After receiving numerous CNN/Money Top 20 lists spots over the last few years, Eagan has faced big issue after big issue up to and including job losses, on-going lead contamination and even the slowed redevelopment efforts which have plagued the area right along the Minnesota River.
Recently Eagan has lost jobs at both Thomson Reuters (60) and Lockheed Martin (1000). Reader Bill Wallace who also authors the Dakota County Properties blog hypothesizes that these jobs losses will be, “a huge blow to employment and housing prices in Dakota County as hundreds of homes go on the market should these employees leave Minnesota.” He further states that the Thomson Reuters loss, even though a very small percentage of their ~7000 strong workforce could be the signs of weakness coming to the surface.
With Minnesota’s overall job market continuing to slow as the state’s unemployment rate inching up another tenth of a point to 7.1% some may be concerned that these huge losses seen in Eagan may be a sign of what’s to come.
Are you at all concerned as the unemployment rates ratchets higher and big companies who have rode out this recession while keeping the number of layoffs to a minimum are now starting to let people go showing signs that the local economy is in for a late route of job losses? Do you worry that once other companies see that they are not the only ones considering this type of action that more layoffs may be to come? How about the lead contamination which has been known since at least 2008? Do the harmful effects of lead in the air concern you for the safety of yourself and your family? Whatever you have to say about the job losses and contamination in Eagan go ahead and comment on!
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November 19th, 2010 at 8:20 am
The Eagan job losses are unfortunate, but I think the Lockheed losses are a product of a growing economy and the Thomson losses are more related to product shift.
Lockheed and Thomson are doing what companies do when the economy goes through the recent struggles. They hire new leaders, cut out the fat and find more economical ways to run their business. Moving jobs to another place in the country and not supporting a huge facility while (I assume) maintaining the same customer base just makes sense.
Cutting people who make books when your business has pretty much moved into an online source of information just makes sense. Moving sales people to the phones vs. face to face, which is cheaper and more productive just makes sense.
Did Eagan have a bad week? Yes. Is this a greater sign of things to come. It think not. Does my opinion do any good to the 1060 people looking for a job? No. That is a tough break, but good people land on their feet, and if my perception of the quality of people that work at those two fine organizations is accurate, they will be back on their feet quickly, and the impact to the Eagan economy will be fine.
Oh, and I don’t feel bad one bit for Granite City. Maybe they will find the need to focus on quality food to get their customers so I can go there again.
November 19th, 2010 at 8:34 am
I’m a resident of Eagan (I live less than a mile from Lockheed) and a member of the real estate community. I have to say that news was not pleasant listening on radio this morning. I like to think of myself as an optimist and want to side with Lefty’s views, but I do think Minnesota needs to step up efforts to attract businesses. Weather aside, the quality of life here is wonderful compared to other parts of the country where I’ve lived. When a headhunter brought our family here 12 years ago, he accurately stated that it’s the most difficult place to get people to move, but once they’re here you can’t get them to leave.
November 19th, 2010 at 8:34 am
Does it suck, yes. At least these employees are finding out now that there will be layoffs starting next year. It is my understanding there will also be some severance for these employees so not a perfect situation but it could be worse.
Companies are in business to MAKE money. If the move saves them 150 million over 10 years, I can’t blame them.
November 19th, 2010 at 8:36 am
I had to chuckle when I read that Pawlenty said that Minnesota has a business friendly environment.
Now we have Dayton likely coming into office touting that everyone is rich if your household income is $150,000 or more and your taxes are going up.
I do not think that this migration of jobs from Minnesota to other States has reached the peak we are going to see in the next 24 months. With the incentives being offered by other cities and states, no state income taxes in Texas, South Dakota, Florida, Nevada, Alaska and the continued low cost of off shore labor this migration of jobs is only going to continue. Minnesota has an unemployment rate of 7.1% compared to the 9%+ of the rest of the country, we can only expect Minnesota unemployment to increase and align more closely with the national average, especially when other States are positioning themselves to steal jobs from those states that are doing nothing to proactively retain jobs before these announcements are made.
