Economic Development and Manufacturing & Technology and Technology

Relocation survey says: 'Go [Mid]west,' young executive: Companies are sending more of their employees to the region; overseas transfers are also on the increase

September 17, 2007

Midwestern cities are unlikely to top the list of vacationing hot spots, but they are a popular destination for relocating employees.

That's the consensus from the latest Corporate Relocation Survey conducted annually by Evansville-based Atlas World Group, whose largest subsidiary is Atlas Van Lines, the second-largest interstate motor carrier in the United States.

The study revealed that nearly a third of firms, 29 percent, are sending more employees to the Midwest than any other part of the country. Surprisingly, the trendy West finished behind the Midwest, South and Northeast.

Whether the Midwest improved its standing from past years is unknown, as Atlas has never presented the question before, said company spokeswoman Sara DeWitt.

But results from the Washington, D.C.-based Worldwide Employment Relocation Council's Best Cities for Relocating Families ranking in May bolsters Atlas' findings.

In the large-market segment, Indianapolis finished fourth behind Forth Worth, Texas; and Nashville, Tenn. Midwestern cohort Kansas City, Mo.; Cincinnati; Minneapolis; and St. Louis placed among the top 10 as well, giving the central region an impressive showing.

Purdue University Economist Larry DeBoer speculated that affordable housing might be a factor.

"Maybe one of the things corporations point out to their employees is that they lose the oceans and the mountains, but, 'Look at the house you can buy,'" DeBoer said. "If you sell a house in California and you move to another place in California, you don't gain anything. But if you move from California to the Midwest, you can buy a palace. I wonder if the message is finally getting through."

Nearly 400 companies participated in the Atlas survey-more than enough to get an accurate representation of what's occurring within the corporate community, said Terry Schindler, an assistant professor of management at the University of Indianapolis' School of Business.

Schindler spent 33 years at Thomson as a corporate trainer and is certain cheaper living costs are considered.

"We would have people who, if they had the chance to come back to Thomson's home office from San Francisco or Dallas, would come here and buy something bigger and still have money left over," he said. "You get the big-city feel without all the trappings that go along with it."

Of course, economic development cheerleaders would argue tax incentives and other initiatives are helping to lure new business and expansions as well. Those indeed could be additional catalysts, Schindler said.

He pointed to Memphis, Tenn.-based Federal Express Corp.'s investment at the Indianapolis International Airport as one example. The transporter spent $270 million in 1998 to triple the size of its hub, from 602,000 square feet to 1.9 million square feet. FedEx's local work force since has more than doubled from 2,000 to 5,000 employees.

Also, London-based Rolls-Royce Corp. plans to add 600 jobs over the next several years, partly through the creation of a center that will focus on advancing aerospace industry technology.

In return for Rolls-Royce's $145 million capital spending and new manufacturing, engineering and research and development jobs, the Indiana Economic Development Corp. is providing a $17 million forgivable loan.

And Tokyo-based Honda Motor Co.'s arrival in Greensburg will further grease the skids.

"You've got employed people being brought in to remain employed. So why are they being transferred here?" Schindler asked. "And if they have a choice, why not? Indianapolis is a well-kept secret."

Other findings from the survey show more employees are being transferred to foreign countries, the pool of employees likely to be relocated is becoming older and more diverse, and family obligations are weighing more heavily on relocation offers.

Transfers abroad increasing

One-third of companies that relocate employees internationally said they transferred more employees to foreign countries in 2006 than the previous year. Of the employees who were transferred internationally, nearly 30 percent were headed to Asia or the Pacific Rim. In the past decade, the number of companies listing the Asia Pacific region as their most frequent international destination has risen nearly 15 percent.

Moreover, nearly 30 percent of companies surveyed predict their amount of overseas transfers will increase this year. But overall, the number of companies expecting to increase their relocation volumes-international or domestic-dipped slightly, from 44 percent to 39 percent.

The lack of access to a local qualified work force has become one of the most important factors affecting a company's relocation decisions.

In 1987, for instance, only 16 percent of firms indicated access to workers was an issue. The figure since has jumped fourfold, to 52 percent. To fill the void, more companies are transferring seasoned veterans.

More older workers relocating

In fact, nearly a third of corporations reported the age of their most frequently transferred employees is at least 40 years old-up substantially from 11 percent in 1973.

"There is the pressure of fiscal conservatism and there is the pressure of a talent shortage," said Karl Ahlrichs, a senior human resources consultant. "Not a numbers shortage but a quality shortage."

Not everyone is willing to accept a transfer, however. Of those who declined to move, eight out of 10 cited family issues as the reason, compared to just one in 10 in 1982.

Rejecting an offer ultimately could hinder the climb up the corporate ladder. Thirty-four percent of companies reported that declining a transfer might hurt an employee's career.
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