Mercedes-Benz on Tuesday confirmed that the German auto giant will move its U.S. headquarters from New Jersey to metro Atlanta in one of the most prestigious corporate recruitments for Georgia in years .
The relocation will involve about 800 jobs — and possibly as many as 1,000 — and the company is likely to pick a spot in Sandy Springs or Alpharetta, commercial real estate executives said. It’s unclear how many workers will relocate from New Jersey and how many the company will hire here.
Perhaps more notable than the number of jobs is the signal sent by a gilded global automotive brand in picking Georgia, a state still left with a lingering hangover from the Great Recession.
While the region is still recovering from a brutal downturn — the state’s unemployment rate of 7.2 is about a point and a half higher than the national average — job growth has accelerated. Georgia offers a low-tax environment, top educational institutions including Georgia Tech and Emory, and daily flights to Germany from the world’s busiest airport.
Gov. Nathan Deal called the move “further affirmation that Georgia is headed in the right direction.”
However, he offered no details of negotiations that led to the announcement, and it’s yet unknown how much the state and local governments will pay in tax credits and other incentives. The governor said a mix of state and local tax breaks and jobs credits were discussed. The company also might qualify for grants from the state’s two “deal closing” funds.
Mercedes-Benz USA President and CEO Stephen Cannon called Atlanta “a premier city” that puts the corporate hub closer to the port in Brunswick, where the company imports automobiles, as well as to its U.S. plant in Alabama.
Cannon credited New Jersey for being the company’s longtime U.S. home and for working with the auto giant as it weighed its options. But Cannon, in a news release, said “it became apparent that to achieve the sustained, profitable growth and efficiencies we require for the decades ahead, our headquarters would have to be located elsewhere.
“That brought us to Atlanta,” he said.
Mercedes said it will shift its executives and staff in phases starting in July, initially into a temporary quarters near Perimeter Mall. The company is still deciding on a final location to build a corporate campus, which it expects to open in early 2017.
Mercedes-Benz ranks with UPS, NCR and Newell Rubbermaid among the largest corporate nameplates to move to metro Atlanta in the past 25 years.
State officials said last month that more than 120 auto companies have invested more than $5 billion in Georgia in the past six years. Automotive firms employ 18,000 people in the state.
That growth comes after Georgia lost the Ford factory near Hartsfield-Jackson International Airport and the General Motors plant in Doraville. But the state, and the rest of the South, has gained traction with suppliers and import carmakers such as Kia.
Many foreign auto firms have planted roots in South, drawn by low business costs, a largely non-unionized workforce and ample incentives.
The Atlanta region also has drawn AT&T’s investments in the “Connected Car,” while Georgia Tech has worked on autonomous driving and other technologies. GM recently opened a technology center in Roswell. Porsche, which has long had its North American offices here, is building an expanded complex with an “experience center” near Hartsfield-Jackson.
The new Mercedes facility will include corporate functions such as accounting, marketing and vehicle distribution, but no manufacturing.
Mercedes’ move out of the higher-tax Northeast may reflect a trend by foreign auto companies to plant not only factories in the South, but corporate offices as well.
Toyota announced plans last year to move its U.S. headquarters from California to Texas, and rumors have swirled in the auto industry that Honda may be the next to leave the Golden State, Kelley Blue Book senior analyst Karl Brauer said.
Mercedes’ chief rival, BMW, is also based in New Jersey and has a factory in South Carolina. Brauer said BMW will also likely consider relocating.
“The unraveling of traditional U.S. auto industry hubs continues,” Brauer said, adding that in the past 10 years “automakers have started prioritizing tax laws, cost-of-living expenses and overall quality of life above proximity to established ‘car towns’ like Detroit, Los Angeles and New York.”
It makes business sense for Mercedes to be near its Alabama factory, and its Sprinter van facility in South Carolina, he said. When Mercedes considers another factory, Brauer said it will likely be “within a few hundred miles of Atlanta.”
Real estate executives have told the AJC Mercedes wants a new building with 250,000 square feet and land for expansion.
The company has looked at sites along Abernathy Road and Ga. 400 and the existing Lakeside Office Park on Glenridge Drive for a redevelopment project, two real estate insiders said.
Mercedes said a regional office and parts distribution functions will remain in New Jersey, the company said. In the release, Mercedes-Benz said the move would “affect” about 1,000 jobs.
Tuesday morning, Fulton County’s development authority voted to take the first step to offer tax incentives to the company, with two Mercedes-Benz attorneys at the meeting. One lawyer described the project as 800 jobs and a $93 million investment.
A phone call at noon from Cannon to Deal cemented the move, prompting celebrations among state economic recruiters. The governor said his impression is Cannon “is not wasting any time.”
“He’s anxious to get this process started,” Deal said.
What: Mercedes-Benz is a unit of Stuttgart, Germany-based Daimler AG. Mercedes is one of the world’s top brands, and builds luxury cars, SUVs, crossovers, as well as commercial trucks. The U.S. division handles customer service, marketing and distribution for Mercedes, Sprinter Vans and the smart brand of vehicles.
Sales: The Mercedes-Benz USA division reported sales on Monday of 330,391 vehicles in 2014, up 5.7 percent from 2013. Kelley Blue Book said Mercedes is No. 2 behind BMW in U.S. luxury auto sales.
Employees: the U.S. division employs about 1,000, and Daimler AG employs about 282,000.
Sources: Daimler AG, Mercedes-Benz USA and Kelley Blue Book