If the closing of the Lockheed Eagan facility has been in the works for a year, where was Pawlenty 12 months ago when he could have made an impact on this decision? The Governor needs to get a pulse of the top 100 employers in Minnesota and track their employee counts on a monthly basis and monitor their real estate and lease commitments to buildings in the state to get in front of these possible migrations of entire divisions or companies in the state.
The old sales rule of thumb, focus on keeping your existing customer base because the cost of obtaining a new customer vs retaining an existing customer is ten fold.
November 19th, 2010 at 8:39 am
An Egyptian friend told me once, “You Americans! You always moan about the problems, and you don’t think about the opportunities! There are always opportunities!”
I guess if you live in Eagan, now is an optimal time to learn a trade in chemical clean-up.
I also think this is a good reminder to all of us to look at our own jobs and see if they’ll still be viable in five or ten years. We can’t stop change, but maybe we can be ready to change, too.
November 19th, 2010 at 9:22 am
The only way I would believe the Minnesota Tax climate has anything to do with this is if most of the transfer jobs go to Virginia. NY and CA have the same if not worse tax climates than MN.
These job losses seem to be the normal ebb and flow of employment in general. Changes in business models, consumer demand, and corporate sales all are a part of it. The biggest problem I see for these people that will loose their jobs is not finding a job, but finding one at the same pay scale they had in the job they left. Taking annual raises for the past 10 years at a company is quite a bit different than perhaps the 10-20% cut in salary & Benefits you might need to take to get land a job today.
The lead contamination has been occurring since before 2008, likely as long as the facility has been operating. It was in 2008 that the allowed emissions changed and Gopher Resources became out of compliance with the changed regulation. The Star Trib article is not very well written, but I get the impression that Gopher Resources wasn’t initially aware of the changed regulation, or is pretending that they now intended to come into compliance. I would’t want to live around that area, and I question if I’d bring any young children with me to drop off paint or aluminum cans at the Dakota County recycle center adjacent to Gopher Resources.
November 19th, 2010 at 9:22 am
Why would we want the government monitoring that kind of activity in private businesses? It sounds like invasiveness that we would be very much against if they were doing it with private citizens.
I’m all for our government leaders finding solutions to attracting companies to Minnesota and keeping the ones we have. However, it doesn’t help when we have a broken tax system that tends to hand out tax breaks to big corporations at random while leaving small businesses high and dry. Locating top 100 companies that are potentially going to leave and then throwing out a bone like a temporary tax break doesn’t do much to help stabilize things.
Goodrich in Burnsville recently added 60 jobs. Legislators were bragging up the fact that they got a tax break for Goodrich in exchange for the expansion being made in Burnsville. According to a friend who works there, the expansion was happening either way.
Why can’t we create a tax environment that is permanently favorable to businesses and employees moving to Minnesota? Why the constant stream of individual breaks and incentives?
November 19th, 2010 at 9:34 am
Tough break for poor Eagan. But I think they will pull through. On the bright side, over 600 of those 1000 lost jobs are going to move to other parts of the country. Yeah, I know. It still stinks.
As for the lead, that “problem” will go away. Lead emissions and the associated impacts are still the same as a few years ago. The EPA just decreased the threshold to 10% of the old one. Gopher will take care of it. The penalties are way too high.
November 19th, 2010 at 9:39 am
I can think of 54 jobs in Eden Prairie that I wouldn’t mind seeing eliminated or moved to another state.
November 19th, 2010 at 9:50 am
Hindsight is 20/20 but perhaps Eagan should have used the tax dollars slated for the underdeveloped area by the River to keep jobs in Eagan rather than try to attract new ones in a time of economic uncertainty.
November 19th, 2010 at 9:54 am
Joey, that would be great. Make it so, snap your fingers and create a favorable environment for MN.
