B&W is taking its talents to Akron.
Babcock & Wilcox Enterprises will relocate hundreds of employees from Barberton and Copley to Akron — and also move its headquarters from Charlotte, N.C., to here.
B&W’s new corporate offices will be in the East End Offices, Goodyear Tire & Rubber Co.’s former headquarters on East Market Street. The move is expected to take place no later than next summer.
B&W notified employees of the move Monday.
This means Akron — and Ohio — becomes the new home to a publicly traded company while the area retains approximately 700 jobs. The announcement comes shortly after longtime Akron company Myers Industries Inc. said it plans in the near future to move to Cleveland, taking about 120 jobs out of the Rubber City.
But at the same time Akron’s next-door neighbor Barberton, despite strong efforts to retain B&W, loses what had been its largest private employer that dates back to the early 1900s in the city — although the blow will be somewhat softened.
“I am pleased to welcome B&W to Akron and thrilled to soon be home to their corporate headquarters," Akron Mayor Dan Horrigan said Monday. "The growth and retention of local businesses is the foundation of our regional strategy to support the economic health of Greater Akron.”
B&W’s move also is a major boost to the East End office, residential and retail development in Akron’s Middlebury neighborhood. The East End developers recently announced they will add a brewpub, restaurant, Starbucks coffee shop and a Handel’s ice cream shop by the end of the year or in early 2019 at Goodyear Hall, directly across the street from the former headquarters.
"With these new facilities, B&W will serve as an anchor partner in the ongoing rebirth of Middlebury, and their presence there will prove to be a catalyst for future revitalization, both for the neighborhood and the wider region," Horrigan said.
B&W said the move makes sense.
“Our current facility [in Barberton] is too big for what we need, and honestly it’s really expensive to maintain,” said Leslie Kass, who in February was promoted to B&W’s chief executive officer. “We started looking at lower cost alternatives that kept us in Northeast Ohio. ... For the business we are today, the heart and soul is in Northeast Ohio. It’s our largest employee base.”
Officials on background said Akron didn’t recruit B&W away from Barberton — the company said it was either going to go into the East End or move its operations to Charlotte. Officials pulled together a financial package to keep B&W local and to attract the corporate headquarters as well. The financial deal, according to James Hardy, Horrigan's chief of staff, includes:
• Akron sharing payroll tax revenue generated by Barberton B&W employees (but not Charlotte) for five years. In the first year, the city of Barberton will receive 1 percent of the tax revenue, which will decrease to zero over five years.
• B&W receiving a 1 percent income tax rebate for seven years.
• A 100 percent TIF (Tax Increment Financing) on the Goodyear property that allows for additional taxes on improvements to offset the cost of preparing the space for B&W.
• Recent school and safety income tax increases will not be impacted by the deal.
Overall, the city anticipates an increase in revenue that will grow as the tax sharing with B&W tapers off, Hardy said following Monday's regular City Council meeting.
Mayor Bill Judge said Monday morning that the move stings the city, but it did not come as a shock.
Summit County Executive Ilene Shapiro, meanwhile, applauded the decision to retain and grow B&W's presence in Summit County.
“Today’s announcement by B&W is an important step forward for Summit County and the Greater Akron region,” she said. “The company’s decision to stay and grow here is a testament to the county’s low cost of doing business, talented and skilled workforce and high quality of living. We look forward to continuing to work with B&W to ensure they have continued success in the future.”
Bill Koehler, CEO of the Team NEO regional economic development group, echoed her sentiments.
“We are excited that the former Goodyear headquarters will be renovated for a new corporate headquarters," he said.
Babcock & Wilcox designs, makes and services coal-fired power plant boilers, pollution control technology and more. B&W’s Power Generation segment is based in Barberton with about 600 employees; it also has about 100 people in Copley, some of whom will stay in the township. Another 100 or so people work in Charlotte; it wasn’t immediately clear how many of them will move to Akron.
Relocating Babcock & Wilcox is intended to save the corporation money, provide contemporary workspace to employees, and also signal to investors and the public that B&W will be around for the long term, Kass said. B&W signed a 15-year lease with renewal options for another 40 to 50 years at the East End.
In turn, B&W’s current five-building campus on South Van Buren Avenue in Barberton will be purchased, redeveloped and repurposed by the two partners in the East End, Industrial Realty Group and Industrial Commercial Properties.
The company’s top executives will move from Charlotte to the East End, solidifying B&W in Northeast Ohio, Kass said.
