Execs say emotion is key reason to stay on LI

The heart often overrules the head when executives choose to keep their companies on Long Island instead of moving to less-expensive locations out of state.

Leaders of businesses that derive most of their sales from outside Nassau and Suffolk counties -- Canon USA, GSE Dynamics, 1-800-Flowers.com and others -- said they've stayed put largely for emotional, not monetary, reasons.

Jim McCann, chief executive of nationally known 1-800-Flowers, went so far as to say the main reason his corporate headquarters remains in Carle Place is "inertia."

These executives and entrepreneurs like living on Long Island. When they do cite business reasons for remaining, they point to hard-to-measure qualitative factors rather than dollars and cents.

It's useful being near New York City, they said, because it offers access to young, tech-savvy workers and huge markets. The corporate chiefs worry a move would cost them trained employees who might be difficult to find elsewhere.

"Long Island only wins on an emotional basis," said Tom Stringer of Ryan tax services, who helps businesses decide where to expand. "The owners are from here, they fear the unknown, they feel loyalty to the workforce."

The Bay Shore native said out of more than 1,000 projects he's worked on since 2000, no client company has ever inquired about moving here: "Long Island never wins objectively when you compare tax rates, energy costs, etc."

Nassau-Suffolk has lost some key businesses to other states -- most recently, the largest publicly-traded company, Arrow Electronics Inc., moved its headquarters to a Denver suburb from Melville. The loss of aerospace giant Grumman, because of a 1994 merger with California-based Northrop Corp., cost more than 7,400 jobs.

The departure of companies, particularly large ones, has far-reaching consequences, economists said. Jobs are lost. There's less tax revenue to pay for public schools, health care and other government services. And suppliers to the exiting corporation may close or move, hollowing out the industrial base and leading to more pink slips.

Irwin Kellner, chief economist at the MarketWatch information service and retired Hofstra University professor, said, "There is a ripple effect . . . These people who will no longer be employed on Long Island -- they'll be buying less goods and services here."

The recession and its aftermath have forced corporate leaders to examine ways to reduce costs. In such dollar comparisons, Long Island and New York State fare poorly because of high taxes, electric rates and construction and transportation costs. New York ranked 49th out of the 50 states in a business-tax climate index released last month by the Tax Foundation, a nonpartisan think tank in Washington.

The Island's greatest success recently is hanging onto Canon. The Japanese camera maker is constructing its Americas headquarters on a former pumpkin farm in Melville. The $500-million project, set to open early next year, received about $100 million in government aid.

"We probably could have built the building a lot cheaper in some other area," said Seymour Liebman, the Canon official who led the long search for a new headquarters location. "But we would have suffered a real big hiccup if we lost a lot of employees."

About 1,200 people work at Canon's five local offices; that number could grow to 3,000 if the Melville complex expands. Connecticut and New Jersey courted the company.

At 1-800-Flowers, founder McCann expanded on his "inertia" comment by saying, "This is where I'm from. This is where we started . . . I live here. My brother lives here. That's why the company is still here."

Workers skilled in selling products via Facebook, Twitter and other social media websites also have been crucial to keeping 1-800-Flowers rooted on Long Island. Some of them commute from New York City.

The company has operations in a half-dozen other states. Its payroll totals 3,500; 600 to 700 locally. "There is an invisible migration of jobs off Long Island," McCann said. "A company like ours, because of the technologies we use and the ways we work today, can have our people be anywhere."

New York's plethora of large corporations (56 of the top 500 U.S. public companies are based in the state; two in Nassau-Suffolk) make it a prime target for poachers.

"When people say they are interested in looking at the cost of doing business, we're going to be on the first plane up there trying to sell Georgia," said Chris Cummiskey, that state's economic development czar.

Gov. Andrew M. Cuomo and his development chief Kenneth Adams are fighting back with the "New York Open for Business" advertising campaign, which touts tax breaks, elimination of government regulations and Cuomo's drive to slow the growth of property taxes.

Last year, Adams said Empire State Development Corp. backed 22 business expansions on Long Island with $23 million in state tax credits. The projects, valued at $300 million, are projected to create 1,631 jobs and preserve another 5,659.

Local county governments and industrial development agencies are trying to reduce business costs.

In Nassau, County Executive Edward Mangano said not raising property taxes had signaled to companies that the county would "no longer tax and spend . . . job creators to death." In Suffolk, County Executive Steve Bellone said, "We can put together a strong financial case for businesses to remain and grow in our region, not just an emotional one."

GSE Dynamics, a defense contractor employing about 50 workers, is the type of business that Suffolk wants to keep.

The manufacturer's president and owner, Anne D. Shybunko-Moore, calls herself an Island "loyalist."

For years, she rejected offers to leave her Hauppauge base. But a few months ago, she asked South Carolina officials for a proposal.

Shybunko-Moore said GSE's rapid growth, Long Island's high costs and her husband's elderly parents living near Charleston, S.C., led her to take South Carolina's pitch more seriously. She also is talking with New York officials.

"It's not my intention to run away from Long Island," she said. "But I cannot just keep saying, 'I like it here,' when people ask why my company is here . . . I want the facts."

SEYMOUR LIEBMAN
Canon U.S.A. Inc.
11,000 employees; 1,200 in Nassau County

Why it stays: Workers want to live here.

What LI can do to be attractive to business: Eliminate hurdles to construction projects.

JIM McCANN
1-800-Flowers.com Inc.
(3,500 employees; 600 to 700 locally

Why it stays: “Inertia;” proximity to New York City.

What LI can do to be attractive to business: Create vibrant downtowns with attractive apartments for young people.

ANNE D. SHYBUNKO-MOORE
GSE Dynamics Inc.
About 50 employees in Suffolk County; 6 in Georgia

Why it stays: Owners are from here; local suppliers; skilled workers.

What LI can do to be attractive to business: Skills training and affordable housing for workers