In the interim, until the State of Minnesota creates a permanent favorable business and employee tax environment (check back in 20 years on that one) , lets just continue to watch companies flock for the borders of Minnesota. I agree, I very much dislike the process by which companies are selected for tax breaks, but this is the system in which they operate today.
To your point about attracting new businesses. When new businesses and companies see long standing existing Minnesota companies fleeing the state, can we really put much hope in new growth?
I am all for less government.
Joey, what is your solution to retain jobs in MN until the tax code is restructured creating a favorable permanent home for businesses, big and small?
November 19th, 2010 at 10:01 am
Thanks for the link Bill.
I think the biggest concern regarding Northwest/Delta a couple years ago and now Lockheed is that a large percentage of these jobs are high paying professional positions. Replacing them with anything is good but in reality we really need similar positions paying $60-120k/year. That’s a big hit to the economic base. If you consider that the average job makes maybe half of their average we really need to add twice as many regular jobs to make up for these ones.
I’m not sure how much Eagan could have done with tax dollars to make it adventageous to stay in either case really. I see it as more of a state/national issue and maybe even moreso a consideration of plain old economics.
In the meantime it does cast a negative pall over the local economy, tax base and real estate market when we can least afford it.
November 19th, 2010 at 10:29 am
Since when is $150,000 NOT a lot of money? What have we come to, that it’s that way? That’s really depressing, but I do agree with Bill Wallace that jobs with similar income levels have to be available, in order to pay the bills that have to be met.
I think what we’re arguing here is what exactly will attract the businesses we need to provide those income levels.
I’m not sure if running our services into the ground is an answer, because five years from now the company that chose a state for its cheap taxes could just as easily shuffle off to Buffalo, India. And we’re stuck living in, well, Arkansas.
I think it would be good if we had politicians in office who thought in terms of a long-term plan, not the next election. I think we need to decide as a state where we want to go, and what kinds of companies we want to attract, and what kind of place we want to live in.
That said, it doesn’t solve the problems of the people of Eagan right now. I’m wondering if Dakota County is prepared for what could be a massive increase of need.
November 19th, 2010 at 10:34 am
@Thought Leader, my solution? As Randy Moss would say, “straight cash, homey.” They can’t track that!
But seriously, without a better tax code, I don’t have much of a solution. Our tax code won’t change until spending changes. Spending won’t change until we accept cuts. Social services are bloated beyond control in this state. I have a friend who works there and can tell stories all evening of waste and corruption. Our education system is a mess, with funding deficits all over the place and benefits packages that far outweigh what the private sector gets. I’m all for taking care of our public employees and the poor, but we clearly have problems that extend beyond what is required to accomplish those two goals.
So I guess the ultimate need is to cut spending, but that won’t happen as long as people freak out when their pet program gets cut.
November 19th, 2010 at 10:51 am
Honestly, I think people are making a bigger deal out of the Lockheed shop closing than it really is.
Lockheed is a prestigious name to Eagan, but 1,000 employees certainly doesn’t put it in the upper echelon of statewide employers. In my experience with the folks in that building, they all have very marketable skills. We can talk about the unemployment rate rising, but the fact remains that unemployment is not/has not been terrible for people with advanced degrees and specialized skills. Yes, they don’t have the career mobility that they had 10 years ago, yes their personal finances have probably taken a hit (shrunken equity, etc) but I have confidence that nearly all of these people will be doing just fine in no time.
Someone mentioned Goodrich in Burnsville. I imagine they’ll see a few resumes from Lockheed. Some of what Goodrich does is similar in nature to what was happening in the Lockheed building. I have a couple close friends in that space/those companies.
That said, I don’t mean to belittle the uncertainty and stress this will cause Lockheed employees. I’m sure this stinks for a lot of people.
