(The following story by Stacie Hamel appeared on the Omaha World-Herald website on January 15.)
OMAHA — Union Pacific Corp. will move 300 information technology jobs to Omaha, bringing to 1,038 the final number of jobs it will move from St. Louis to its new headquarters under construction.
Gov. Mike Johanns announced the final tally at a Tuesday morning press conference at the Capitol.
“What we have announced today is a massive payroll, and that payroll pays taxes,” Johanns said. “It’s almost immeasurable to describe what these jobs do.”
The company previously had not specified the number of jobs, indicating at times that at least 500 and as many as 700 positions would move.
The final number is more than double the 500 needed to qualify for tax incentives the company said were instrumental in determining the size of its 19-story building at 14th and Douglas Streets.
Union Pacific had planned to keep the information technology jobs — which have an average salary of $70,000 — in St. Louis. The 738 other positions — a mix of accounting, finance and customer service — have an average salary of $50,000.
Dick Davidson, U.P. chairman and chief executive, said final plans for the headquarters building made it clear that there would be room for the IT workers. He called Tuesday’s announcements “a banner day for the company.”
“Our new office building and the synergy we’ll be able to achieve . . . will make it possible for us to put together a very efficient operation,” he said.
Union Pacific’s new building is expected to be partially ready for occupants in May. The company expects to be finished moving in August.
The IT employees were told Tuesday that their jobs would move, though they had been informed of the possibility 10 days ago, said spokeswoman Kathryn Blackwell.
Annual payroll for the 1,038 jobs was estimated at about $62 million, excluding benefits.
The company still plans to sell its old building at 14th and Dodge to the City of Omaha for $1, Blackwell said. The city has not announced plans for the building.
Davidson said he expects that about 80 percent of employees offered relocation will move, “so there will be hiring opportunities for people from Omaha and the state.”
Tax incentives under the Invest Nebraska Act and Legislative Bill 775 were the determining factor in moving jobs to Omaha, Davidson said. Under the Invest Nebraska Act, a company must invest $200 million and create at least 500 jobs to receive a 15 percent investment tax credit.
Union Pacific will invest $260 million, the cost of its new building.
“As far as bringing people from St. Louis to Omaha, every bit of it is attributable,” he said. “The incentives programs are what enabled that.”
Johanns said states that don’t offer tax incentives lose out on economic development and said what Nebraska offers isn’t spectacular compared with other states.
“Clearly, today’s announcement is the reason we do incentive programs in Nebraska,” he said.
Union Pacific did not release an estimate of tax credits it could gain.
They are performance-based, Blackwell said, and the company will receive no tax breaks until it fills the jobs and meets other requirements, including being audited by the state.
Under the Invest Nebraska Act, the company’s $260 million investment would earn an income tax credit of $39 million, which it could spread over 10 years. Or the company could choose an income tax credit of up to 5 percent of the payroll of workers added to the headquarters. That credit could be taken each year for 10 years.
The Legislature’s fiscal office had estimated in 2001 that under both laws, the project would bring U.P. a total tax benefit of $54.5 million, using present value over the time period 2002-2018. The analysis assumed fewer jobs, a slightly lower investment and that 80 percent of the jobs would be filled by people moving into the state.
It also assumed that the company’s tax liability would be large enough that it could take advantage of the full tax credit.
“That’s not necessarily true,” Don Yelick, a state analyst said.
Mark Vasina, who is part of a petition drive to repeal LB 775, said incentive programs remove revenue that the state will never get back.
“I don’t doubt that LB 775 and Invest Nebraska Act and other investment programs bring some jobs to the state and help retain some jobs. That’s not the question,” said Vasina, of Lincoln. “At what cost are we bringing these jobs?”
He said a culture of competition among states has developed, and state leaders would do better to forge alliances with surrounding states, rather than view them as competitors for jobs.
“The idea that somehow (residents of other states) ought to be competitors for winning jobs is really a sad comment on how economic policy is developed, not just in Nebraska but elsewhere,” Vasina said. “We are weakening our national economy.”
U.P. will have few nontrain service jobs left in St. Louis after the 1,038 positions are moved. There still will be a law department and some marketing employees who call on customers in the area. Blackwell said the company has no plans to move those employees.
Statewide, however, Union Pacific will continue to have significant employment in Missouri, where it now has about 5,000 workers, Davidson said.
The 1,038 positions will bring Union Pacific’s employment in Nebraska to about 8,000, with 4,500 in Omaha.
Union Pacific also will create a data center elsewhere in Omaha from which it could run the railroad should disaster strike the Harriman Center in downtown Omaha. Such a center now exists in St. Louis.
Moving the 300 IT positions will bring to more than 700 the number of technology professionals U.P. has in Omaha.
St. Louis employees have until the end of January to decide on relocating. The decision might be especially difficult for the IT employees, Blackwell said.
“It was a bit of a surprise to the group, because the plan was to keep them in St. Louis,” she said. “Obviously, for some of them, St. Louis is their hometown, their spouse might have a career there. . . . It’s a difficult time.”
The company offers St. Louis employees information about Omaha through presentations in St. Louis by the Greater Omaha Chamber of Commerce; by posting information on a secured Web site; by informing spouses about the city, schools and benefit packages; and by matching them with Omaha mentors.
“We try to do it so that each employee who wants it has a resource,” she said.