The financial stakes aren't very high but with pride and prestige on the line, Maryland and Virginia are locked in a tug of war for the right to claim Fairchild Industries Inc. as a corporate resident.
Despite its long history as a Maryland-based corporation, Fairchild is contemplating a move of its corporate headquarters to Northern Virginia's Dulles International Airport. In fact, the move has been the subject of formal negotiations between Fairchild and Dulles officials for the past two weeks.
Meanwhile, with Gov. Harry Hughes playing a prominent role, Maryland has launched a belated but all-out drive to retain Fairchild's headquarters in the state by offering the aerospace and telecommunications giant a site at Baltimore-Washington International Airport.
Maryland officials have stopped short of offering Fairchild any monetary inducements such as a tax break, but they have offered a big package of incentives which they believe will make a BWI office site as appealing as a Dulles location.
And even though Fairchild is well into formal negotiations with Dulles and FAA officials, Maryland is proceeding on the premise that as long as Fairchild has not signed a contract with Dulles there is a chance to pull off a deal of its own. "We're eternally optimistic," a Hughes aide volunteered.
Nonetheless, Virginia has a substantial head start on Maryland in this battle for prestige. Neither Dulles nor Fairchild officials will discuss details of the negotiations but "progress is being made," a Fairchild spokesman said late last week.
Actually, an announcement of an agreement between Fairchild and Dulles had been expected before now. Talks began about four months ago and by the time news of those discussions had filtered out a month ago, an agreement appeared imminent.
From all accounts, the discussions were initiated by Fairchild and are not the result of any business attraction forays into Maryland by Virginia economic development officials.
Fairchild determined more than a year ago that for several reasons, its Germantown headquarters were no longer adequate and began an intensive search for another location. In official statements explaining the decision to look for another headquarters site, Fairchild says its far-flung operations, including a joint-venture in Sweden, require extensive air travel by its executives. Hence, the company felt its headquarters should be at or near an airport, a spokesman said.
The headquarters move would affect less than 120 employes. Fairchild employes about 13,000 persons at facilities in Germantown, Hagerstown and Rockville and last week it announced an expansion that would mean hiring an additional 50 to 60 persons at Frederick.
The company's Fairchild Communications and Electronics Co. subsidiary will test electronics and communications equipment for satellite earth stations and other communications subsystems and equipment at the Frederick facility.
In addition to its Maryland operations, Fairchild has facilities in Michigan, Texas, New York, Florida, North Carolina and California.
Part of the consideration to move the company's headquarters is tied to plans to develop a museum in which it would display documents and technology tracing its role in aviation and aerospace. Fairchild also plans to shift its marketing division from Germantown to the new headquarters site, but that is not a part of the negotiations at Dulles, says airport manager Dexter Davis.
A Fairchild spokesman confirmed that the company's proposal for the Dulles site does not include plans for a marketing-demonstration facility. That would be built later, although no site has been identified at Dulles.
Fairchild says it will need the demonstration facility to market new lines of commuter and corporate aircraft that are being built in a joint venture with Saab-Scania of Sweden. The new Saab-Fairchild 340 aircraft is undergoing certification tests in Sweden but deliveries aren't expected until sometime next year.
While Maryland officials have accepted Fairchild's rationale for wanting to locate its headquarters at an airport, they have not been persuaded that Dulles is a superior choice to BWI.
"They're pretty much out of space and need another building, and for future business they need to be at an airport," says John Griffin, staff assistant to Hughes for economic development.
Griffin added, nevertheless, that "our basic feeling is that since this company started in Maryland they should not be an absentee landlord. We would like to see their corporate headquarters remain here. "You could view it as a hole in the dike. It could give rise to other thoughts about moving other parts of" the company's operations, he said.
Losing Fairchild to Virginia would be a serious blow to Maryland's economic development program as well as to state pride, say several Maryland state and local officials. What's more, they fear that the loss of a Fortune 500 company which has its roots in Maryland could raise questions about the business climate in the state.
The question has already been raised in a bitter dispute stemming from Maryland's successful prosecution of Fairchild on charges of polluting the area around the company's Hagerstown plant. Fairchild last month was found guilty of five counts of unauthorized hazardous waste disposal and water pollution and fined $100,000. It was the largest criminal penalty ever assessed under the state's antipollution statutes, according to Maryland Attorney General Stephen Sachs.
In a well-orchestrated campaign to counter the pollution charges, Fairchild criticized Sachs for his "adversarial approach" to business and, in a pamphlet to business leaders, Fairchild Chairman Edward G. Uhl warned of the consequences for the state if the enforcement policy becomes widespread.
Coming in the wake of the dispute with Maryland, Fairchild's disclosure of plans to move to Dulles has been widely interpreted as a slap at the state for pressing the pollution case. But Fairchild emphasizes that its discussions with Dulles officials are in no way related to its problems in Maryland.
But until Fairchild actually reaches a decision, Maryland refuses to concede anything to its neighboring state. Indeed, Maryland is prepared to match any offer Virginia makes, James Roberson, secretary of Maryland's Department of Economic and Community Development, announced last week.
Uhl has been told as much in meetings with Hughes, Roberson and Maryland's Transportation Secretary Lowell Bridwell.
At the conclusion of a meeting held recently at BWI, Uhl agreed to take back a proposal from Maryland officials for consideration by Fairchild's board, Griffin disclosed.
At the same BWI meeting Uhl was briefed on several plans that Maryland has developed to sell BWI as a competitor to Dulles. Besides improvements at BWI those plans call for development of a major artery and connectors that would link Germantown and northern Montgomery County to BWI.
While funding has not been approved, the road plans were considered and drawn before the Fairchild move became an issue.
Among other selling points presented to Uhl are the Amtrak station at BWI, linking it to Baltimore and Washington, and a state commitment to expedite land improvements that would enable Fairchild to construct a new headquarters.
The planning and wooing by Maryland officials have become so extensive that officials have even conducted tests to compare travel times between Germantown and Dulles and between Germantown and BWI.
Computing those times in peak travel periods, a team determined that it takes roughly one hour to drive from Germantown to Dulles. A similar test showed that it takes only four to six minutes longer to drive from Germantown to BWI--a surprising result for many who had assumed the commuting time on that leg would be much longer.
Despite the pressure to keep Fairchild in Maryland, officials have ruled out at least one inducement. "We are not thinking of nor do I think (Fairchild) is thinking of any special tax break or advantage," Griffin emphasized.
Meanwhile, Fairchild's negotiations with Dulles are being applauded primarily from the sidelines by Virginia officials who are confident an agreement will soon be signed. State and local officials have had very little to say about those talks, however.
Although Dulles was carved out of Fairfax and Loudoun counties, it is still federal property and the negotiations with Fairchild are being handled by the Federal Aviation Administration and airport officials, emphasized June Bachtell, director of Loudoun County's office of economic development.
Bachtell acknowledged, nevertheless, that Fairchild had contacted officials of both counties several months ago to inform them of its interest in moving to Dulles. "We're just observers lending support," Bachtell said.