FERGUSON — Emerson posed the latest challenge for the region’s business and civic community this week, when the company said it plans to sell its current campus in Ferguson, and is looking both in the ӣƵ area and elsewhere for a new headquarters.
Emerson has been in the ӣƵ area for 132 years. Now local leaders will try to prove that the region has the amenities and growth potential to serve as Emerson’s corporate home for decades ahead.
“We’re going to compete,” said Jason Hall, CEO of Greater ӣƵ. “And we’re taking nothing for granted.”
Emerson has been in the ӣƵ area since it was founded in 1890 as an electric motor and fan manufacturer, and its current location on West Florissant Avenue in Ferguson is at least in part a product of an effort to keep the company from leaving the region more than 80 years ago.
People are also reading…
In 1940, when Emerson was located on Washington Avenue, the company received an attractive offer to move to Evansville, Indiana. Emerson President Stuart Symington told a reporter at the time that “free land, moving expenses and a commitment on taxes for a period just can’t be laughed off,” according to Post-Dispatch archives.
Emerson workers, represented by the United Electrical, Radio and Machine Workers’ Union, offered to advance the company $100,000 from their wages to match Evansville’s offer, and help pay the cost of establishing a new site here. The company did not take the workers up on the proposal, but ultimately decided to stay in town and build a new, $10.5 million plant on West Florissant Avenue in Ferguson. When it opened, workers there made gun turrets for military planes used in World War II.
In 2014, Emerson recommitted to Ferguson in the wake of the fatal shooting of 18-year-old Michael Brown by police Officer Darren Wilson, with a $4.4 million donation to scholarships and youth employment in north ӣƵ County.
The headquarters search disclosed this week is tied to another decision announced by the company: The sale of a majority stake in its Climate Technologies business, which makes HVAC and refrigeration products. Its brands include Copeland, Vilter, Dixell, White-Rodgers and Sensi.
The Climate Technologies business made $5 billion in sales during the most recent fiscal year — about a quarter of Emerson’s revenues. The divestiture is part of the company’s larger shift away from consumer and residential products, and toward its automation solutions business.
Under the terms of the deal, Climate Technologies will be structured as a new joint venture between Emerson and private equity funds managed by New York-based investment firm Blackstone. Emerson will sell ownership of its Ferguson campus to the joint venture and enter a three-year lease on the headquarters, where about 1,300 employees work, with an option to extend the lease two years.
During that time, the company plans to undertake a “comprehensive assessment of potential headquarter locations,” Chief Financial Officer Frank Dellaquila told investors Monday.
A company spokesperson said Emerson no longer needs all of the real estate at its 200-acre campus in Ferguson because of changes in the company’s strategy and the growth of remote work.
Emerson President and CEO Lal Karsanbhai, who has a residence in Ladue, holds an economics degree from the University of Michigan and a master’s degree in business administration from Washington University. He is carrying out a term on the board of directors at the ӣƵ Federal Reserve that ends in December 2024.
Karsanbhai is on the board of directors of Greater ӣƵ, and was active in the group’s efforts to secure direct flights from ӣƵ Lambert International Airport to continental Europe, Hall said.
State and city leaders often compete for the prestige, jobs, corporate philanthropy and local spending associated with having a company headquartered in their region. But the significance of a corporate headquarters for the communities they occupy is different for different businesses, said John Barrios, assistant professor of accounting at Washington University’s Olin Business School.
For larger companies with overseas operations, the headquarters may support fewer jobs relative to size. Or a tech company, for example, might operate entirely remotely, with the exception of a monthly or quarterly meeting.
Should Emerson ultimately decide to move its headquarters, Barrios said, the effect on the community will depend on what that move looks like. But regardless, it would be a hit to the region’s image. “Even if the fundamentals don’t change, it’s still bad PR,” Barrios said.
Hall, of Greater ӣƵ, called headquarters a measure of “global relevance” for a community.
“It is a leading, important indicator of the dynamism — the competitiveness — of the assets of a community,” Hall said.
Taxing question: Missouri's Legislature is considering a reduction in the state's income tax rate. David Nicklaus thinks the cut will help the state's economy, but Jim Gallagher argues that Missouri should first spend money to shore up basic public services.
