From his office in downtown Knoxville, Dustan McCoy can gaze upon the campus of the University of Tennessee and, from a distance, the Great Smoky Mountains.
A scenic vista, however, is just one reason why the president of Brunswick Boat Group is satisfied with the decision to locate the company’s headquarters in Knoxville.
From a more practical business standpoint, the company has grown and prospered since the move and has found a well-trained and highly skilled work force in the east Tennessee metro.
There are myriad reasons why companies decide to relocate their corporate headquarters. Sometimes, a company wants to be closer to its manufacturing operations, suppliers or customers.
When a company makes the final decision of where to site the headquarters, work force, incentives, location and quality of life issues play an important role.
In the case of Brunswick Boat Group, the decision to find a new headquarters site stemmed from its desire to escape the cocoon of its parent company, Brunswick Corp.
By 2002, Brunswick Boat had become the largest segment of Brunswick Corp., a 160-year-old company that originally manufactured billiard tables but had diversified numerous times, through bowling equipment and other mostly recreational lines.
Brunswick Boat, the world’s largest manufacturer of pleasure boats, had net sales of $1.6 billion in 2003.
Brunswick Corp. is based in Lake Forest, Ill., in the Chicago metro. Brunswick Boat was based there, too.
“We felt we needed to move so we could establish our own culture and identity separate from the corporate culture of Brunswick,” McCoy said.
When the decision was made to site a new headquarters facility, Brunswick Boat took an analytical approach to the situation.
Executives evaluated several criteria — ranging from airport access to the quality of schools, health care and recreation — in each prospective city.
Brunswick Boat whittled the list down to five cities in the South and began making visits, eventually selecting Knoxville where 200 employees currently work in the corporate headquarters.
The move united a company that had different parts of its headquarters operations scattered across the country.
Work Force, Incentives Were Instrumental
There were numerous tangible reasons that led to the decision to locate in Knoxville.
The company’s flagship brand, Sea Ray Boats, is manufactured in three plants in the metro. These facilities currently employ about 1,600 workers, and the company is in the midst of a $22 million expansion and modernization project that will add 200 workers. Sea Ray’s international headquarters is based in East Knoxville.
So, there was already a presence in the region with a work force that was familiar with fiberglass boat construction. The company continues to be impressed by the metro’s work force.
“The number of job applicants has overwhelmed us,” McCoy said. “We have way more applications for any position we want to fill than we have time to screen.”
As an added bonus, Brunswick Boat has picked from a work force that is interested in its business.
“That’s something you don’t always find,” McCoy said. “It just so happens that we are in a fun business.”
McCoy said Knoxville metro officials went out of their way to attract the company. Less than 24 hours after Brunswick Boat specified the assistance it needed, the city of Knoxville put together a $3.5 million incentive package (another finalist city offered a package that was about triple the monetary value of Knoxville’s proposal) that included infrastructure upgrades, facility improvements, work force training assistance and state tax incentives.
The quick response was a factor in Brunswick Boat’s decision.
“During our meetings we detected a desire on the part of community officials to have us,” McCoy said. “They showed that they wanted to help us accomplish our long-term business goals.”
Other reasons for choosing Knoxville centered on location and quality of life issues.
The metro’s location in the eastern United States gives Brunswick Boat good transportation options for both manufacturing components and finished products.
And the metro is home to numerous cultural amenities, including a symphony orchestra, and ballet and opera companies, plus the University of Tennessee.
“We felt that Knoxville was a city where people could settle in, raise children and have a wonderful lifestyle outside of the office,” McCoy said.
Brunswick Boat continues to expand. Earlier this year, the company bought offshore fishing rig manufacturers Sea Pro Boats Inc. and Sea Boss Boats and will fold them in with a current subsidiary, Boston Whaler, to create a saltwater boat division, which will be based in Knoxville.
Changes in the Company Leads to Headquarters Relocation
While Brunswick Boat looked to create its own corporate identity with its site location, Louisiana-Pacific was looking to create synergy when it decided it was time to relocate its corporate headquarters from Portland, Ore., in early 2003.
During the previous decade, the company underwent significant changes in management and businesses, divesting itself of non-strategic operations to reduce debt and improve financial flexibility, allowing it to focus on growing its strategic businesses.
Aside from Portland, the company also had administrative offices in five other locations scattered around the country.
When the dust settled from the reorganization, Louisiana-Pacific found that most of its remaining manufacturing operations were located in the Southeast U.S.
When Mark Suwyn took over as chairman and CEO of the company, a supplier of oriented strand board-based products, he felt it was time to consolidate the headquarters functions into one facility.
“Our [administrative] locations no longer fit with where our manufacturing operations were,” said Hugh Donnelly, corporate facilities manager for Louisiana-Pacific. “It was difficult for the company to have the kind of synergy we needed with so many regional headquarters offices.”
Louisiana-Pacific contracted with a real estate services provider to help in the site location search. The provider helped the company develop a set of criteria that needed to be met.
Those criteria included a location with direct flights to the company’s manufacturing sites, a quality education system, a business- and tax-friendly climate, and a high quality of life.
Louisiana-Pacific eventually decided to site its corporate headquarters in Nashville, Tenn., where the company now employs 200 workers, a number that is expected to grow substantially in the future. It leases 80,000 square feet of office space in downtown Nashville.
“There was a business-friendly approach in Nashville that we found appealing,” Donnelly said.
The move puts Louisiana-Pacific closer to its mills, customers and financial shareholders, according to the company.
While employees in Portland were initially disappointed at the news (Portland was given an opportunity to retain the headquarters), they soon found themselves attracted to Nashville because of its housing, schools and residents, Donnelly said. Most employees that were given the opportunity to move to Nashville did so.
“After employees visited Nashville, they were willing to move,” he pointed out.
Business-wise, the state and local economic development agencies provided a competitive financial incentive package to Louisiana-Pacific.
The company is taking advantage of a highly skilled work force and the numerous colleges and universities in Nashville, Donnelly said. The company has also sited a research and development center in the metro.
Making The Right Choice
A corporate headquarters relocation represents a huge investment to both the company and its employees.
“You’re signing leases and asking employees to sell their homes and uproot their lives,” Donnelly said.
Making a mistake in where to site a headquarters is one that is not easily rectifiable. That’s why Donnelly suggests taking advantage of every resource available to make the most informed decision.
“It’s not something companies do all that often, so it would be foolish for a company to think it can do it alone,” he stressed.
While there is plenty of help, the decision usually comes down to one executive who holds the fate of dozens — if not hundreds — of employees in his or her hands.
McCoy was in such a position as decision time came for Brunswick Boat. He had studied the tangible reasons why the company should locate in Knoxville.
Still, McCoy, who earlier in his career oversaw the relocation of a chemical company’s headquarters to Greenwich, Conn., from New York City and 12 other locations, had one more test.
On one trip, McCoy was able to sneak away to drive and walk around the community by himself. The only question going through his mind was, “Will my folks be happy and thrive here.”
It was completely intangible, yet very important to his piece of mind.
“Nobody understands our business needs and people like we who manage our business,” McCoy said. “When you get to the final decision, it gets down to whether your employees will be happy. Because if they are not happy, the business will not succeed.”
McCoy has no doubts that Brunswick Boat’s employees are happy and that the business will continue to flourish in Knoxville. Every employee asked to relocate to Knoxville decided to make the move, McCoy said.
“There hasn’t been a person who came here that wished he/she hadn’t,” he said.
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