The Competition Is in High Gear to Woo Northrop GrummanMarch 04, 2010

 

Northrop Grumman, which announced earlier this year that it was moving its corporate headquarters to the Washington, D.C., area, holds all the cards as the governors of Virginia and Maryland, and the mayor of D.C. woo the defense giant.

The company says that offering the best economic incentive package will be a big factor in its decision to chose a new home, according to an article in the Washington Post. Other key factors involved in the location decision include the quality of office space, proximity to federal clients and quality of life issues, the article noted. Northrop plans to announce its decision in March or in April.

Virginia Gov. Robert F. McDonnell (R), Maryland Gov. Martin O'Malley (D) and Washington, D.C., Mayor Adrian M. Fenty (D) are angling to secure what every political leader in the country seeks: hundreds of high-paying jobs and positive publicity for their respective political parties should Grumman choose to settle in their district. The Post notes that what would normally be a quiet competition has become a competition that will hand — in a very public way — a devastating defeat for two bidders, and a political and economic triumph for the winner. The officials have not disclosed the details about any economic incentives they are offering.

"Just as in poker, people bring varying perspectives to the table and then get caught up in the game," says David Thornburgh, executive director of the Fels Institute of Government at the Wharton School. "And then you get caught up in the bidding, and the next thing you know you've lost your house."

Thornburgh notes that from the perspective of the Washington, D.C., metropolitan area economy, it doesn't matter "a hoot if Northrop is in Virginia, Maryland or D.C." And from Northrop's perspective, apart from any economic sweeteners, the precise location may not be critical. “It could be two miles, five miles or 10 miles in one direction or another, but they are really just relocating people to the D.C. metropolitan area."

This type of bidding war between states goes back decades but has intensified as economic activity has become more mobile, he adds. "There was a time when you needed a river or water supply, so your choices were more limited," said Thornburg. "But now it's more about attracting the best people to a place with quality of life and strong transportation infrastructure."

The outcome will likely reinforce the notion that our national economy is really made up for an interrelated series of regional economies. Each of the states in the area will benefit from the economic activity in its neighboring states. "It really is just political jockeying and a frustrating spiral," he said. "But it's tough because of the political capital at stake."