Tobacco giant Philip Morris USA said yesterday that it will move its headquarters to Richmond from New York City.
The company said that to save costs it will move most of 682 corporate jobs now in New York to the Virginia capital, where it already has about 6,800 manufacturing and sales employees. The firm's parent company, Altria Group Inc., which also sells packaged foods, will remain in New York.
New York officials had pushed to keep the headquarters, but apparently the financial incentives they dangled couldn't make up for the $60 million per year the firm expects to save in a place with lower office rent and closer to its operations.
The move will put Philip Morris in the center of tobacco country, though the crop is less significant to the Virginia economy than it was in 1919, when Philip Morris established roots there. The firm was incorporated in New York in 1902. At an event yesterday announcing the move, the company also said it will also spend $300 million on equipment upgrades for the Richmond manufacturing plant.
"It's a huge deal," said Greg Wingfield, president of the Greater Richmond Partnership, which tries to attract businesses to the area. "You're looking at a payroll of $83 million, and those people will be buying houses and cars. It could have a significant impact on our economy."
The Richmond campus of Philip Morris, just off of Interstate 95 south of town, has smokestacks designed to look like cigarettes, although the firm plans to make its corporate headquarters at a different location. The company plans to begin moving this summer and complete the transition by June 2004. Most employees will be given the option to relocate, McCormick said.
"It is critical for [Philip Morris USA] to streamline costs due to the pressure the business continues to face," Salomon Smith Barney analyst Bonnie Herzog wrote in a recent report.
Some New York press reports have speculated the move was in part a rebuke to Mayor Michael R. Bloomberg, who has signed a law banning smoking in bars and restaurants starting at the end of the month. Philip Morris and the mayor's office both said that the law was not a factor.