Honeywell, a Fortune 100 technology company whose products range from airplane cockpit systems to oil refineries to security systems for hospitals, announced Friday that it is relocating its headquarters to Charlotte from New Jersey.
“Today is a landmark day for the city of Charlotte and the state of North Carolina, one that will impact our business landscape for years to come,” said N.C. Gov. Roy Cooper. The Observer reported the decision Thursday, based on sources with knowledge of the deal.
But the move is dependent on the passage of a state economics incentives package with tax breaks for Honeywell. Cooper said that final approval is expected Monday, after the General Assembly on Thursday approved legislation that raises the amount of incentives the state can award companies for economic development projects.
Cooper said the amount of the incentives package won’t be released until the state officially awards the grant Monday. However, it’s likely to be record-setting: Mecklenburg County Manager Dena Diorio said the county’s share of the incentives package is more than $28 million, while Mayor Vi Lyles said the city is offering $17 million in property tax breaks.
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The combined local incentives are about $46 million, the biggest package ever offered by the city and county to one company.
Cooper said that in addition to the tax breaks, Honeywell was lured by Charlotte’s low cost of doing business, the state’s business-friendly climate and infrastructure like the city’s airport that allows easy access for companies. Honeywell also has major corporate offices in Atlanta.
“There were many locations in the running for this corporate headquarters,” Cooper said. “It’s been months and months. This has been in conversation for quite a while.”
The company plans to relocate about 150 to 200 senior corporate employees by September 2019. Honeywell will also move about 100 South Carolina-based jobs to Charlotte (Honeywell bought Fort Mill-based Transnorm, a warehouse automation solutions company, in a roughly $484 million deal in November, and employs about 250 people in Fort Mill).
Honeywell then plans to hire 500 more employees in Charlotte over the next five years, reaching 750 local employees by 2024. “Any corporate roles that will be added in Charlotte will come from multiple locations, not just New Jersey,” the company said in a statement.
State legislators have said the median wage for the jobs will be about $85,000. The median household income in Mecklenburg County is about $60,000, according to federal statistics.
Honeywell CEO Darius Adamczyk said he previously lived in Charlotte and still watches the Carolina Panthers every Sunday. He previously worked for Ingersoll Rand, which has its North American headquarters in Davidson, and another Honeywell division in Charlotte.
“This was a very competitive process, because this was not a decision based on my preferences,” Adamczyk said. “This is a decision based on what’s the right decision for Honeywell for the next 10 or 20 years.”
He plans to be in Charlotte day-to-day by mid-2019. Adamczyk also emphasized that the move is still dependent on the state’s tax incentives getting final approval.
“Probably this announcement is a little premature, given some of the things we heard yesterday,” he said. “But we’re excited to be here.
“Our decision to relocate to Charlotte still depends on the recently passed Job Development Investment Grant legislation,” he said.
Company spokesman Eric Krantz wouldn’t say what other locations Honeywell considered, only that they had “looked at several other states that presented offers that were very compelling.”
Honeywell will initially lease space at the Barings building uptown, a new office tower at 300 S. Tryon St. Sources have told the Observer that the company is looking at space in Ballantyne or SouthPark. Adamczyk said the final location hasn’t been determined.
“We’re going to keep an open mind. Certainly (we) could stay uptown,” he said. “The South End looks like a pretty fun place to be, but then there are a lot of other appealing areas as well, so we’ll see.”
CEO Adamczyk said that that Honeywell’s Charlotte headquarters jobs will be in departments other than just technology.
“We’re recruiting senior-most talent in the company so whether it’s IT, legal, finance, HR, those are the kinds of functions we’re going to be seeking,” he said. “It’s not just technology talent. It’s important because we’re a technology company, but it’s much more than that.”
Honeywell is a major manufacturer of electronics, aerospace and electronic equipment. This isn’t the first time in recent years it has moved headquarters. In 2013, New Jersey awarded Honeywell a tax incentives package worth up to $40 million to keep its headquarters in that state, though the company did move several miles to a new campus in Morris Plains from its decades-long home in Morris Township.
Honeywell will retain about 800 jobs at its Morris Plains, N.J., facilities, the company said. Krantz said the company will continue to meet the terms of its New Jersey tax break.
“Even factoring in the positions that will move, about 1,000 Honeywell employees will remain in New Jersey across our six locations,” Krantz said.
Friday’s announcement apparently came as a surprise to some New Jersey officials.
“This one came out of left field,” Morris Plans Mayor Frank Druetzler said, according to a report Friday in NJ Advance Media.
New Jersey Gov. Phil Murphy said the state is grateful Honeywell is leaving some jobs there.
“Though we’re never happy when any jobs leave our state, we appreciate their continued commitment and confidence in New Jersey,” Murphy said in a statement.
Luring back Fortune 500 firms
For Charlotte, Honeywell’s move would increase the number of Fortune 500 firms headquartered in the area. That group is currently at six companies: Bank of America (No. 24), Lowe’s Cos. (No. 40), Duke Energy (No. 125), Nucor (No. 151), Sonic Automotive (No. 298) and Sealed Air (No. 456).
Sealed Air, which makes Bubble Wrap, was the last Fortune 500 firm to relocate to Charlotte, also from New Jersey. In 2014, the company announced plans to relocate its headquarters from Elmwood Park, N.J., bringing 1,262 jobs.
Honeywell ranks 77th on the Fortune 500 list, based on annual revenue of about $40.5 billion.
Snagging Honeywell helps Charlotte reverse a trend in which the number of Fortune 500 companies in the area has been falling for a decade. Nine companies made the list in 2007.
The decline has mostly been due to acquisitions and spinoffs. Family Dollar was acquired and is moving its headquarters out of Matthews, and local firms such as Belk and Harris Teeter have also been bought by outside firms.
North Carolina has awarded millions of dollars of incentives to companies over the years in exchange for relocating operations to the state. Such grants involve reimbursements of withholding taxes for the new jobs, provided companies meets job-creation and investment targets.
Among the largest awards in the state’s history, insurer MetLife was granted $87.2 million in a 2013 package for creating 2,600 jobs in Charlotte and Cary.
In 2017, the state announced $40.2 million for Swiss bank Credit Suisse to expand its Research Triangle Park campus operations. Also last year, Allstate Insurance Company was given $17.8 million to create 2,250 jobs in a Charlotte expansion project.
To lure more headquarters, North Carolina this week upped the amount it will offer companies going forward. On Thursday, state lawmakers approved a bill allowing the N.C. Department of Commerce to offer companies up to $16,000 per year in tax breaks for every job created. Currently, the limit is $6,500 per job.
The Senate unanimously approved the bill on Wednesday. But it ran into opposition from Republican Rep. Jonathan Jordan, who said the change would mean “more money to give to our corporate welfare programs and crony capitalism.”
Jordan fought over the bill with Rep. Bill Brawley, a Republican from Matthews who was one of the bill’s sponsors. The House approved it, and Cooper said he expects the bill to be signed and ratified in time for the state to formally approve the incentives package Monday. Brawley attended Friday’s meeting and won praise from officials.
Cooper said he didn’t know if the incentives package would be the biggest ever offered by North Carolina but that it would be worthwhile.
“Yes, it’s worth it, because we’ve done the economic analysis,” he said.