W. R. Grace & Co.'s decision to relocate its worldwide headquarters in Columbia will raise the Baltimore region's visibility as a good place to live and work, industry observers and local officials say.
There's also the benefit of having a firm whose chief executive officer wants to bulk up Grace's worldwide presence, they say.
"This company is in the process of changing its stripes," said Bear, Stearns & Co. analyst Christopher Bodnar. "It had been in a restructuring mode. Now, it's moving forward as an organization into a growth-focused, acquisition mode. Believe it or not, that short statement tells you a lot."
Grace said Wednesday that it will move its corporate headquarters from Boca Raton, Fla., to Howard County, the division headquarters for its Grace Davison chemical unit -- with $712 million in sales, the biggest of the company's three major businesses. The move will add only 40 employees to the 365-member work force in Columbia, but the additions will be top-tier positions -- including Chairman and Chief Executive Officer Paul J. Norris, who grew up in Maryland.
The executives are likely to join the Davison unit in its building off Route 32.
Landing a corporate headquarters -- particularly when takeovers have caused the Baltimore region to suffer from "headquarters flight" -- will certainly enhance the area's image. At the same time, there will be an economic benefit, said George Mickalonis, managing director of the World Trade Center Institute Inc.
"There will be a tremendous spinoff effect," Mickalonis said. "The economic activity compounds as it spreads out. People travel here to meet with the executives, they come to BWI airport, stay in our hotels and eat in our restaurants."
Howard County expects to gain from the relocation. Richard Story, executive director of the county's economic development authority, estimates that of the $408 million of the county's projected tax revenue for 1999, about $198 million will come from property taxes and $138 million from income taxes.
Grace's decision caps a 13-month period during which 13 firms have relocated their bases to the county, one of the most affluent jurisdictions in the nation.
"What you see as a direct effect is the income tax of the highly paid executives," Story said. "On top of that, you're going to have to build houses for these executives, homes that will be assessed a higher tax rate."
But the longest-reaching benefit may come from the fact that Norris, 51, has vowed to build up Grace -- which had shed more than 30 businesses in the several years before he joined the firm. Now a specialty company with about $1.5 billion in annual sales, Grace finds itself as a smaller player in an arena where -- similar to other industries -- the mantra seems to be: Acquire or be acquired. And Norris has signaled it's not his intention to be acquired.
Norris joined Grace as CEO in November from AlliedSignal Inc. and became chairman at year-end. He began his career in 1971 at Grace Davison, the specialty chemical unit that employs 663 at its Curtis Bay plant in Baltimore. He also spent time at Grace rival Engelhard Corp., where he was general manager of the Iselin, N.J.-based firm's catalyst unit. At AlliedSignal, Norris was senior vice president of that company's $1.6 billion specialty chemical business, where revenue jumped 50 percent during the last two years he was there, according to Bloomberg News.
The Grace headquarters relocation -- set for completion by the third quarter -- will be a homecoming of sorts for Norris: The company said he graduated from Mount St. Mary's College and Seminary in Emmitsburg and earned his master's of business administration from the University of Maryland.
Pub Date: 1/29/99