November 19th, 2010 at 10:59 am
Obviously, cities and states need to do everything they can to retain and attract businesses. But both of these (and Northwest before it) were caused by larger economic issues at play that can’t be stopped at a local level, only mitigated. This is macroeconomic issue, not a microeconomic one.
Lockheed isn’t leaving due to taxes; they’re leaving because the Navy and other clients have less need for what they work on here and they eventually are going to be phasing these products out. Like Mikeh said, of the jobs that are being moved rather than eliminated, they’re going to states with higher taxes (and more regulation that adds to the cost of doing business) as well. TR’s cuts weren’t due to taxes either, but instead caused by changes in their product offerings.
It’s fine to look at taxes; there could be room for improvement there, especially around the way subsidies and incentives are given. But you also need to look at the other things companies need too. For a company like Lockheed, an educated workforce (and good schools for the children of employees) is a huge one, for example. Yes, you can attract workers from elsewhere, but it’s a lot easier when you already have the talent you need where you are. We have to look at the whole package and not just one part of it.
And I’ll second what Michelle said about households that make more than $150K a year. “Rich” might be too strong a word…or is it? When it’s about two and a half times the median household income in this state, I’m not so sure. It’s way more than what my household makes.
November 19th, 2010 at 11:25 am
How soon we forget that the large office complex in Eagan has a potential new tenant. This will bring more jobs to Eagan, but the recovery is not being felt in MN yet IMO. Furthermore, if the medical device tax goes into place, look for MN to loose many more jobs.
November 19th, 2010 at 11:45 am
In Dakota County, according to HUD, you are low income if you are at or below $64,400 in income for a 4 person family. Median income in Dakota County is listed as $84,000.
November 19th, 2010 at 11:51 am
It’s hard to pick out any one factor that state or local government has any control over, especially if the company that’s leaving doesn’t give one. Still, our high-tax, high-service model wasn’t enough to KEEP Lockheed. The fact that Minnesota’s tax rates are high tax rates (3rd highest corporate tax rate, if I recall) isn’t an encouraging sign to business.
November 19th, 2010 at 1:28 pm
Which office complex is that?
November 19th, 2010 at 1:31 pm
The story on MPR said that many of the 1,000 people would be offered jobs at their other facilities. Doesn’t help Eagan, but not as bad for unemployment.
November 19th, 2010 at 1:57 pm
1. The majority of these jobs are moving to other states and facilities; this was also the case with Northwest.
2. Moving people is very expensive when you consider that most of these people will owe more on their homes than what they are worth.
3. We are receiving our commercial property tax assessments for 2011 at the moment and our values are down 15% yet the taxes are up!
Minnesota is not a good value and companies are voting the only way they can; with their feet!
Michael Roess
Reality Executive
Commercial Property Owner
November 19th, 2010 at 2:18 pm
How does one become a “Reality executive”? Is there a degree for that?
November 19th, 2010 at 2:51 pm
I doubt there’s a degree, but probably classes. I thought it was spelled “R-E-A-L-T-Y” though, not “R-E-A-L-I-T-Y.” I know, my anal spelling critic notices the little things…
November 19th, 2010 at 2:56 pm
My husband works at Lockheed Martin but is probably not losing his job. The closing of this plant doesn’t have much to do with Eagan or Minnesota per se — neither the city nor the state are the reason the company’s leaving and there’s not much they could have done to get the company to stay. In the 1970s and 80s, big defense contractors wanted to have facilities in as many congressional districts as possible, to garner political support. Now, the high overhead costs of maintaining facilities all over the place outweighs the political benefits. They’re consolidating in the direction of their largest facilities, which are on the coasts and in the South.
Also, this plant closing has been in the works for several years. It doesn’t have anything to do with recent politics, one way or the other.
November 19th, 2010 at 3:00 pm
I doubt there’s a degree, but probably classes. I thought it was spelled “R-E-A-L-T-Y” though, not “R-E-A-L-I-T-Y.” I know, my anal spelling critic notices the little things…
Thanks for helping to explain my attempt at humor.
