Making it in Massachusetts
Historically, The Globe 100 has focused on Massachusetts-based companies. But as local corporate icons have been taken over by out-of-state owners, and the country as a whole has seen steady consolidation in almost all industries, The Globe 100 has worked to deepen its coverage of national companies with major operations here.
How do big US companies see Massachusetts? What do they like -- and loathe -- about doing business here? We convened executives from three major players on the Bay State's economic landscape: Donna C. Cupelo, president of Verizon Communications Inc.'s Massachusetts/Rhode Island operations; Anne Finucane, Northeast president of Bank of America Corp. and Boston-based head of its global marketing and corporate affairs; and Tim Pardue, a district manager for The Home Depot Inc. overseeing stores in Massachusetts, New Hampshire, and Vermont who also has run Home Depot operations in the Deep South. (Home Depot, based in Atlanta, is the best-performing company on this year's new Globe National 25 scoreboard of companies operating here, which also includes Bank of America and Verizon.)
They spoke with Globe 100 editor Peter J. Howe at the bank's Boston offices. Edited excerpts follow:
GLOBE Considering all the high costs and headaches you face here, how good a market is Massachusetts for you?
FINUCANE This is, at least for us, a great state to do business in for a number of reasons, not the least of which is a very attractive customer base, a very attractive employee base. Our global wealth and investment management business here will be generating just in the first quarter alone about $2 billion in revenue. For the more bread-and-butter business of banking, commercial business, retail business, we've seen double-digit growth in the past year or so.
PARDUE We've got 48 operations here in Massachusetts, and we think there's going to be some continued growth. We definitely feel it's a good spot to be.
CUPELO Verizon views Massachusetts as one of its top 10 marketplaces in the nation. One is the customer base -- you're hearing the same thing from me -- but for very different reasons. They're very technologically savvy here. The human capital is a very, very big advantage, the employees we've been able to hire. We work very closely with the colleges and universities. We have our Verizon laboratories here in Massachusetts, one of just two sites in the country, about 500 people in Waltham. They test everything from technologies that we're offering our customers today to technologies that are being attempted by real innovators in universities and research labs.
GLOBE But you'd put call-center jobs in West Virginia, right?
CUPELO I would challenge that. We have some very big call centers here. Probably about 7,000 of our 14,000 employees in some way are working in the call centers around New England, primarily in Massachusetts. They need to have gone to a two-year college or four-year college and acquire the technical ability to communicate with customers, probably more so than ever. I know the cost of labor here is much higher, but it's balanced by who we need to serve our customers.
GLOBE Did ex-Fleet customers here freak out when the Bank of America people in North Carolina began having your associates actually greet people coming into the bank? That's so not Boston.
FINUCANE Having been born and bred in Massachusetts myself, I didn't know how it would work either. But I'm happy to report that it's been very successful. The whole Bank of America approach of greeting people, welcoming them, has obviously been fruitful for the company -- a 10 percent or greater improvement in our customer sales. I will tell you I think, initially, for both the associates and customers it took some adjusting to this friendly manner.
GLOBE Home Depot had to pay a nearly $4 million settlement four years ago over this unusual Massachusetts rule requiring you post a price on every single store item. Is that a hassle?
PARDUE It's probably one of the most unique things in this area. It definitely benefits the customers and consumers to come in and be educated to what the products cost. From a retailer's perspective, it's been a challenge. We work hard to make sure we're in compliance with it.
GLOBE And zoning and real estate costs must make it far more expensive to build stores here.
PARDUE That would be a challenge. Obviously, our locations take up a significant amount of space. We try to be good neighbors to our communities, too. It's probably a little bit more of a challenge in this area than others making sure we have the right areas. Permitting, the time from decision-making to opening the doors of the store, I think it probably does run a little higher here.
FINUCANE It isn't so much about laws and regulations. Massachusetts is a different state from many others in the way press and politics are in the drinking water. The level of engagement for business in the community is probably greater than it is in other parts of the country -- which I think is a good thing. But it's certainly different.
CUPELO In Texas, for Verizon to get into a new market, the video business, it takes approximately 14 days from the time of application. In Massachusetts, because of policies and the way we do local government, it takes anywhere from nine to 15 months, doing the exact same video service. A company like ours will have to decide, for its future, do we put another $400 million this year in Massachusetts? Or do we put it in Texas where it takes 14 days? Or in Virginia where it takes 30?
GLOBE Hasn't Massachusetts lost something by losing so many locally headquartered companies? How much do people in Charlotte or Atlanta or New Jersey really care about us?
FINUCANE We spent $10 [million] or $11 million in Massachusetts alone on philanthropy this last year. We've committed $100 million to New England over a five-year period. Those are dollar amounts and commitments, frankly, in a smaller operation I don't know that we could have made.
PARDUE Home Depot does something called a ''KaBOOM Build," where we come in and build a playground for youth. We had about 150 people in Taunton doing one recently and 180 come out in Springfield. This is volunteer time. It's sweat equity that we're putting back into the communities. We're fortunate to be able to bring that into Massachusetts.
GLOBE Is the new state health insurance mandate with the employer tax bad for the economy?
PARDUE I think it'll benefit the people of the state, and big businesses will definitely benefit from that as well.
FINUCANE We have an honorable mission here that we all think, both from an employer level and from a consumer level, is a good thing. We need to execute now.
CUPELO And the nation is watching, really. It's not just other states. National policy could be derived from what we do. Do we like every aspect of what was passed? No. But overall, it is the right direction to reduce payments into the uncompensated care pool.
We do business with probably about 9,500 small businesses in Massachusetts, and they're worried. How do we care for them in a way that doesn't corrupt the system we intended to implement -- but also does not discourage those folks who come up with the great ideas to move somewhere else?
GLOBE What states could Massachusetts policy makers learn from?
CUPELO In Maryland, there are some very attractive economic development incentives to grow call centers. Maine, too. Virginia has one of the best public education systems, both lower and higher ed, and they are constantly relooking at their tax policies and streamlining technology taxes. The Carolinas have great systems for site location and approval.
FINUCANE In Rhode Island, there's a real effort to create tax incentives to bring greater employment there. We were able to open and put 900 people in the call center in East Providence in very quick order.
GLOBE And Verizon put a big call center for your FiOS telecom/TV operation in Providence, too.
CUPELO Bank of America and Verizon were in similar situations in Rhode Island because of the incentives, job training, other kinds of incentives, like software sales tax incentives, it really was very competitive.
GLOBE What's the best thing the next governor can do for the state's economy?
CUPELO The new governor really needs to take stock of all the industries and not just fall in love with just the new and hot, like biotech. Take a look at healthcare, education. The technology sector is not dead. It has changed since the 1990s. It is not dead. Financial services has come back in a very different way but strong as ever.
FINUCANE Recognition that growth in our economy does not mean that a company has to be based here. We've concentrated too much time and effort on what is headquartered here. I'd concentrate on what's growing here.
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Streaming audio and podcast versions of the round table interview are available at www.boston.com/business/globe/Globe_100. 