 | E-Malt.com News article: USA: Battle of beer towns for Miller's headquarters
Keeping Miller Brewing Co.'s headquarters in Milwaukee won't be easy, according to Milwaukee Journal Sentinel, November 6.
Then again, the Packers' overtime victory over the Denver Broncos last week wasn't exactly a cinch, either.
If all goes as planned, Miller will merge its operations with Golden, Colo.-based Coors Brewing Co. in 2008. But the companies have not yet decided whether the headquarters of the MillerCoors joint venture will be in Milwaukee, or in the Denver area.
"I didn't get the sense that it's winner-take-all," said Milwaukee Mayor Tom Barrett, who last week joined Gov. Jim Doyle in meeting with Coors executives to begin discussing how corporate functions might be split between the cities.
Executives from Miller and Coors are saying little about that process. They're still crafting a definitive joint venture agreement, and are seeking approval from federal antitrust regulators.
Site selection consultants say most company executives typically look at similar factors when making relocation decisions. Not surprisingly, they focus on the costs of doing business. Those include differences between locations on taxes and employee costs, said Ron Pollina, who operates Pollina Corporate Real Estate Inc., of Park Ridge, Ill.
Executives at Miller and Coors also will likely consider so-called "quality of life" factors. Those include crime rates, school performance and housing costs.
Finally, there are intangibles, including the question of which company is the buyer and which is the seller. The buyer usually has more to say on relocation decisions, Pollina said.
People shouldn't expect any one factor to influence the decision on where to locate a headquarters for MillerCoors, says site selection consultant Leslie Rubin, who operates Indianapolis-based Rubin Advisors Inc.
"There are so many pieces that come into play," Rubin says. Here are some of them:
Denver, Milwaukee compared on factors involved in picking a headquarters
Miller in Milwaukee
Miller Brewing Co. has 800 employees at its headquarters, at 3939 W. Highland Blvd., and 900 employees at the neighboring brewery complex. The MillerCoors joint venture will not close any of the six breweries operated by Miller, or the two breweries operated by Coors.
Labor costs
The cost of labor is the top factor in site selection decisions, according to the most recent annual survey of executives conducted by "Area Development," a trade publication that focuses on corporate site selections and relocations.
Labor costs represent an advantage for the Milwaukee area. White-collar employees here earn less than their counterparts in the Denver area, according to the U.S. Bureau of Labor Statistics.
The mean hourly wage for management and professional employees in the Milwaukee area was $30.94 in the bureau's most recent survey, compared with $32.47 in the Denver area.
For Milwaukee-area sales and office employees, the mean hourly wage was $15.38, compared with $17.76 in Denver.
Advantage: Milwaukee
Health care costs
But Milwaukee also has some of the nation's highest health care costs.
A Government Accountability Office study released in 2005 found that the Milwaukee area had the 16th-highest physician prices in the country, and the fifth-highest hospital prices.
That same GAO study ranked the Denver area No. 177 out of 319 metro areas in both physician prices and hospital prices.
Advantage: Denver
Taxes
Taxes are another major issue.
The "Area Development" survey respondents rated the state's corporate tax rate as the No. 3 factor in their decisions. (The No. 2 factor, highway accessibility, is a wash. Both companies have headquarters within short drives of interstate highways.)
Wisconsin's corporate tax rate is 7.9%, while Colorado has a 4.63% rate, according to the Federation of Tax Administrators.
However, Colorado requires "combined reporting" for some corporate taxpayers. That practice combines the reporting of profits by a corporate parent and its subsidiaries for tax purposes.
Wisconsin doesn't have combined reporting. That allows parent companies to move income and expenses among subsidiaries, reducing their overall taxes.
Advantage: Uncertain
Airport connections
The Denver International Airport offers 835 daily departures to 140 non-stop destinations, giving corporate travelers a wide range of opportunities to reach customers throughout the country.
Milwaukee's Mitchell International Airport has 235 daily departures to 53 non-stop destinations. Milwaukee corporate travelers also sometimes use O'Hare International Airport, in Chicago. But O'Hare is 81 miles from Miller's headquarters, while Denver International is 35 miles from the Coors headquarters.
Advantage: Denver
Overall business climate
This takes into account a wide variety of factors, including work force quality, energy costs, spending on highways and other infrastructure, and the availability of state and local financial assistance.
Pollina Corporate Real Estate Inc., of Park Ridge, Ill., issues an annual report that ranks the states on their business climates. In the 2007 report, Colorado ranked No. 33 and Wisconsin was No. 44.
Wisconsin's average electricity costs are about 1% lower than Colorado's, and both states offer a range of grants and loans to expanding businesses. But Colorado fared better on infrastructure spending. Also, 32.7% of its residents ages 25 and older have a bachelor's degree or better, compared with 22.4% of Wisconsin residents, according to census data.
Advantage: Denver
Quality of life
This is one of Milwaukee's biggest advantages, said Pat O'Brien, executive director of the Milwaukee 7, the newly formed economic development group for southeastern Wisconsin. Miller's headquarters is relatively close to Milwaukee's vibrant downtown, the lakefront and livable neighborhoods, O'Brien said.
The Milwaukee area also has good public school systems and housing that's more affordable than the Denver area offers, he said.
According to the most recent survey conducted by the National Association of Home Builders, the Milwaukee area ranked No. 76 among 215 metro areas for housing affordability. The Denver area ranked No. 95, with that higher number signifying a lower percentage of homes that are affordable to families earning that area's median income.
Tom Clark, O'Brien's Denver counterpart, agreed that the Milwaukee area has a strong quality of life. But the Denver area, with its cultural attractions and "outdoor lifestyle" recreation opportunities, also does well in that category, said Clark, executive vice president of the Metro Denver Economic Development Corp.
The ski slopes and biking trails of the Rocky Mountains may be among the reasons why Colorado has the lowest rate of adult obesity, according to the latest rankings compiled by the Trust for America's Health. Wisconsin ranked as the 22nd most obese state.
Milwaukee's proximity to Chicago and Minneapolis is a big plus, but Denver wins on another score: the rate of violent crime. In 2006, the Milwaukee metropolitan area reported a violent crime rate of 579.6 crimes per 100,000 residents, according to the FBI. The Denver metro area's crime rate was 427.7 crimes per 100,000 residents.
The acquiring company often has an edge in the relocation decision, said Ron Pollina of Pollina Corporate Real Estate. But it's not clear which company -- if any -- plays a dominant role in the MillerCoors joint venture.
The corporate parents, London-based SABMiller Plc, and Molson Coors Brewing Co., with its headquarters split between Denver and Montreal, will each have a 50% voting interest in MillerCoors. But, based on asset value, SABMiller will have a 58% economic interest in MillerCoors. That means 58% of the joint venture's income will flow to SABMiller.
Leo Kiely, 60, chief executive officer of Molson Coors, will be CEO of MillerCoors and will serve at least two years. He will be succeeded by Miller President Tom Long, 48, who will be MillerCoors' president and chief commercial officer. Pete Coors, 61, Molson Coors vice chairman whose great-grandfather founded Coors, will be chairman of MillerCoors but will not have an executive position. Graham Mackay, 58, chief executive of SABMiller, will be vice chairman of MillerCoors.
07 November, 2007
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