Exxon Mobil is relocating its Fairfax County operations to Houston beginning in early 2014, taking 2,100 jobs out of a region already experiencing a slowdown in hiring as employers brace for cuts in federal spending.
The Irving, Tex.-based oil giant announced Wednesday that it planned to move employees from Fairfax to a sprawling new 385-acre office complex in Houston. The decision is part of a broader consolidation by the company that includes moving workers from offices in the Houston area and Akron, Ohio, to a new campus that will accommodate 10,000 employees by the time the transfers are complete in 2015.
The loss of private-sector jobs — many of them high-paying, white-collar positions — comes as Lockheed Martin and other defense and government contractors are eliminating headquarters positions in anticipation of Pentagon budget cuts.
“This is just bad timing,” said Stephen Fuller, director of George Mason University’s Center for Regional Analysis. “It is a hit, and it runs counter to the long-term expectations for Fairfax and for the broader region to become a global business center.”
In recent years, Fairfax County has been especially aggressive in its push to attract major corporations, but even the 1,200 jobs created by familiar nameplates such as Volkswagen, Hilton and Northrop Grumman are not enough to offset the latest loss.
Virginia Gov. Robert F. McDonnell (R) said Wednesday that he has been speaking to Exxon officials for two years about a possible move, trying to persuade the company to stay.
“We’ve actually been fortunate that they have delayed their decision and we were able to keep them here for a couple years to keep that presence here,” McDonnell said. “Obviously it’s a lot of jobs. I’m disappointed.”
The Washington area has been largely insulated from the economic downturn that ravaged other parts of the country, given its proximity to a federal government that ramped up spending to support two wars and stir a recovery. Unemployment rates in Maryland and Virginia have generally remained below the national average, helping to stabilize the local housing and retail markets.
But the region’s relative good fortune may be ending now as concerns about federal deficits grow larger. The government has already scaled back or canceled many military and technology programs, and area business leaders fear worse after the presidential election, when lawmakers must again confront decisions about taxes and spending levels. Currently, automatic spending cuts called for under the sequestration process, totaling more than $1 trillion over about a decade, are set to start in January, with half coming out of the defense budget.
The prospects are already figuring into Virginia state politics.
“This is very disconcerting,” said Terry McAuliffe, a businessman and presumed Democratic candidate for governor. “The loss of 2,100 well-paying jobs, coupled with the fact that we are about to lose thousands more jobs with the upcoming Department of Defense cuts, makes it imperative that we diversify Virginia’s economy and bring in new industries for the 21st century.”
Exxon’s move to Texas is part of a years-long effort by the company to consolidate its far-flung enterprises into one location. The company has been reviewing its real estate portfolio since 2010, and construction of the Houston campus began in 2011.
The oil company’s arrival in Fairfax three decades earlier — initially as Mobil — was hailed as a watershed for the county, proof that it could host big corporations and not serve simply as a bedroom community for the federal workforce.
Mobil chief executive Allen E. Murray cited the expense of operating in midtown Manhattan and the high cost of living for its employees as reasons for moving to the greener environs of Fairfax.
Real estate costs, taxes, traffic and schools all helped Mobil decide to consolidate at one Fairfax location, which became a coup for Northern Virginia.
Exxon acquired Mobil in 1998 for $80 billion. After the merger, the 118-acre Fairfax office was used to house the giant company’s production, distribution and marketing operations.
“It makes a lot of sense,” Fadel Gheit, a senior energy analyst for Oppenheimer investment bank, said of Exxon’s decision to leave. “Most of their operations are in Texas, in the heart of the energy business. There’s nothing in Fairfax — no plant, no manufacturing, no physical assets. The Virginia office really should not have been there in the first place.”
Jerry Gordon, president of the Fairfax County Development Authority, said Exxon’s departure, while a loss, is not the end of the world. The county today is in a far stronger position to absorb the shock than it once was.
“The impact is not the negative equivalent of when they arrived, because we now have 620,000 jobs in Fairfax,” Gordon said. “It couldn’t have been much more than 100,000 [jobs] back when they came in the early 1980s.”
Fairfax County Board of Supervisors Chairman Sharon S. Bulova (D) said Exxon Mobil is seeking a new tenant for the campus, off Gallows Road near Route 50 in Merrifield.
“I don’t expect the space to be vacant for long,” she said.
The local real estate community is already abuzz. Government agencies and private companies alike have been eyeing the property, which has 1.2 million square feet of office space.
“In the long run, it may end up attracting and capturing to Fairfax a significant replacement,” said George Mason’s Fuller. “But in the short term, it’s certainly bad timing.”
Staff writers Marjorie Censer and Fredrick Kunkle and Anita Kumar in Richmond contributed to this report.