Maybe if I get to 370 posts someone will get my jokes by then. :)
November 19th, 2010 at 6:00 pm
#13: “I’m not sure if running our services into the ground is an answer, because five years from now the company that chose a state for its cheap taxes could just as easily shuffle off to Buffalo, India. And we’re stuck living in, well, Arkansas.”
Compare:
“The job losses will be partly offset by the transfer of about 650 positions from Eagan to three other locations, Lockheed’s statement added. It also said jobs would be created in Camden, Arkansas, when some Middle River manufacturing work moves there.”
http://www.moneycontrol.com/news/world-news/lockheed-to-close-facility-cut-jobs_500093.html
November 19th, 2010 at 6:12 pm
I rarely agree with Michele on here, but right now I do. IMO, if you make over 150K in your household, you are rich. Wow. I cannot imagine our combined income ever reaching that threshold.
As for Eagan, they’ll be fine.
November 19th, 2010 at 6:16 pm
Both you and your husband (and actually your husband alone) have backgrounds which would easily make that kind of money. You choose not to however.
While I agree that $150,000 is certainly well off, it’s not as obscene as people are making it out to be. Now if you’re making more than $500,000 then I’d consider it to be honing in on “obscene”.
November 19th, 2010 at 8:51 pm
Thomson had a plan a few years ago to build a new eight story tower on their complex. That was supposed to bring something like 2,000 more jobs to Eagan. They were hitting the state up for some relatively small tax breaks as an incentive to build it. Pawlenty said he was for it, but he ended up vetoing it along with other items the Dems wanted. It was never built and now that Thomson is Thomson Reuters they are adding employees, but in India instead. I don’t fault Pawlenty for controlling spending, but that was one deal that he needed to make work. Considering how much he touts jobs he has not had much luck keeping them around literally right in his own backyard.
November 19th, 2010 at 8:58 pm
Oh, and I have been near that Gopher Resources place and smelled some very nasty smells. I remember thinking at the time that it was probably not a very healthy thing to be near. I absolutely cannot believe that they would locate something like that in such a heavily populated area and I agree with the previous post that I would not want to live anywhere near that. There is a very large development of homes right across 149 from that place and it is directly downwind. It really bothers me to think of all the people and innocent kids that are probably sucking in toxins every single day.
November 19th, 2010 at 10:28 pm
Obscene? Did I say obscene? I never meant to imply that; I just said that it was a lot of money. Obscene is … okay, what the CEO of Target makes is obscene.
But I’m thinking that people who make 1.57 million dollars a year probably think that isn’t enough, either … and there is the problem with the capitalist model today. We tend to live to the level of our income. And meeting that becomes more important than the business, the community, the country.
What struck me is what Mikeh said, that $64,000 is considered poverty level for a family of four. My lord, is that true? That’s what an army officer made twenty years ago, and that was considered a good income. What have we done to ourselves?
November 19th, 2010 at 11:32 pm
Oh, before I forget …. From everything I’ve read or heard in the debates, Dayton’s plan is to raise taxes for people making over $250,000, not $150,000.
That’s a quarter of a million dollars, in any decade’s math.
November 19th, 2010 at 11:49 pm
And it would still do jack squat to improve our budget situation. The money we’d gain from that tax increase would hardly be a drop in the bucket. 98% of Americans make less than $250,000, so it’s a popular number for politicians to throw out, but it’s a number that’s already being taxed like crazy. That doesn’t mean they can’t absorb more, but it also doesn’t mean they should absorb more. Additionally, there are many, many small business owners who on paper make more than $250,000 but in reality take home much less.
November 20th, 2010 at 12:51 am
I double checked, and I’m wrong – Dayton DID say $150,000. I was probably thinking of Obama.
