors steered Unilever's consolidation to Trumbull.
Pointed Consolidation toward Trumbull
One was simply available acreage. Trumbull Industrial Park had enough contiguous land to accommodate Unilever's plans for a far larger headquarters campus. Unilever couldn't find a similar expansion site in Greenwich, said Strauss.
The company already owns three facilities in Trumbull Industrial Park. It will spend at least US$15 million in buying, renovating and then moving into two other facilities in the park, Strauss explained. Unilever's neighbors in the park include Avery Worldwide, Connecticut Magazine, Gartner Group, NASDAQ and New Horizons.
Trumbull's tax-abatement program further boosted the site's appeal. Initiated in 2003, that program encourages expansions while also easing the impact of Connecticut's heavy reliance on local property taxes to fund public services. The city provides abatements for expansions with a value (excluding land) of at least $15 million (the same figure as Unilever's minimum projected investment).
Unilever's first-year abatement will be 70 percent, explained Raymond Baldwin Jr., the city's first selectman (Trumbull's organizational equivalent of mayor). The abatement percentage then drops by 10 points in each of the six successive years.
"Trumbull's tax-abatement program ultimately played into Unilever's decision, and it demonstrated to them that this city is friendly to business," said Baldwin.
Unilever's Owned Space WillThe eventual value of Unilever's abatement remains to be seen. Neither company nor city officials ventured an estimate on how much property will be involved in the Trumbull expansion.
Exceed Half a Million Square Feet
The company's three owned buildings in Trumbull Industrial Park together span 332,000 sq. ft. (29,880 sq. m.). Those facilities house Unilever North America's information technology center, its skin-care product development center and many of its back-office functions. The company last year paid some $1.07 million in city taxes for real estate and personal property (including equipment and furnishings), local officials reported.
In addition, Unilever currently leases two other buildings in Trumbull that cover 112,000 sq. ft. (10,080 sq. m.). The two new buildings that the company will buy will replace the leased facilities.
The new additions will bring Unilever's owned portfolio in Trumbull to more than half a million square feet (45,000 square meters). The company has hired Philadelphia-based Kling Architecture to create a master plan for its larger five-building campus.
$23-Million Innovation CenterIn addition, Unilever has another local expansion underway that previously qualified for Trumbull's tax abatements. Late last year, the company began a $23-million, 80,000-sq.-ft. (7,200-sq.-m.) expansion at one of its owned facilities in Trumbull. The space will house a newly created Unilever Global Innovation Center.
Project Began Late Last Year
That expansion will relocate some 190 jobs from R&D operations now in Edgewater. About a dozen jobs in Greenwich will also be relocated. Unilever expects to begin moving into the new innovation center in the first half of 2005.
The company, however, isn't deserting New Jersey. Unilever will continue to maintain its North American Food unit's headquarters in Englewood, company officials said.
The Trumbull center's construction is adding office and R&D space. The enlarged operation will broaden the R&D focus in Trumbull, which previously concentrated solely on the North American market.
"With the expansion, the [existing] unit's mission will change to include global research, development and market innovation," explained Arnold Brown, Unilever's director of strategic programs.
Neat Trick: Tax Abatements EncourageTrumbull's tax-abatement program has managed to pull off several major changes of its own - some of them at first glance appearing to be at odds.
Expansions, but Still Manage Local Growth
One major change is a boost in financing local services. Connecticut's local governments are only allowed to use property taxes as the sole source for funding local services.
Trumbull's tax abatements are beefing up the local property-tax base by bringing in expansions like Unilever's. At the same time, however, the city has adhered to a master plan that rigorously separates commercial and residential development. Commercial development has remained confined to four sites at Trumbull's northern and southern borders. The city's Main Street remains strictly residential, with no retail or corporate space whatsoever.
Trumbull's inventiveness comes as Connecticut's local governments are again lobbying state lawmakers to reform the public-services funding system.
"I am not angry that Trumbull took advantage of Connecticut's property tax system to get ahead," explained John Fabrizi, mayor of Bridgeport, located some nine miles (14 kilometers) south of Trumbull. "I am angry at the state of Connecticut for not having a fair system of taxation.
"The current revenue stream, the property tax, cannot keep up with the need for services," Fabrizi continued in testimony early this year before the Connecticut General Assembly's Planning and Development Committee. "As many cities and towns will be faced with another difficult budget year, the search for increased revenues centers on attracting more business and commercial development. This not only pits community against community and discourages cooperation, but [it] also contributes to sprawl."
Trumbull, however, has managed to add development with almost no disturbance of its quiet, residential ambiance.
'Path to Growth' Hits BumpThings haven't gone as well for Unilever's "Path to Growth" plan.
In mid-February, Co-Chairman Niall FitzGerald reported on the strategy's progress. He graded the company's performance to date as "nine and a half out of 10 in our 'Path to Growth.' "
The plan, FitzGerald reported, is on track to hit its goals on margins, cost savings, cash flow and debt reduction by year's end, when the "Path" program ends.
Unilever's plan, however, missed on one major goal, FitzGerald explained. The strategy won't meet its 5 percent to 6 percent sales-growth target this year.
That result appears to have dramatically changed the corporate tea leaves for Unilever's chairman, one of the primary architects of the "Path to Growth." FitzGerald announced that he was retiring on Sept. 30, 2004, a year ahead of the original schedule.
"Unilever will continue to operate according to its long-held principles with the objective of value creation for all our stakeholders," Co-Chairman Antony Burgmans commented after FitzGerald's announcement. "But at the same time we must evolve to meet new challenges."
Meanwhile, Unilever continues to evolve in Trumbull in a very big way.
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