Fidelity: Fla. calling: Hub, fund giant grow apart

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Originally Posted by The Herald

Fidelity: Fla. calling: Hub, fund giant grow apart
By Scott Van Voorhis
Wednesday, June 21, 2006 - Updated: 06:44 AM EST

Sunny Florida is the latest destination for Fidelity Investments, with the Boston financial giant taking the wraps off yet another big out-of-state expansion.
Fidelity will spend more than $27 million in Jacksonville to create one of the company?s largest call centers, a major expansion that comes even as the firm shrinks its Hub footprint.
Fidelity expects to hire 400 in the first year, with the call center, which will provide service to individual investors, ramping up over four years to a total of 1,200 employees.
But the Jacksonville campus is just the latest expansion beyond Massachusetts by Fidelity as other states and cities aggressively seek the firm?s relatively high-paying jobs.
?Let?s face it, Florida by and large is a far less expensive place to operate its facilities,? said John Bonnanzio, group editor at Fidelity Insight. ?If there is a silver lining here, at least these are not jobs going to India.?
Florida and Jacksonville officials aggressively courted Fidelity, with Gov. Jeb Bush pulling $5 million from the state?s Quick Action Fund to lure Fidelity. The company is also applying for other state and county tax breaks.
Meanwhile, Fidelity is quietly laying the groundwork for a massive new campus in North Carolina, executives familiar with the planning say. Fidelity is also steadily expanding already sizeable operations in Rhode Island and North Carolina.
Earlier this year, Fidelity announced it would move as many as 1,500 jobs out of state, most of them now located in downtown Boston high-rises. That will come from the 12,700-strong payroll the company now maintains in the state.
Anne Crowley, a Fidelity spokeswoman, acknowledged that tax incentives were a factor, but said the larger issue is a now-years-long drive by the company to geographically diversify its operations, which employ 37,000 people worldwide.
The company?s expansion comes as its business and customer base has gone global, with Fidelity counting 22 million customers from around the world, Crowley said.
She added that the company remains committed to Boston.
?Massachusetts has been our headquarters for 60 years. It is where the company was founded,? Crowley noted. ?It?s by far the state with the highest number of Fidelity employees.?

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Originally Posted by The Globe

Fidelity to expand Florida operations

By Ross Kerber, Globe Staff | June 21, 2006

Fidelity Investments said yesterday it plans to open a customer-service center in Jacksonville, Fla., creating 1,200 jobs there by 2010, in the latest expansion by the mutual fund giant outside of Massachusetts.

The new employees will work in Fidelity's growing retail brokerage division, in a leased facility that was sited in Jacksonville because of a mixture of economic incentives, geography, and other factors, according to the state and the company.

``We do intend to continue to grow in other locations, because that strategy is what makes sense for Fidelity," spokeswoman Anne Crowley said yesterday. She noted the company also runs call centers in places like Kentucky, Texas, and Toronto. Among other things, the spread-out base helps assure continuous customer service, she said.

Some Massachusetts leaders who have been trying to persuade Fidelity to create more jobs in the Bay State said they weren't concerned by the move, saying Massachusetts wouldn't typically compete for call center jobs.

But the step still serves as a reminder the state should be more focused on keeping and expanding Fidelity's local workforce and that of other employers, said David Begelfer , leader of the Massachusetts chapter of the National Association of Industrial and Office Properties, which represents commercial landlords that house local businesses.

``Call centers aren't the kind of businesses we should be going after, so that doesn't mean much," Begelfer said. But he added that ``All of us in the state, from the economic development people to the private sector, have not spent enough time and resources on the existing businesses in the state, and that's where the growth has occurred and most likely will occur," he said.

Fidelity's intentions toward Massachusetts have drawn much interest since January, when it said it would move as many as 1,500 jobs to Rhode Island and New Hampshire by 2008. That would be more than 10 percent of the company's current Massachusetts workforce of roughly 12,900. Fidelity employs 38,000 people worldwide.

In comparison, the company had 100 fewer workers in Massachusetts and 1,000 fewer people worldwide at the start of the year, and is hiring in both categories.

Yesterday, Crowley said Fidelity won't discuss reports in North Carolina newspapers that it has held talks about locating more jobs there. She reiterated the company's past statements that it expects to keep its headquarters in Massachusetts and remain one of the state's larger employers.

But the jobs it is creating in Florida are significant, she said, ranging from entry-level customer-service jobs to trading, sales, and financial planning positions. ``They're all good-quality jobs," she said, including many that require credentials such as licenses to deal securities.

Previously Crowley has also noted that spreading out its facilities offers advantages such as ``getting us closer to our customers and clients" nationally and opening up a deeper pool of potential hires.

Fidelity currently has 10 retail investor centers in Florida and has been building up its brokerage-services businesses to capture more business from individual investors who want to trade stocks.

As of March, Fidelity said its retail brokerage unit had $715 billion in total client assets, up 21 percent from the same point a year earlier, and 143,089 daily average commissionable trades, 44 percent more than a year earlier.

Since Fidelity's disclosures in January, representatives of both Massachusetts Governor Mitt Romney and Boston Mayor Thomas M. Menino have met with the closely held company to persuade it to expand locally, but officials have declined to discuss any details.

In a press release, Florida development agencies said Fidelity's project requires further approvals. Fidelity will spend about $27.25 million to refurbish the site.

