Nestlé to move US headquarters to Arlington, Virginia, bringing 750 jobs
NESTLE USA, the maker of Häagen-Dazs, Baby Ruth, Lean Cuisine and dozens of other mass brands, is moving its US headquarters to Arlington, Virginia’s Rosslyn area, bringing roughly 750 jobs to a part of Virginia struggling with widespread office vacancies.
The world’s largest packagedfood company - which bills itself as a nutrition, health and wellness company - will move in to the region’s tallest building, which has remained vacant since it was completed in late 2013. Nestlé was lured to the area, executives say, by its proximity to law makers, regulators and lobbyists - and more than US$ 16 million in state and county subsidies.
“Frankly, this brings us closer to the heartbeat of our industry,” said Paul Grimwood, chairman and chief executive of Nestlé USA, which is part of the global giant Nestlé SA, based in Vevey, Switzerland. “It allows us to collaborate not just with consumers but also with other important stakeholders in Washington and on Capitol Hill.”
The company’s current US headquarters is in Glendale, California, where it has come under fire in recent years for bottling water during the state’s record multi-year drought. In 2015, Nestlé - which has nine brands of water, including Arrowhead - removed 36 million gallons of water from a natural forest in California to bottle and sell, prompting public criticism and at least one lawsuit.
Nestlé, founded in 1866, has built itself into a global powerhouse with world-wide sales of around US$ 90 billion in 2015. In addition to Nestlé Crunch, Butterfinger and Toll House, the company’s brands include Hot Pockets, DiGiorno, Nescafe, Boost, Gerber and Purina.
With Nestlé’s move, the MidAtlantic region will now boast three major candy makers. Mars, the privately held maker of Snickers, Milky Way and M& M’s, is based in McLean, Virginia, and Hershey is based in Pennsylvania.
In recent years, Nestlé has made a steady push to remove unnatural flavours and colours from its chocolate bars and reduce the sugar in its Nesquik drink powders.
It has also invested in healthcare firms and medical device companies, and earlier this year it brought in Ulf Mark Schneider, a former health- care executive, as chief executive of its global operations.
Virginia officials wooed Nestlé for over a year, said Governor Terry McAuliffe, D. The company considered 20 locations across the country but by October had narrowed its search to Rosslyn and Atlanta.
“Relocation of the Nestlé USA headquarters was under consideration before the election cycle,” said Lisa Gibby, a Nestlé spokeswoman. “We made the decision to come to Washington independent of the election of the president.”
Ultimately, Grimwood said, the state’s incentive package, combined with easy access to transportation and Arlington’s reputation for good public schools, helped seal the deal.
The move brings Nestlé closer to its customers and its productions facilities - 80 per cent of the company’s US products are sold east of the Mississippi River, where threefourths of its 87 US factories are based, Grimwood said. It also helps bring US executives closer to the company’s global headquarters and supports the company’s government-related efforts.
Nestlé spent more than US$ 16 million lobbying Congress between 2012 and 2016 on issues related to environmental regulations, trade and labour, according to public records.
For northern Virginia, the arrival of Nestlé USA, which in 2015 had US$ 9.7 billion in sales, serves as proof that it can look beyond defence contractors for growth.
The state is now home to more than 70 corporate headquarters, including Volkswagen Group of America, Hilton Worldwide and Capital One Financial.
“For us, it’s perfect,” McAuliffe said, adding that he and Nestlé executives finalised the deal four weeks ago while drinking Virginia wine in California.
“We brought in a company that is not dependent on federal government spending. We realise we do have to diversify, which means we have to bring in different types of businesses.”
The commonwealth is offering US$ 10 million in cash grants to Nestlé: US$ 6 million as a Commonwealth Opportunity Fund incentive and US$ 4 million from a Virginia Economic Development Incentive Grant. Arlington County is offering an additional US$ 6 million in incentives – US$ 4 million from performance grants and US$ 2 million in infrastructure updates - as well as additional money for “extensive relocation assistance” to help cover expenses related to the company’s move and training of new hires.
Nestlé will spend an estimated US$ 39.8 million ( RM179 million) building out its share of the 35storey high-rise.
The company will take over 40 per cent of the building, or about 206,000 square feet, on the top nine floors. The move will begin this summer and is expected to be complete by late 2018.
Of the 750 positions in Rosslyn, about half will be new hires, Grimwood said. — WPBloomberg