Diebold Inc. has scrapped its plans to build its new world headquarters in Green, saying Thursday it was no longer economically feasible.
The news comes as the company, as expected, reported a decline in earnings and cut its full-year earnings forecast.
The company, a maker of ATMs and security systems, earlier this year said it had chosen Green as the location to build a $100 million global headquarters, despite heavy wooing from North Carolina and Virginia. The state of Ohio had promised a $56 million incentive package for the project.
The new headquarters — replacing the company’s existing headquarters in Green on Mayfair Road — was to be built on 55 acres in the Union Square development, near the intersection of Massillon Road and Town Park Boulevard, west of Interstate 77.
It would have consolidated five of Diebold’s seven Northeast Ohio operations under one roof. The company employs about 2,000 in Northeast Ohio.
The company issued a statement Thursday saying it was “suspending indefinitely its plans to construct a new global headquarters facility.”
President and Chief Executive Officer Thomas W. Swidarski said in the statement, “As we’ve been analyzing our near- and long-term growth priorities, it has become clear that investing more than $100 million in a headquarters facility is not economically feasible given the other priorities for the business at this time.”
Swidarski said the company has “tremendous opportunities for growth, both through acquisition and organic means. Therefore, we must ensure that we maintain adequate capital flexibility to take advantage of these prospects that will position us for long-term growth.”
The company said it had no plans to pursue new construction options for its headquarters in Ohio or elsewhere and is committed to staying in its current location.
Diebold said it planned updates to the existing corporate headquarters in Green and its other local facilities.
Diebold said it will decline the previously offered state and local financial incentives.
The company said earlier that local incentives set the financing package at $100 million, or the cost of the project.
Even with the financial incentives, Diebold would have invested a substantial amount of its own money in the new headquarters, including repayment of $20 million in loans that were part of the state’s $56 million incentive package.
Green Mayor Dick Norton said in an email that Diebold executives were quick to reassure him of their intentions to stay.
“Clearly I would have preferred to have the new facility,” Norton said. “On the other hand, I can certainly respect their position to make this tough decision to delay the project and to invest in growing the business.
Bob DeHoff, president of DeHoff Development Co., which is developing the Union Square and adjacent Park Place sites, said Thursday: “We certainly are disappointed, but understand. No matter how difficult those decisions are, when you’re in business they sometimes have to be made.”
He said his company had invested a “substantial amount” in extending utilities to the proposed Diebold site.
DeHoff said he would now work with state and local officials to market the Union Square and Park Place.
“It’s certainly a great site positioned along Interstate 77 between the two cities of Akron and Canton,” DeHoff said. “The quality of that site, and the potential for it, have not been diminished.”
Diebold and the developer are now in discussions regarding a previously negotiated purchase agreement, said Diebold spokesman Mike Jacobsen. Diebold’s cost to exit the agreement “will be far less than the investment in the new headquarters” and will be disclosed in future company regulatory filings, he said.
In the company’s statement, Swidarski said: “I deeply regret that our plans raised the hopes and expectations of our associates and the community. However, I believe this decision is in the best interests of our company, our associates, our shareholders and the long-term growth prospects of our business.”
Union Square, encompassing about 150 acres, is the larger of the two developments, which together total about 250 acres. Union Square is east of Massillon Road, and runs south and east to Wise Road. Park Place runs south of Wise, to Greensburg Road.
In a Thursday morning conference call with financial analysts discussing Diebold’s third-quarter earnings, the suspended headquarters plan was not a major focus for company officials and there were no questions from analysts.
Swidarski called Gov. John Kasich on Wednesday about the company’s decision regarding the new headquarters, Diebold’s Jacobsen said.
Even if Diebold had reported strong earnings and a better financial outlook for the year, it still would have shelved the headquarters project, Jacobsen said.
Diebold executives decided to spend capital on such things as making acquisitions instead of building the headquarters, he said.
State and local financial incentives had not yet kicked in for the project, he said.
“Those assets can now be directed to other needs and programs,” Jacobsen said.
The company said the “recently announced acquisitions of logical security and services businesses in Brazil and Turkey, as well as needed spending on IT and services infrastructure, software and global shared services, represent the kinds of investments Diebold is making to grow the company and build a solid foundation for its future.”
Last month, the company bought GAS Tecnolgia, a Brazilian Internet, online payment and mobile banking security company. This week, the company announced its purchase of Altus, a financial industry service provider based in Ankara, Turkey.
Terms of the deals were not disclosed.
Beacon Journal staff writer Kathy Antoniotti contributed to this story. Jim Mackinnon can be reached at 330-995-3544 or firstname.lastname@example.org. Katie Byard can be reached at 330-996-3781 or email@example.com. Betty Lin-Fisher can be reached at 330-996-3724 or firstname.lastname@example.org.