Jerry Mallot, executive vice-president of the Jacksonville Regional Chamber of Commerce, said officials have been in talks with Fidelity for several years to persuade the company to pursue the new location compared to alternatives like expanding existing facilities. The company will be eligible for a tax break of $3,000 per employee and get a grant of $5 million, he said.

Ross Kerber can be reached at kerber@globe.com.

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Fidelity, others look to grow elsewhere
Employers seeking to avoid tapping out local labor market

By Ross Kerber, Globe Staff | June 27, 2006

Fidelity Investments is one of Massachusetts' largest employers. But that could be a liability for the state as the mutual fund giant decides where to locate the jobs it is creating.

Consultants who help employers decide where to locate facilities say lately many are trying not to put too many jobs in one place, for fear of tapping out the local labor market.

That explains some of the appeal of Jacksonville, Fla., for instance, where Fidelity last week said it would open a call center with 1,200 employees by 2010.

``I've heard companies say that they reach a point where they're competing with themselves" for workers, said Jerry Mallot, executive vice president of the Jacksonville, Fla., Regional Chamber of Commerce.

Among other companies that have come to Jacksonville, such as financial-services giants Citigroup Inc. and Washington Mutual Inc. , ``Most have told us there's a point, which some see as 2,000 or 3,000 people, that is the maximum they can effectively hire and manage in one location," he said.

Mallot used the term ``workforce saturation" to describe the concept, which he said was among a number of factors Fidelity considered in its decision to locate its new call center in Jacksonville instead of Massachusetts. Fidelity spokeswoman Anne Crowley said the company would not publicly predict future employment levels in a particular location such as Massachusetts. But she noted factors she said are driving Fidelity to locate more jobs elsewhere.

``We believe that in order to continue to serve our customers -- 22 million individuals and more than 5,500 corporate plans around the world -- that we need to be located in multiple locations, in order to be closer to our customers, in order to take advantage of multiple talent pools, and to be prepared for contingency-planning purposes," she said.

``The growth of our customer base, which is significant worldwide and not limited to Massachusetts, is driving a large part of our need to be in multiple locations," Crowley said.

Fidelity's intentions toward Massachusetts have drawn much interest since January, when the company said it plans to move up to 1,500 workers to Rhode Island and New Hampshire by 2008. Officials including Massachusetts Economic Development Secretary Ranch C. Kimball have held talks with the company about its employment plans but wouldn't provide details or agree to be interviewed for this article.

Fidelity continues to hire in Massachusetts and now has 12,900 workers in the state, up from 12,800 at the start of the year. But worldwide, its employment has risen to 38,000, up from 37,000 in January.

Fidelity isn't the only local company expanding its workforce more quickly outside of Massachusetts than within. Data storage maker EMC Corp. of Hopkinton, for instance, said last week it will double its workforce in India to 1,600 by 2008. EMC now has 8,000 employees in Massachusetts out of 27,000 worldwide, and is hiring in foreign countries because that is where it has more opportunities to grow sales, said spokesman Michael Gallant. He also noted recent domestic acquisitions that have grown EMC's workforce in other states.

These moves fit a pattern described by siting consultant Dennis J. Donovan of New Jersey: No company wants to get too tied to a particular location. He said clients including retailer Target Corp. of Minneapolis have told him of similar worries. Executives often want no more than 2,500 people in any location, to keep labor costs down, though the number can be higher for headquarters or in big cities.

``You need to be in an area where the competitive demand [for workers] is not so intense," Donovan said.

Fidelity's Crowley reiterated the closely held company expects to keep its headquarters in Massachusetts and remain one of the state's larger employers. She also noted population trends influence Fidelity's thinking.

Though she did not say so, the declining population in Boston and the state's slow-growing population overall will also limit the labor supply Fidelity and other companies can tap -- a chicken-and-egg problem since job growth in Massachusetts also lags behind national trends.

Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, notes that Fidelity's proportion of its total workforce in Massachusetts, 34 percent, is significantly higher than most other companies of its size and is particularly valuable because of its highly paid headquarters jobs. EMC's figure is 30 percent, and other large employers' numbers are lower, as well: Natick medical-devices company Boston Scientific Corp. , employs just 8 percent of its 28,000 workers in Massachusetts, and Waltham defense contractor Raytheon Co. , has 15 percent of its 80,000 workers here.

Financial services companies are especially important because they provide entry-level jobs with opportunities for advancement, said Widmer and others. Call center jobs might pay $11 an hour and have good healthcare and other benefits, said Michael McMahon, a former Rhode Island economic development official who now runs a private equity fund in New York.

Companies create these jobs with an eye on how easily they could get employees to fill them, McMahon said. He cited the example of a new Bank of America call center in East Providence that could employ up to 900 people. While welcome, the decision could make it harder for the state to attract more call center jobs from Fidelity or other employers, he said. ``That was a real drain on talent," he said.

Long a mainstay of the Massachusetts economy, employment in the financial services sector has taken major hits in recent years from an economic slowdown and mergers that eliminated the headquarters first of BankBoston Corp. and then of FleetBoston Financial Corp. From a peak of 55,200 jobs in 2001, there are now just 46,800 people in employed in securities, commodities, and investment services , state figures show.

Joseph D. Alviani , a former Massachusetts economic development official, said the state's population trends will make it harder for the sectors' numbers to recover because of companies' concerns they could become too reliant on the local workforce.

``I think that's a fundamental issue, not just for Fidelity but for a lot of other companies considering whether to expand or locate here," he said.

Ross Kerber can be reached at kerber@globe.com.

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