High Costs Are Factor in Exxon's Exodus from New York
EXXON's decision to leave the pell-mell, catch-a-cab-if-you-can, bustle of Manhattan for the howdy-y'all charm and relative-open-spaces of a Dallas suburb underscores the increasing difficulties faced by New York in retaining its huge corporate-financial industry. The oil giant's announcement last week - to take effect next fall - was not totally unexpected. Exxon chairman Lawrence G. Rawl told employees that the move had been considered for a long time. Rumors about it had floated around Exxon's mid-town offices for months. All told, some 300 Exxon employees will be directly affected.
``This has been planned for years, maybe 10 years or so,'' says Rosario S. Ilacqua, an energy expert with Nikko Securities Co. International. ``Little by little the company has been shifting workers out of New York.''
One reason, Mr. Ilacqua believes, is the better political climate for Exxon in Texas, he says. ``Starting in 1973, with the oil embargo, the oil companies have been harassed by the press.'' Exxon, he adds, was the subject of major media scrutiny here following the Exxon Valdez spill in Alaska.
Another reason for the Exxon move is financial, analysts maintain. ``The oil industry is a very cost-conscious industry,'' says Frederick P. Leuffer, an energy analyst with C.J. Lawrence, Morgan Grenfell Inc. ``This was primarily a dollars-and-cents decision on Exxon's part. They want to save some money.''
For New York City, the Exxon defection can hardly be described as good news. Exxon is the world's largest energy company - a visible symbol of the corporate and financial clout that comprises the New York economic scene. Exxon is the latest in a series of corporate and financial-company departures, the result - analysts say - of the mounting high costs of doing business here.
Moreover, corporate managers face innumerable personal difficulties in New York. More often than not they live in nearby suburbs, yet must find their way to work each day in Manhattan.
Before 1973, most of the major oil companies were based in New York. Mobil, which still maintains offices here, relocated its headquarters to Fairfax, Va., two years ago. Texaco put its headquarters in White Plains, N.Y. Exxon was one of the few to have kept its corporate headquarters on the island. Now, only Amerada Hess is left in Manhattan.
Other members of the New York-to-Dallas shuttle in recent years include J.C. Penney, in 1987, and GTE Corporation, which moved some staff to Texas in 1988.
Such major relocations are only the tip of the iceberg. Although New York is still the nation's major headquarters city for corporations, and the its top financial center, the city's overall ``leadership edge'' has been shrinking.
Over 17,000 employees have lost their jobs on Wall Street since the stock market crash in October 1987. Key financial-services firms and banks are shifting back-office staffs to boroughs beside Manhattan, as well as outside New York City itself. This past summer, Merrill Lynch announced that it would relocate close to 3,000 workers across the Hudson River to Jersey City, N.J. New Jersey has shown no mercy to the Big Apple in seeking to woo businesses across the Hudson.
New York's business leadership is well aware of the need to retain the city's status as a corporate-financial center. But analysts expect further defections.
In addition, the city has been suffering from the downsizing of Wall Street. A recent report prepared by the New York City Partnership Inc., a group of business, education, and civic leaders, says New York could lose some 43,000 of its financial-community work force of 440,000 during the years ahead.
All is not gloom for New York, however. As noted, the city is still home base to more corporations than any other area. And New York's economy continues to grow. Between 1979 and 1988 some 326,000 jobs were added here. Moreover, the city is maintaining its population base. New York City still has roughly as many people as live in the next three largest US cities combined.