By No, I’m not talking about how they’re shaking the game up by announcing so many cutting edge devices that will be heading our way sooner rather than later. I’m talking about Motorola’s handset division actually making a move: out of Chicago.
According to Bloomberg, they want to leave the region and create more of a standalone image for their mobile devices division to “shake up the business”. They haven’t decided on a location, but that will all be taken care of by the end of this year according to Sanjay Jah, Motorola’s co-CEO.
Whatever happens, the vast majority of the folks here in Chicago will continue to stay here. I anticipate that if I do take the headquarters out of here, I’ll take 150 to 200 people.
It’s said that Jha is making this move to better position themselves to take on top mobile hardware manufacturers (in the US) RIM and Apple. I’m not yet sure how moving headquarters can be used as a strategy or tactic to better position themselves in this smartphone war, but then again, I’m not the CEO of Motorola.
It’s not at all a business strategy, quentyn. This is SOP for CEO folks. I’ve worked for probably 10 companies where they decide that they want to live somewhere else, so they find a way to rationalize moving the headquarters to said location. Basically, upper management agreed they want to give themselves another type of promotion: to work at a place they choose.
It’s also a bad decision (HR-wise) in the short term and a bad decision in the long term, as many people are not going to be willing to relocate even if they are in that group selected to do so.
Aiming for apple/RIM spells out california to me. Literally the decision is this shallow. AKA a cointoss is about as well decided.
This is a bad move, Motorola. I can’t believe they’re kicking butt and then doing something this stupid. Do they really not want to ever be amazingly succesful?
the reason for the move is simple……..
leaving the entrenched dead wood in chigago and getting younger hipper people working at their new location.
that’s where the demographics of the wireless market are heading aint they?
younger and hipper.
I live near Chicago and this has everything to do with how expensive it is for companies to work there. Illinois is on the verge of bankruptcy, and a lot of people believe it’s from bad politics and corruption. If Motorola leaves Chicago, they won’t be the first to find better locations.
Hopefully they’ll come to Atlanta! I know the state has been offering huge incentives to companies to move here. We recently had RIM open an office here, ATT Wireless is here, and Verizon is here.
Great comment Aeires. I agree with you 100%
@Matt, Read comment 3. There actually IS a legit reason behind the move. Personally, I think it’s brilliant!
Its all about taxes especially when the current tax cuts end federally. When they go up next year motorola who has been struggling to get back in the black would benefit by going to an environment that at least doesn’t charge state income taxes Nevada or the like. I don’t blame them.
Sanjay Jha has a home in California. He wants to move the cellular division to CA. It’s really that simple. The Chicago suburbs accomodate Motorola in every way possible, so it’s not a tax issue. (If that were the case, Boeing could have moved anywhere in the US but they chose to move to Chicago.) Jha said a couple months back that the Chicago area didn’t have the qualified people needed. I guess Northwestern U and U of Chicago don’t put out good students anymore.
@Sam I Am, Chicago not having qualified people is CEO talk for “I need to blame it on something subjective…” Engineers and designers moving to get a job is not anything new or uncommon. Chicago has some great universities as well, and Purdue, which has outstanding engineering departments is not that far away either. If Sanjay Jha actually is moving it just to be close to home, he’s an idiot. I find that hard to believe though, it’s about money. It always is.
If not Cali, then I agree Atlanta, GA is a good choice. Another good place for any company to move is the RTP area in NC
@#6, #3 is full of crap. I have lived in chicago previously and can tell you that they don’t know what they’re talking about for multiple reasons. First off, they are in Schaumburg, which is like 25 miles or more from chicago. In fact, they’re almost far enough to be outside of the county that chicago is a part of.
Is there corruption? yes. Is there a budget issue? No. Illinois was never on the verge of bankruptcy, but they do have a lot of crap to be fixed. It’s also one of the biggest/busiest states, so it also brings in the most money and takes the least from the gov’t as well.
#7 is correct that it’s not a tax issue. Illinois has some of the most lenient tax laws and has very easy ways to minimize taxes (at will employment and allowing high deductible health plans for two things).
@Matt. Really? http://www.huffingtonpost.com/2010/02/22/illinois-budget-crisis-20_n_471737.html and http://www.pantagraph.com/news/local/article_ff03c0e0-cef2-11de-bb89-001cc4c002e0.html to name just a small amount of literature on how screwed up Illinois is.
