Unneighborly Tussle For Northrop Hq

Md., D.c., Va. Wooing Fortune 100 Company

January 06, 2010|By Jamie Smith Hopkins | Jamie Smith Hopkins,jamie.smith.hopkins@baltsun.com

There's nothing like competing for the headquarters of one of the nation's largest companies to make neighboring jurisdictions feel less neighborly.

When defense-contracting giant Northrop Grumman Corp. announced this week that it will move its Los Angeles headquarters to the Washington region, officials in Maryland, the District of Columbia and Virginia immediately pledged to woo the company with aggressive campaigns to showcase their strengths, such as a highly educated work force, good schools or low taxes. Those efforts could include tax breaks or other financial incentives.

"Game's on," said Jim Dinegar, president and chief executive of the Greater Washington Board of Trade, which positions itself as a neutral cheerleader in this three-way match.

It's the prestige of being home to a Fortune 100 headquarters that local leaders particularly want, along with having highly paid top executives as residents and the extra charitable giving, civic involvement and economic growth they can provide. Where one big firm moves, economic developers hope, others will follow.

Northrop Grumman already employs more than 40,000 in Virginia, Maryland and the District of Columbia, so the 300 extra jobs that would come with its main office are a small number by comparison.

For Maryland, success would be especially sweet. The state has had a long history of losing headquarters to mergers, the latest being Black & Decker of Towson. It also has a reputation for being less friendly to business than Virginia, whose officials noted Tuesday that the state has been ranked No. 1 four years in a row on the "Best States For Business" list at Forbes.com. (Maryland was 12th on the most recent ranking, pulled down in part by its higher taxes.)

"When we look at Northrop, to us, that's one of those opportunities that doesn't come around very often," said Christian S. Johansson, Maryland's secretary of business and economic development. "We're going to be aggressively pursuing this. ... We can really make a good business case for why Northrop should be choosing Maryland."

Maryland has a cluster of defense contractors, including Bethesda-based Lockheed Martin Corp., and some have been opening outposts here to prepare for the local business opportunities of the national military base realignment and closure process. BRAC is sending new government defense operations, and thousands of jobs, to Fort Meade in Anne Arundel County and Aberdeen Proving Ground in Harford County.

The National Security Agency, an important Northrop customer, is on the Fort Meade post. And the company has stationed nearly 12,000 of its Beltway-area workers in the state, including its large electronic systems division in Linthicum.

But Virginia has a bigger Northrop presence. The company employs 30,000 there, making it the state's largest private-sector employer. More of Northrop's clients, including the Pentagon, CIA and National Reconnaissance Office, are there. And in the past two years, defense contractors CSC and SAIC moved their bases to Northern Virginia.

Loren B. Thompson, a military analyst at the Lexington Institute who drives past many of these offices on his way to work in Arlington, thinks it's no contest.

"Virginia just seems to hold most of the cards," he said.

Washington, which has 1,000 Northrop jobs now, strikes him as out of the running. The potential threat of a terrorist attack is omnipresent in defense contractors' minds, so he doubts one would choose to locate its leaders there. Maryland and Virginia benefit from being near the nation's capital but at a potentially safer distance, though "there's a clear pattern among the recent arrival of defense companies in Washington: They tend to favor Northern Virginia," Thompson said.

Baltimore economist Anirban Basu agrees that it's tough to be pitted against Virginia, but he doesn't think Maryland is out of the running.

"A state that borders Virginia needs to pick its battles," said Basu, head of the consulting firm Sage Policy Group. "In my view, Maryland should pick this one. This one is pretty important and very visible."

The Greater Washington Board of Trade and its marketing affiliate, the Greater Washington Initiative, believe Northrop leaders haven't made up their minds yet and contend that each jurisdiction has a shot. Don't count out Washington proper, which is more aggressively marketing itself as a headquarters destination, they note. And they say Maryland has quality-of-life and transportation options going for it. Not that Virginia doesn't boast those advantages, too, they add.

"We have to be Switzerland," said Matt Erskine, executive director of the Greater Washington Initiative.

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