In today's economy where nothing stays the same for long, think of regional business recruiting as a leaky boat. The mission? To keep pouring more and better jobs into the boat faster than jobs are lost through holes in the hull.
Lately, the Tampa Bay area has been on a roll, adding more jobs than subtracting them. But when the area loses a high-profile project that pays well and comes with a globally recognized brand name like Time Warner, it hurts. A lot.
Like many other metro areas, Tampa Bay is vulnerable to comings and goings because it relies heavily on recruiting back-office pieces of companies based elsewhere. Now a new multicounty effort is emerging, led by the Tampa Hillsborough Economic Development Corp., to start recruiting the headquarters of companies. That's a much tougher task, of course, but landing a headquarters adds not only prestige but added security that those relocating HQs will tend to stick around in tougher times.
What follows is a closer look at three past examples of business recruiting announced with plenty of fanfare by Florida and Tampa Bay officials. All three deals came with hefty financial incentives and big media events to trumpet the recruiting success of Florida and Tampa Bay.
In these three examples, the expansions did not go as planned. And the incentives in these cases may never be paid because the promised jobs never materialized. There were no followup media events to discuss the bad economic news. But there are still lessons to be learned.
Time Warner shutting major Tampa operation
New York media giant Time Warner announced in 2011 that it would open an advanced human resources center in Tampa to handle the entire corporation's needs. It promised about 500 jobs averaging $50,000 to be created over five years. Florida and Tampa Bay offered up to $3 million in incentives to lure Time Warner, if it delivered on those jobs.
This past week, Time Warner blamed its spinoff of Time Inc. and other corporate changes for the need to shut down the human resource/payroll center recently opened in Tampa Bay Park near Raymond James Stadium. This was a particularly big blow because Tampa Bay is so eager to recruit major businesses with well-known names as a tool to draw others with similarly hefty reputations.
Area economic development leaders fought especially hard to get Time Warner to expand here. They were jubilant three years ago when the company picked Tampa over competing Atlanta. Said Atlanta's newspaper, the Journal -Constitution, at the time: "It's a big loss for economic developers in metro Atlanta and the state of Georgia, who fought hard to attract the new shared services division."
The lesson: Keep scrapping for big brand expansions like Time Warner's shared services center. But realize in this more precarious economy that even major corporations will be ruthless in cutting operations when the company is forced to change directions in a hurry.
Digital Risk retreats from bold expansion
In 2012, the state announced mortgage software firm Digital Risk would add 1,000 jobs in Florida. Initially, the Maitland company talked up the possibility of bringing hundreds of those promised jobs to the Tampa area.
"The growth of Digital Risk perfectly demonstrates Florida's ability to recruit and retain innovative companies that can contribute to our economy and provide high-value jobs for Floridians," Gov. Rick Scott said. State incentives totaled about $3 million.
Most of that expansion will not take place.
So what happened? Six months after the governor made his upbeat remarks, Digital Risk was bought for $175 million by an IT company called Mphasis in Bangalore, India. As the mortgage market slowed, the new owners opted to pull back on Digital Risk's extensive expansion plans in Florida. Citing a need for greater flexibility, it eliminated 744 staff positions, making them contract or part-time jobs.
The lesson: Beware the double whammy of a company facing slowing demand and a new foreign owner that may have a very different outlook and strategy for a company like Digital Risk.
IRX Therapeutics: Where are you?
In 2011, cancer-fighting biotech firm IRX Therapeutics of New York City said it would relocate its headquarters to St. Petersburg by the end of that year, with plans to increase its workforce to more than 280 over several years with salaries averaging a whopping $97,000.
The news was unveiled on the University of South Florida St. Petersburg campus during an event attended by Gov. Rick Scott, St. Petersburg's then-Mayor Bill Foster, USF president Judy Genshaft and other area dignitaries. Rick Baker, a past St. Petersburg mayor who then worked for USF to recruit businesses that could collaborate with the university, personally escorted IRX CEO John Hadden to the nearby St. Petersburg Times, now the Tampa Bay Times, after the event to discuss the relocation and its potential. The relocation package involved some $1.2 million in government incentives.
That was in October 2011.
IRX Therapeutics is still headquartered in New York City.
In occasional responses to email queries by the Times over recent years, Hadden insists the lack of relocation is due to unanticipated delays rather than any decision to back out of the move to St. Petersburg.
The lesson: If a company cuts a deal backed by government incentives to come here by a certain date, then it needs to be held accountable. IRX is more than two years behind its commitment to be in St. Petersburg and yet there has been no official word on why or what happened. That's lousy public policy. And should IRX eventually show up, the lack of transparency about the delay does not help the company's reputation.