#12, bahahahahahah. huffingtonpost? bwahahahha. And then a Think Tank? Clearly these are scientific results by financial analysts. Or then again, they’re not. You crack me up.
in the meantime, financial crisis in any state has zero to do with decisions made by corporations that reside within it. If you think any large company is going to jump ship from any state they are in due to their budget criss you have zero understanding of economics and politics. You can hate on Illinois all you want, but really it has something that only 3 major cities in the us have: LA, Chicago and NYC. The business generated in those 3 dwarfs the rest of the nation.
@Aeires “it’s about money. It always is.”
You’re right about that. Moving will definitely benefit Jha & Motorola. At the end of the day though, we’re only talking a couple hundred jobs. And most of those are senior management, who would like to never see another Chicago winter again. Like Apple, Motorola makes ZERO of their phones in the U.S.
@Matt has it right, and all the talk about I’LL being too expensive is mostly crap. They’ll go to SoCal where Jha’s family lives. CA is far worse off in terms of state budget than IL. And he didn’t say he’ moving the business, just HQ: Sr Mgt, probably Marketing & some sales. That leaves a big operation behind in IL. Also, this is likely being done so Jha can be seen as his own man, and to put distance between him and his co-CEO.
@Ross, I was hoping I wouldn’t have to state something so obvious. Thanks. It’s clear “aeries” has some issues with Illinois. Personally, I love it here.
If Aeries had ever worked with upper management for any company you’d find out the moves are not for budget or logical reasons, it’s for rationalized reasons such as “the executives want warmer weather”. If it was for budget reasons they would move to a state that has less costs in some form, in areas such as the pacific northwest or Kansas/surrounding states.
Cali is even more expensive to live in than Illinois, and New York more expensive than Cali.
Why does it have to be for any single reason? Maybe it’s for all those reasons.
@Matt. “Issues with Illinois,” not really. I happen to love Chicago, it’s one of my favorite cities. Very cool what the Blackhawks just did as well, and today starts the greatest rivalry in baseball when the Cubs host the Sox. It’s just sad such a great state can get so messed up, and there’s tons of experts that agree the state is in for serious trouble financially. What is interesting is how people are so sure the HQ is going to CA, when the article clearly states no information on location exists at this moment. Bottom line is we don’t really know where they are going, or why, so everything is speculation at this point. Please keep your cheap shots to your self though, we all have opinions on this, no need to run someone down if you don’t agree.
@Aeires, when Jha came to Motorola he didn’t relocate, and kept his family in CA. Google is in CA. Jha was asked about moving the company to CA earlier this year, and didn’t deny the possibility. And Moto already has offices in CA. Bet the farm.
They’re moving to Southern California. Mark my words.
I think this move only has to do with positioning MOT next to their new best friend Google and the Google ANDROID team…that spells NoCal…If he does move it, it might begin with Sr MGMT, but it’ll end with the whole US team including engineering.
if motorola is all about Android then it probably does make sense to be closer to Google.
@ari-free, it doesn’t really make sense, but it’s a nice sounding rationalization. Moto is headquartered in Schaumburg,IL, though the handset business runs out of Libertyville. But that’s only part of it. There is some development in Chicago, and a lot more scattered all over the world. It’s a globalized business. Where the HQ is located isn’t going to change much one way or another, except that Jha can be on site more often and doesn’t have to endure Chicago winters when he does visit.
VW/Audi did the same thing (moved HQ from Detroit to DC area). There’s no business case for it, unless they want to cut staff by having them quit due to them being unwilling to relocate instead of having to fire them, but the top brass just don’t like the current location. In the end it will cost them a ton of money flying people back and forth for meetings (same thing is happening at VW). Illinois may be expensive compared to Wisconsin but it is still much cheaper than Cali. Someone mentioned political and budget problems in IL being the issue. Umm…CA is in worse shape than most other states, except for MI of course (trust me I see it first hand).
When you have a company that requires intellectual capabilities (i.e. not primarily labor or raw materials) to be successful, it’s critically important to be in a location where you can get the talent. Motorola needs energetic, hard working, flexible (e.g. willing to work later than 4:30 PM to meet deadlines sometimes), talented employees with mobile device hardware and software experience. Asking them to relocate to deep in the suburbs of Chicago is a hard sell.
Illinois may be screwed up as far as corporate taxes and politics go, but California is more expensive to do business. But if you can’t attract the talent you need to grow, innovate, and generally stay ahead of the competition, corporate taxes are a much lower priority.
Jha’s family is in the San Diego area, as is his previous employer, Qualcomm. Multiple other mobile technology companies are there, including handset manufacturers, software companies, and at least one carrier. San Diego is the likely front-runner, but Jha will have his staff and/or consultants sniff out tax incentives in a variety of areas before he makes a recommendation to the board.