TreeHouse Foods’ decision to open an office in Omaha, hiring 280 former ConAgra Foods employees, is a silver lining in what’s been a stormy year for ConAgra’s workforce.
Is there any chance the Illinois company would brighten Omaha’s forecast even more by relocating its headquarters here, filling ConAgra’s shoes in Omaha’s Fortune 500 lineup?
Unlikely, several experts said. Though a former mayor says we should at least try.
State and local economic development officials wouldn’t comment specifically on whether they were making any pitches for the TreeHouse headquarters, saying they don’t talk about recruitment.
When ConAgra moves its head office later this year, Omaha will have four remaining headquarters of companies on Fortune magazine’s list of the 500 largest U.S. companies.
Despite a handful of high-profile headquarters moves in the news lately, such a move is still “pretty rare,” said Phil Schneider, site selection expert with a Wisconsin-based consulting practice.
He called a move to Omaha “not out of the question,” but said of headquarters moves in general: “It’s difficult to move, and it’s very expensive.”
Companies move for strategic reasons, and incentives and business climate are just some of the factors, he and other experts said.
They pointed to several reasons why it would make sense for TreeHouse to stay put, even though the 10-year-old company doesn’t have a storied history in its location like ConAgra — in Omaha since 1922.
Those include easy access to O’Hare International Airport — good for traveling to the company’s dozens of far-flung manufacturing plants. And they include the growing concentration in Chicagoland of food businesses such as Kraft, Mondelez and ADM, and their support system of food-centric marketing, research, professional services and tech firms.
(ConAgra cited this food brain trust as one of its reasons for moving to Chicago.)
Meanwhile, TreeHouse’s chief executive, Sam Reed, a veteran of other food businesses including Keebler, lives only about 5 miles from the company offices.
“Treehouse Foods’ senior management is very content with their Oak Brook, Illinois, headquarters location, and there is little likelihood that will change,” company spokesman Ron Bottrell said.
Still, that doesn’t mean Omaha shouldn’t try, said former Omaha Mayor Hal Daub. He disagreed with site selectors who say Omaha would be a long shot for a TreeHouse headquarters.
“I don’t think that’s true at all,” he said. “I think Omaha is growing more and more into a city that can support corporate headquarters, and large business activity.”
He mentioned Omaha’s central location, cost of living, educational system, telecommunications network and performing arts community as winning attributes.
“My view is we ought to chase it,” he said of TreeHouse.
“It’s food and value-added agriculture” — priority areas for Nebraska and Omaha business recruiters. He can even envision the company setting up shop in part of ConAgra’s riverfront campus.
The Greater Omaha Chamber of Commerce is hired by the city to work on economic development efforts; the chamber wouldn’t comment on whether it’s recruiting TreeHouse.
TreeHouse said in January it was hiring 280 former ConAgra workers in Omaha, following its agreement to purchase ConAgra’s private-label food business for $2.7 billion. The private-brands positions are not counted among the 1,000 Omaha jobs that ConAgra is cutting, or the 300 other Omaha jobs that it said would move to Chicago.
Commercial real estate brokers in Omaha said TreeHouse is looking for 50,000 to 60,000 square feet of space here, enough to accommodate its 280 workers, but not many more. The company said last week it hasn’t selected a location but could soon.
The space the company is looking for in Omaha is about the same amount of space TreeHouse leased for its headquarters in 2010 in suburban Oak Brook, down the street from the McDonald’s corporate headquarters. TreeHouse also plans to keep regional offices in Downers Grove, Illinois, and in St. Louis. The company now has more than 50 manufacturing facilities and more than 16,000 employees.
There would need to be a “compelling reason” to move the whole headquarters to Omaha, said Dennis Donovan, site selection adviser at New Jersey-based Wadley Donovan Gutshaw Consulting.
A move to Omaha from Chicago would go against trends in corporate headquarters location. Headquarters moves today tend to be in one direction: toward bigger urban areas, like Atlanta (Mercedes-Benz USA), Dallas (Sunoco) and Boston (General Electric).
And in many cases the moves don’t bring many workers. Moves like ConAgra’s, where top execs’ jobs move to a bigger city while midlevel positions stay in places like Omaha, can be thought of as “executive headquarters,” Aaron M. Renn, a senior fellow at the Manhattan Institute, wrote in a 2014 article.
Meanwhile, midsize cities like Omaha are seeing more of the types of jobs TreeHouse is keeping here: “back office” or “shared services” support roles in research and development, information technology, finance, supply chain and customer service.
Putting a headquarters in the same city as a back office doesn’t usually make sense, because different attributes position a city well for one or the other, said Darin Buelow, principal at Deloitte Consulting.
Even if its headquarters is not in play, TreeHouse still has the potential to grow in Omaha. Buelow said such offices can double or triple in size once a company determines a location is working out.
TreeHouse is now the largest player in private brands, expecting revenue of up to $6.5 billion in 2016, with plans to keep gobbling up smaller players. Private brands are products made under grocery stores’ own labels. With the purchase of ConAgra’s private-label business, TreeHouse’s projected revenue would put it in the Fortune 500.
That TreeHouse is keeping the 280 jobs in Omaha instead of moving them to Oak Brook or elsewhere is a win, said Randy Thelen, senior vice president at the Greater Omaha Economic Development Partnership, a group that includes the Greater Omaha Chamber.
When it comes to headquarters generally, he said, “We certainly are prospecting for them and competing for them.”
But landing what he calls a “second office” location is a more common opportunity, he said. Consider that Omaha has major offices for Yahoo, PayPal, Interpublic Group and LinkedIn, which together employ more than 4,000, he said.
A second office may not be the “crown jewel” of economic development that a headquarters is, with its cachet, executive salaries and involvement in philanthropy. “But it’s awfully close,” Thelen said.
Site-selection expert John Boyd of the Boyd Co. in New Jersey, maintained that Omaha should focus on what he said was its strength as a shared-services hub.
“Don’t be greedy,” he said, when asked about chasing a headquarters.
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