I do agree with you, Joey, that taxing the rich won’t make that much of a difference when it comes to balancing the budget. (I will argue the whole lumping small business owners and corporations together. I could also say that ending our love affair with the defense industry could probably pay for the whole health care system, but I won’t waste the time.)
I just said that $150,000 is a lot of money. Darn it, it IS!
November 20th, 2010 at 1:07 am
$150,000 is a lot of money – agreed.
We have an obscene love affair with the defense industry – agreed.
Taxing the rich won’t make a huge difference – agreed.
Kumbaya?
It’s 1:00 AM…I’m all about being agreeable.
November 20th, 2010 at 3:15 pm
The trick to being a responsible rich person is to be a poor one first.
November 21st, 2010 at 10:20 am
Employment prospects in 2011: not good. The state and national economy are in the doldrums and it is likely that unemployment in MN will go up, nationally it may stay around 10%. The main culprit is housing/foreclosures/deflation. These have most of us in a death grip right now. Most corporations still are making money by cutting overhead (jobs/benefits), and saving the cash because capacity utilization remains near the mid 70′s, hence no need for new investment. Or investment is cheaper elsewhere (see Polaris move to Mexico), or investment in India or Brazil makes sense as they are building to serve those markets, not necessarily export from there to here. Mergers and acquisitions are picking up which is a mixed blessing, it could be a signal of confidence, on the other hand it is likely not good for increases in employment as mergers usually mean “redundancies” as the Brits say. Finally whether you see this as a good or bad thing, local and state governments will be shedding jobs in 2011-2012. They will also be cutting back on spending that feeds jobs at other locations. For the reasons stated above, in the near term that slack will not be taken up by private businesses.
Taxes: i remain of the opinion the effective tax rate here is not that much different than in many other similar demographic states. And the resource climate here (in people and critical mass of other companies that provide rich fodder for business development) is good, otherwise we wouldnt be in the top ten in the nation for Fortune 500 company headquarters ( i will grant that many of these companies have innovative tax procedures and likely do not pay the “rack rate” to the state of MN , which reinforces my belief that the effective rate is not all that bad, God created accountants for a reason) I think a more logical tax system should be created, lower rates with less loopholes and deductions for businesses and individuals.
the good news long term is the dollar is going to get weaker , barring another financial collapse in the world which will make the dollar stronger, and long term that will make actually producing things in the USA more interesting as the cost of producing and shipping becomes higher. (it will make operations producing and selling overseas more profitable though as it is right now). As several have said, at that point state government needs to be ready with policies that are encouraging to businesses to expand.
as to taxes in MN, obviously a Gov Dayton will not be taxing the rich with an opposition majority in the legislature. Hopefully it is a “nixon to china” moment when some tax reform actually could occur.
November 21st, 2010 at 12:20 pm
My background is in social work, not sure how much you think that pays :) But you’re right about my hubs.
I don’t think 150000 is obscene, but I do think it’s a lot.
I don’t the taxes will do much.
Richness is all relative. If our average income was 500K a household, rich would be much higher.
November 21st, 2010 at 3:07 pm
The numbers I pulled up for income in Dakota County come from the HUD program income eligibility data. They base their numbers off the Median income rate for a county. I was surprised the Median income rate was so high.
150k is quite a bit of money, and sure we have Fortune 500 companies and all. But an economy doesn’t grow by the same companies doing the same thing. What we need to keep an eye on is what we do to dis-courage new companies from forming in MN. What do we do to dis-courage existing companies from expanding?
Sure 150K seems like a lot of money, but when you look at the median income for the county, it gets cut in almost half. To me that puts the income level directly in the range of folks that are providers of jobs. Are things in Minnesota really so good that you don’t think people that can move their business, won’t do it?
April 18th, 2011 at 7:01 am
[...] to bid farewell to a good friend of the last 7+ years before he departs to San Diego as part of Eagan’s loss of Lockheed Martin. During these trips we do our best to avoid the national chains as best we can and eat in as many [...]