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20. January 2015

GER / USA - Mercedes-Benz is latest to leave NJ, moving from Montvale to Atlanta

GER / USA - Mercedes-Benz is latest to leave NJ, moving from Montvale to Atlanta

In the latest in a string of corporate departures from North Jersey, Mercedes-Benz USA on Tuesday confirmed rumors that after 43 years in Montvale, it is moving its headquarters to Atlanta, leading to the loss of up to 1,000 jobs in New Jersey, though it’s not clear how many of those workers will transfer south.

CEO Stephen Cannon said Tuesday in an interview that he had met with Governor Christie and state economic development officials, and that they had worked hard to try to persuade the automaker to stay, with offers of undisclosed tax incentives.

But in the end, Georgia won out over New Jersey and two other states, with the Atlanta location bringing Mercedes “closer to our ever-growing Southeast customer base, our port in Brunswick, Ga., and our Alabama manufacturing facility, which accounts for half of the vehicles we sell here in the U.S.,” the company said.

Related: Christie hailed Georgia governor for 'pro-business policies'

The move, beginning this summer, will help Mercedes achieve the “profitable growth and efficiencies we require for the decades ahead,” the company said. Cannon said the Atlanta headquarters would have fewer workers, and the company’s application to the development agency in Fulton County, Ga., said the headquarters would have 800 jobs.

Related: A 'sad' day at  Mercedes-Benz's Montvale headquarters

Cannon said Mercedes was not abandoning New Jersey, with plans for a Northeast regional headquarters and a “state-of-the-art” training center in Montvale as well as some operations in Robbinsville in Mercer County.

The company announced the move at a president’s reception for employees at the Park Ridge Marriott Tuesday afternoon. Leaving the meeting, workers declined to talk on the record, though one said the mood was “very sad, horrible.” Another said, “We got the answers we were expecting to get.” Rumors about a possible move began circulating within the company in August, according to employees.

The relocation, which will get under way in July, will affect about 1,000 employees now working on Mercedes’ three-building, 37-acre campus, where it has been since 1972. The company did not say how many employees would be offered transfers.

The German automaker’s decision reflects “the intense competition New Jersey faces from other states for employment and investment, a competition that will continue as businesses seek to lower costs,” said Joseph Seneca, a Rutgers University economist, who called the relocation “a significant negative” following thousands of recent casino job losses in South Jersey.

Cannon did not disclose the amounts of any incentives offered by either New Jersey or Georgia. But according to a source, Georgia offered $40 million to $50 million in tax incentives, and the Fulton County development authority gave approval Tuesday for the agency to “formalize negotiations” with the aim of moving the German car giant’s headquarters to a site in or around Sandy Springs, just north of Atlanta, according to the Atlanta Journal Constitution.

New Jersey countered with a “substantial” incentive package of an undisclosed amount, according to state Sen. Gerald Cardinale, R-Demarest.

However, New Jersey’s efforts didn’t change the automaker’s mind.

“Georgia is a much more business-friendly state, where costs are lower across the board,” said James Hughes, also a Rutgers economist.

New Jersey’s tax climate for business was ranked 49th last year by the Tax Foundation, while Georgia ranked 32nd. New Jersey’s corporate and individual income taxes both have a top rate of about 9 percent, while Georgia’s corporate and individual income taxes both top out at 6 percent. Georgia also has lower property and sales taxes than New Jersey.

Overall, New Jersey’s total tax burden is more than twice Georgia’s, with Garden State taxpayers paying $6,675 per person in 2014, compared with $3,237 in Georgia, according to the Tax Foundation.

John Boyd, a principal at The Boyd Co. in Princeton, an adviser on corporate relocations, has said lower taxes, wages and land costs mean a company could potentially save 10 percent to 20 percent in annual operating expenses by moving from Bergen County to the Atlanta area.

Still, even if Mercedes-Benz will save on costs, the move will probably mean the loss of experienced workers, Hughes said.

“It’s going to really disrupt their labor force,” he said. “I’m sure a number of people don’t want to live in Atlanta, don’t want to live in the South.” But he also said Atlanta offers a “pretty good labor force you can draw from.”

Mercedes-Benz’s headquarters is the North American division of the German automaker Daimler AG and is responsible for distribution, marketing and customer service for all Mercedes-Benz products. The move to Georgia brings it closer to its factory in Tuscaloosa County, Ala., which is about 210 miles from Atlanta.

Mercedes-Benz’s headquarters is the North American division of the German automaker Daimler AG and is responsible for distribution, marketing and customer service for all Mercedes-Benz products. The move to Georgia brings it closer to its factory in Tuscaloosa County, Ala., which is about 210 miles from Atlanta.

The Mercedes-Benz departure is the latest in a series of corporate relocations out of North Jersey.

The car-rental company Hertz Corp. shifted its headquarters and 550 jobs from Park Ridge to Estero, Fla., and started moving to Florida in 2013. Bubble Wrap maker Sealed Air Corp. announced plans last summer to move its headquarters and 200 jobs from Elmwood Park to Charlotte, N.C. Both companies received tax incentives from those states. In both cases, New Jersey officials said, the businesses did not ask about incentives to stay in the Garden State.

Other recent relocations include Roche, the pharmaceutical giant, which has shuttered its giant Clifton/Nutley site and moved to California after its purchase of California-based Genentech.

Mercedes-Benz is Montvale’s second-largest private employer, after the accounting giant KPMG, according to the Bergen County Economic Development Corp. The carmaker is among the top 10 corporate employers in the county and paid $916,700 in property taxes in 2014.

The company’s move “will mean a loss of income, consumer expenditures, and income and sales tax revenues” for New Jersey, Seneca said.

It is also likely to add office space to a market that already has too much, according to Jon Hanson, chairman of the Hampshire Cos. in Morristown, a commercial real estate firm that owns about 20 million square feet of warehouse, storage, retail and other space. According to JLL, a real estate brokerage, the vacancy rate for Class A office space in northern Bergen County is 30 percent.

Sony Corp. of America recently put its 219,000-square-foot Park Ridge building on the market, and Hertz plans to lease out its 226,000-square-foot building, also in Park Ridge.

Mercedes said that it will start out in Atlanta in an interim location in the Central Perimeter area, north of central Atlanta, while building a “state of the art” headquarters to be completed in early 2017.

Cannon, who grew up in Wyckoff, said the company also considered moving to Texas or North Carolina. Several real estate experts speculated that Atlanta had an edge over other Southern cities because of Hartfield-Jackson Atlanta International Airport, the world’s busiest. Delta and Lufthansa both have flights to Frankfurt from Atlanta, and Frankfurt was the airport’s ninth-busiest foreign destination, with about 293,000 passengers, according to the airport. Frankfurt is the closest airport to Stuttgart, the headquarters of Mercedes-Benz parent Daimler AG.

Source: NorthJersey.com

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