Monday, August 15, 2005

Sometimes I Feel We Cannot Win... Another Blow to Our Region

From Crains Cleveland Business:

Monday August 15, 2005
OfficeMax picks suburban Chicago

By Jay Miller

11:17 am, August 15, 2005

Office supply company OfficeMax Inc. has decided to stay in the Chicago suburbs and will not move its headquarters to Northeast Ohio.

The decision is expected to cost the regional economy more than 600 jobs that now are at the headquarters of the company’s office superstore division in Shaker Heights.

“I understand that the decision was based on business factors out of our control,” said Shaker Heights Mayor Judy Rawson. The mayor said the move will cost the city of Shaker Heights and its school district between $600,000 and $700,000 a year in tax revenue.

OfficeMax, in a news release this morning, said the “headquarters consolidation will integrate retail and contract functions and is expected to strengthen operational efficiencies, enhance collaboration among departments, and reduce costs over time.”

Boise Cascade Corp. in 2003 bought the Shaker Heights company and last year took OfficeMax Inc. as its corporate name. OfficeMax now is based in Itasca, Ill. The news release stated that an exact location in suburban Chicago has not yet been determined.

OfficeMax spokesman Bill Bonner said the company will vacate the Shaker Heights office building that was the headquarters of the original OfficeMax.

Mr. Bonner said senior department managers were beginning today to evaluate staffing needs to determine how many of the Shaker Heights employees will be offered jobs in Illinois. He said the headquarters staff eventually could number 1,500, which is more than the company now employs in its Shaker Heights and Itasca offices.

Mr. Bonner said he did not know what the company’s lease obligations were in Shaker Heights.

Consolidation of the two merged companies’ headquarters staffs was foreseen when the merger took place two years ago, but the merged company did not begin its site selection process in earnest until earlier this year. At the outset, the Chicago region was the front-runner. But a concerted effort by the cities of Shaker Heights, Cleveland and Team NEO, the regional economic development organization, kept the region in the running.

Sam Duncan, president and CEO of OfficeMax, suggested as much in a statement in the news release.

“While our review resulted in the selection of Illinois, the decision was a difficult one,” he said. “We specifically want to acknowledge the efforts of the city of Cleveland, the city of Shaker Heights, Cuyahoga County, the state of Ohio and Team NEO and express our sincere appreciation for their coordinated approach.”

Robert Farley, president of Team NEO, was disappointed with the outcome but believes the local effort made a significant impact on the real estate professionals involved in the process, which tells him that the next similar opportunity that comes around is winnable.

“(OfficeMax) certainly looked at all the numbers, but there are a lot of personal preference issues involved,” he said, when it comes to choosing a headquarters location.