MI digs deep to win battle with GA for Kmart

[Allan]

Friday, October 22, 2004

Mich. digs deep to win battle with Georgia for Kmart HQ

By Daniel Howes / The Detroit News

Michigan is more in the hunt to retain Kmart Holding Corp.'s headquarters than it was just a few weeks ago.

State economic development officials and Gov. Jennifer Granholm are offering a rich incentive package that appears to have gotten the attention of Kmart Chairman Eddie Lampert, whose willingness to reverse course if it makes good business sense is evident in his surprise CEO shuffle and renewed commitment to rebuild Kmart's ailing stores.

Michigan's offer, if accepted, would easily top Georgia's bid of roughly $30 million to $40 million in tax credits and other incentives, according to sources familiar with the negotiations.

Michigan doesn't have much choice. If it wants to avoid the embarrassment of losing a longtime corporate citizen, the state must top Georgia's offer because it cannot match the lower general business costs - prevailing wage rates, workers compensation and health-care costs - of metropolitan Atlanta, the front-runner for Kmart's headquarters.

The situation is fluid, and no decisions have been made. Kmart and Michigan officials clarified the state's offer in phone conversations Thursday even as a Kmart team was in Atlanta for continued talks.

The future of Kmart's headquarters needs to be settled soon if Lampert wants Kmart's employees to focus on the holiday selling season and, second, if he expects his new CEO, Aylwin Lewis, to begin molding a 21st-century retail culture for Kmart.

Just a few weeks ago, knowledgable economic development pros in Lansing and Oakland County expressed doubts that Michigan could make a serious play to retain the Troy-based retailer. The president of the Michigan Economic Development Corp. saw an "uphill battle" to keep a company "that wants to leave."

That still may happen. But packing up and handing out pink slips to more than a thousand headquarters employees and setting up shop in Atlanta wouldn't be cheap or without disruption. Then factor in the likelihood of discrimination lawsuits alleging that one reason behind Kmart's move was to purge "deadwood" that just happened to be older and more expensive.

Viewed that way, it's cheaper and a lot less risky to switch CEOs and charge the new guy with engineering a culture change than roll the dice with a move that could culminate in a deep legal morass, bureaucratic chaos and spiraling costs.

Lampert is about making money, not blowing it on a relocation whim that wouldn't necessarily enhance Kmart's chances for real revival. Business success depends on leadership, the right product, efficient operations and how all three mesh - not where they're managed from.

If Michigan prevails, voices will rise to protest the public willingness to put taxpayer resources behind a company that has spent a decade struggling to survive. Let them complain, after they explain how losing Kmart and 2,200 headquarters jobs is a good thing.

The state needs to make an aggressive play to keep Kmart. All Kmart needs to do is prove that it was worth the trouble and expense.

Daniel Howes' column appears Sundays, Wednesdays and Fridays. He can be reached at (313) 222-2106 or at [email protected]. Catch him Fridays with Paul W. Smith on NewsTalk760-WJR.

[peaceloveunderstanding]

stupid atlanta. Why must they pollute the rest of the world with their noise. Why can't they stay within their 10,000 mile metro!

Im joking.

Seriously though, this would a terriable blow to Michigan's moral. It seems as nothing good has come from this current govenor.

[baldy]

You'll be happy to know they're not moving to Georgia!

They ended up buying Sears a few months ago, if you can actually believe that, and have just recently stated they plan on moving out of their headquarters in Troy within the next year.

[Jonzo]

It seems as nothing good has come from this current govenor.

<{POST_SNAPBACK}>

No this current governor is great. She has to unfortunatley clean up a very large mess left by our last govenor who, in my opinion was one of the worst govenors the state ever had and is one of the main reasons that the state is in such bad shape today.

[Allan]

No this current governor is great.  She has to unfortunatley clean up a very large mess left by our last govenor who, in my opinion was one of the worst govenors the state ever had and is one of the main reasons that the state is in such bad shape today.

<{POST_SNAPBACK}>

I would say that I have to agree. So far she's spent her term cleaning up the budget mess made by Engler. I really wish she would do more to help out the economy though. The economy is really struggling, and Michigan is lagging behind the other 49 states. The state is loosing many of its best and brightest young people to other states. I will probably be one of those people in a few years. I would prefer to live in a liveable, walkable city with mass transit. Detroit just doesn't cut it for me, and there are no other large cities in Michigan. The city is being mismanaged, and I don't think I could live in a place that can barely provide its residents with basic services. I used to think that I could be a part of the city's rebound, but now I am even questioning if the rebound is actually happening. Other cities like Detroit have been revitalized, like Pittsburgh, for example. However, its revitalization picked up a lot of momentum fairly quickly. Detroit's revitalization is kind of sputtering along. It's going, but we've yet to see if it is going to pick up speed, or if it's going to fade away. That's my personal take on the whole thing, anyway.

[Pachuco]

Maybe they might choose Flint as a location.

[snoogit]

last I heard Kmart was moving to Chicago to be closer to sears

[bobliocatt]

Whatever happened to the idea of K-mart moving their headquarters to downtown Detroit? If they move to Chicago, then that's no better then them moving to Atlanta.

[Allan]

Kmart is still maintaining a "significant presence" in metro Detroit. They are selling their Troy headquarters and moving somewhere else in the metro. Where will that be? Your guess is as good as mine. I'm sure some will be moving to Hoffman Estates, IL. The rest could end up anywhere in the metro area.

[GaryP]

What has happened since all this news died down? Will Kmart actually keep a presence in Troy?

[theSuburbs]

I'm eager to learn more!!

[Allan]

Kmart is selling (or have they already?) sold their Troy HQ & are moving to smaller offices. A significant number of people have been layed off as part of the restructuring.