B&W has been struggling with a changing marketplace as electric utilities increasingly burn cheaper and cleaner fracked natural gas, not coal, as well as with costly problems in some overseas projects. It also has been under pressure to sell itself to its largest shareholder. The company’s stock price has plummeted and it is selling off non-core assets to improve its finances.
Even with those outstanding issues, the move to Akron makes sense for the company, Kass said.
One big reason is the new headquarters is an opportunity to save money, which is important to investors, she said. The company is getting a package of city, county and other financial incentives.
“There’s a tremendous cost savings,” Kass said. “It’s unusual that you can save a bunch of money, move to a facility that has tremendous amenities that they’ve created in the East End location, and give us the ability to attract and retain talent. Because this is the kind of space today’s workers would like to be in. It’s an asset for us.”
The new location embraces the architecture of the former Goodyear facilities but with up-to-the minute design and features, Kass and others said.
“We’re a 151-year-old company, so to be able to move to a space with modern amenities but still have that historic feel, it’s a magical combination for us,” Kass said.
The company first explored moving a couple of years ago and then put it on a back burner, Kass said. She made relocating the headquarters a priority after becoming CEO.
B&W’s main building in Barberton was built in 1958. Kass and other executives said the size, layout and design from that era don’t meet today’s needs and expectations. Rebuilding and renovating the Barberton campus would have been too costly, they said.
B&W has been in Barberton since 1906.
B&W could not find a solution in Barberton fast enough and at the right cost, Kass said. Barberton officials proposed a number of options that did not work for the company, she said.
“We realize we’re moving from one city to another,” Kass said.
B&W will take up as much as 180,000 square feet of custom-designed office space in the East End.
The complex has a total of 1.4 million square feet of developable area; about 450,000 square feet is in the former Goodyear headquarters building. (The Akron tire maker in 2013 moved into its state-of-the-art headquarters on nearby Innovation Way.) Health insurer SummaCare in May finished moving into the East End with 300 jobs, taking up 65,000 square feet of space. ICan Schools has been on site since 2013 with 42,000 square feet.
“B&W wanted this kind of cool industrial look,” said Chris Semarjian, owner of Solon-based Industrial Commercial Properties and partner in the East End. “So we blasted the deck, we painted the steel, we blasted the brick on the facade and we gave them a couple ideas with the furniture package on what the space can look like.”
“We’re going to put all-new glass on the backside of the building,” Semarjian said. “The light is just going to go crazy.”
Work is nearly complete on rebuilding the old main entrance area off East Market Street to resemble a hotel’s front lobby; the public space will offer food, a beer and wine bar and an interior open-air patio. The developers are also building an indoor exercise facility with a room for hitting golf balls.
There will be private offices as well as so-called huddle areas and fun spaces for B&W, Semarjian said.
“Everyone will have some access to daylight, which I personally think is a great improvement,” Kass said. “I want light and collaboration.”
B&W’s space is not yet fully designed and furniture is not picked out, Kass noted.
“We are going for a more modern feel,” she said. A big part of the design will make it easier for employees to interact with each other, she said.
Meanwhile, big, ostentatious offices send the wrong message, she said.
“That’s not the kind of company we are today and not the leadership team that we have,” she said.
Another draw was the Hilton Garden Inn that opened in 2014 as part of the East End project. B&W sees the hotel as an amenity for its business travelers. B&W operates globally and has about 5,000 employees worldwide.
B&W’s financial package includes incentives from the city of Akron, Summit County, the Development Finance Authority and others.
B&W was spun off in 2015 as a publicly traded fossil fuel and renewable energy company from what is now called BWX Technologies Inc.; the previously combined business, Babcock & Wilcox Co. had been headquartered in Charlotte. B&W kept its headquarters in Charlotte while BWX, which is a nuclear power-focused energy and defense company, went to Virginia.
Kass, 47, succeeded Jim Ferland as B&W’s CEO in February. She has been with B&W since 2013 and previously was head of the company’s industrial segment.
While B&W shed jobs in 2017 and this year, Kass said there is room for B&W to grow in the East End Office space.
Earlier in August, Babcock & Wilcox Enterprises Inc. reported a second-quarter loss of $265.8 million, or $2.12 per share, on revenue of $291.3 million. B&W had an adjusted loss of $96.2 million for the quarter.
Beacon Journal reporters Betty Lin-Fisher and Doug Livingston contributed to this report. Jim Mackinnon covers business and county government. He can be reached at 330-996-3544 or firstname.lastname@example.org. Follow him @JimMackinnonABJ on Twitter or www.facebook.com/JimMackinnonABJ