Md. to grant Bertelsmann $2.5 million

Random House parent will expand its Westminster facility

`Very impressive' offer

Distribution site aid said needed to keep 900 jobs in state


June 02, 1999|By Mark Guidera | Mark Guidera,SUN STAFF

State legislators agreed yesterday to award Bertelsmann AG, the parent of publishing giant Random House, a $2.5 million grant to help renovate and expand its national distribution facility in Carroll County.

Richard C. Mike Lewin, state economic development secretary, said the grant was critical to retaining 900 jobs in Maryland.

"We just couldn't take a chance at losing those jobs," he said.

William Barry, senior vice president for distribution at Random House in New York, said Maryland's offer was "very impressive" and helped the company make its decision to locate its sole national distribution facility in Westminster.

"We also like the work ethic of the area," Barry said. "They've been good to us, and we've been good to them."

The Legislative Policy Committee, made up of top Republicans and Democrats in the General Assembly, approved the grant yesterday along with a $1.2 million million loan to MICROS Systems Inc. for a new headquarters in Howard County.

The money will come from the state's Sunny Day fund, which is used to attract and retain jobs in Maryland.

Bertelsmann, a privately held German publishing and communica- tions empire, recently announced plans to cut as many as 278 of its 1,178 jobs in Westminster. That move triggered some legislators to express lukewarm feelings about the grant.

But Lewin said yesterday that without the grant Maryland "ran a very significant risk of losing 900 more jobs." Bertelsmann, he said, also was considering consolidating distribution operations in Tennessee or Chicago.

"We were aware that Chicago had a very aggressive offer," Lewin said. "If they had chosen to consolidate elsewhere it would have had a truly adverse effect on Carroll County's economy.

"What this does is ensure 900 good-paying jobs at one of the world's most important media companies stay in Maryland."

Barry said Random House is selling its Tennessee warehouse and has announced plans to close its Chicago plant in June of next year. Inventory from those locations will be sent to Westminster, he said.

Bertelsmann, the No. 3 media and publishing company in the world behind Time Warner Inc. and Walt Disney Co., is Carroll County's largest employer, state economic development officials said.

The Westminster facility has an annual payroll of $34 million, according to company figures provided to the state.

The facility also generates about $1 million a year in state taxes, said Lewin.

"The grant will pay for itself in just a few years," he said.

The company has previously said it plans to create a state-of-the-art book-distribution center at the Westminster facility so it can better serve customers nationwide.

The site has about 900,000 square feet of space. The company plans to add 320,000 square feet, said Barry, and break ground next week.

Once the expansion is complete next year, the center will distribute titles under the Random House, Knopf, Ballantine, Bantam, Doubleday, Dell and Broadway Books imprimaturs. Audio titles also will be warehoused and shipped from the facility. Random House, purchased by Bertelsmann last year, opened its Westminster operation in 1966.

Under terms of the deal, Bertelsmann agreed to keep 900 full-time permanent employees through Dec. 31, 2003, and to spend at least $30 million on renovation and expansion.

The grant will be distributed once the company has spent $10 million on its expansion project.

As a result of that investment, said Lewin, "we feel they are probably here forever.

As for the loan to fast-growing MICROS, which provides software systems for hotels and restaurants, the company wanted to consolidate operations in Howard County, where many of its employees live. The company's operations are now spread out in four buildings in Prince George's County.

Under terms of the $1.2 million loan, MICROS must maintain employment in Maryland for 10 years, said Lewin.

Pub Date: 6/02/99

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