Exxon Deals Blow to the Big Apple, Will Move Main Offices to Dallas Suburb
Exxon Corp. disclosed Thursday that it will move its corporate headquarters staff of 300 from Manhattan to a Dallas suburb next year, in a painful symbolic setback to New York City’s efforts to retain major corporate headquarters.
Lawrence Rawl, chairman and chief executive of the world’s largest oil company, said officials decided that less costly Irving, Tex., would be a better location “from the standpoint of our employees’ personal and professional lives, and from an overall business standpoint.” A company evaluation considered factors such as business costs, housing, commuting, taxes, accessibility by air and the “overall business climate,” Exxon said.
Exxon will move its staff from space it leases at 1250 Avenue of the Americas in midtown Manhattan to leased offices in Irving. In 1993, the staff will move to a new headquarters it plans to build in Las Colinas, a mixed-use development with a commercial emphasis, in Irving, near Dallas-Ft. Worth International Airport.
While Exxon’s headquarters staff is not large, the move is fraught with historical significance. Exxon and its predecessor companies--Esso and Standard Oil--have had their headquarters in New York City since oil magnate John D. Rockefeller opened the Standard Oil Trust here in 1882. The trust formed the nucleus of what became the U.S. oil industry.
Despite prodigious efforts, New York City has continued to suffer from a slow exodus of Fortune 500 companies. Two years ago, J. C. Penney Co. announced that it would move its headquarters to Plano, Tex., another Dallas suburb, to save $60 million a year. Mobil Corp. announced in 1987 that it would move its headquarters to Fairfax, Va., a suburb of Washington, D.C.
Any loss of jobs is painful right now for New York, which is facing a $500-million budget shortfall and a further contraction of Wall Street, and perhaps a recession, in the months ahead.
Unlike some other companies, which have allowed New York City to offer them inducements to stay, Exxon popped the news on city officials on the same morning it was announced to the world. “This was regrettable,” said Claire Tallerico, speaking for Stanley E. Grayson, New York City’s deputy mayor for finance. “The company and the city would have been better served if they had asked us about it first.”
Exxon officials insisted that the move was not negotiable. An Exxon spokeswoman, Sarah Johnson, said the incentives the city usually offers--tax abatements, tax credits and reduced power rates--would not have changed the outcome.
She stressed the importance of the lower cost of living in Texas. “We have young employees who transfer here from our worldwide operations, and they walk the halls in shock from the cost of everything,” she said.
Exxon would not say how much money it expects to save from the move, but Wall Street analysts said the difference would probably not be great in relation to the enormous size of Exxon, which last year had sales of $87.5 billion. “The savings would be a couple of pennies a share, if that,” said George Friesen, analyst with Deutsche Bank Capital Corp. in Manhattan. “This had more to do with the quality of life.”
He speculated that the decision to move might also reflect the personal preference of Rawl, who, although a New Jersey native, lived in the oil patch for years.
Members of the headquarters staff were reportedly taken by surprise at the announcement, though Exxon had been cutting the size of its Manhattan staff since a company-wide restructuring in the mid-1980s. As of 1985, Exxon still had 1,300 employees in Manhattan.
Exxon has more than 2,000 employees in Florham Park, N.J., where it maintains research and engineering operations, and the offices of its Exxon International unit. Another 12,500 employees are based in Houston with the company’s U.S. subsidiary and a variety of other operations.
The departure will leave Amerada Hess the only major oil company headquartered in New York City, noted Joel D. Fischer, analyst with the Drexel Burnham Lambert investment firm. As recently as the late 1960s, Rockefeller Center was the hub of the world energy industry, housing the headquarters of Mobil, Esso, Texaco, Conoco and Shell’s U.S. subsidiary.
New York state lost 37 Fortune 500 companies in 1987 and 1988, making it the biggest loser of such firms, according to a recent Fortune magazine survey. Texas was the biggest winner in that period, gaining 12, the survey showed.
New York has succeeded in holding other major corporate offices, including, last year, General Electric’s National Broadcasting Co. subsidiary and the 5,000-employee back office operations of Chase Manhattan Bank. But in those cases the cost of the city’s efforts stirred controversy: New York gave Chase a package worth $235 million and NBC a deal worth $98 million.
