Editorial: A Global Giant With A Good Reputation
When a corporate giant comes in to buy a smaller, locally-based manufacturer, it's usually bad news for local jobs.
Central Massachusetts is riddled with examples, most recently punctuated by the planned closure of H&R 1871 in Gardner, a storied gun manufacturer. The plant was acquired by North Carolina-based Remington Arms as part of its acquisition of Marlin Firearms in December. Only four months later, the news broke that the Gardner operations would be shut down, leaving about 200 people without work. Beyond the loss of jobs, the plant closure also hurts the already economically distressed town of Gardner.
Winners And Losers
And that's usually the story with acquisitions. The reality is when a bigger company buys a smaller rival, there are usually redundancies to be eliminated and cost savings to be had through consolidation. That might mean a better bottom line for the bigger company but the loss of jobs and tax dollars also punches a hole in the local community.
But corporate acquisitions don't always have to mean disaster for the local economy. Take the recently completed acquisition of Morgan Construction, a Worcester-based maker of steel mill equipment, by Austrian corporate giant Siemens.
When news of the deal first broke at the end of last year, everyone's first instinct was panic. Would the deal mean the elimination of Morgan's 400 local jobs? How would the loss of another family-owned business in Worcester impact the community?
The company's CEO Philip "Flip" Morgan came out strongly saying that the acquisition wouldn't translate into another shuttered Worcester plant. He insisted that Siemens was committed to growing Morgan's business, both locally and abroad.
And thankfully, Siemens track record in other parts of the United States seems to back up those assertions.
In a recent New York Times article entitled, "Two Outcomes When Foreigners Buy Factories," Simens was praised for its impact on the town of Holland, Mich., where it acquired a factory that produces wastewater treatment equipment. There, the Siemens deal has meant a twofold increase in local employment, up from 105 to 237.
But for every Siemens, there's a bad corporate player. The aforementioned New York Times piece contrasts Siemens impact on Holland with Electrolux, which bought a plant in Greenville, Mich., two years ago and shut it down, eliminating 2,700 jobs after sending operations to Mexico.
Now, there's no way to predict whether Morgan Construction's local staffing will swell or shrink, but the outlook is bright. According to people in the steel industry, the Morgan acquisition will bring new business into to the Siemens portfolio, meaning there's incentive for them to grow the business.
The indications are that the Siemens acquisition of Morgan could buck the trend and be a catalyst for local growth. Let's make Siemens feel welcome and make it as easy as possible for the company to fuel Morgan's local growth.
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