Fidelity, others look to grow elsewhere
Employers seeking to avoid tapping out local labor market
By Ross Kerber, Globe Staff | June 27, 2006
Fidelity Investments is one of Massachusetts' largest employers. But that could be a liability for the state as the mutual fund giant decides where to locate the jobs it is creating.
Consultants who help employers decide where to locate facilities say lately many are trying not to put too many jobs in one place, for fear of tapping out the local labor market.
That explains some of the appeal of Jacksonville, Fla., for instance, where Fidelity last week said it would open a call center with 1,200 employees by 2010.
``I've heard companies say that they reach a point where they're competing with themselves" for workers, said Jerry Mallot, executive vice president of the Jacksonville, Fla., Regional Chamber of Commerce.
Among other companies that have come to Jacksonville, such as financial-services giants Citigroup Inc. and Washington Mutual Inc. , ``Most have told us there's a point, which some see as 2,000 or 3,000 people, that is the maximum they can effectively hire and manage in one location," he said.
Mallot used the term ``workforce saturation" to describe the concept, which he said was among a number of factors Fidelity considered in its decision to locate its new call center in Jacksonville instead of Massachusetts. Fidelity spokeswoman Anne Crowley said the company would not publicly predict future employment levels in a particular location such as Massachusetts. But she noted factors she said are driving Fidelity to locate more jobs elsewhere.
``We believe that in order to continue to serve our customers -- 22 million individuals and more than 5,500 corporate plans around the world -- that we need to be located in multiple locations, in order to be closer to our customers, in order to take advantage of multiple talent pools, and to be prepared for contingency-planning purposes," she said.
``The growth of our customer base, which is significant worldwide and not limited to Massachusetts, is driving a large part of our need to be in multiple locations," Crowley said.
Fidelity's intentions toward Massachusetts have drawn much interest since January, when the company said it plans to move up to 1,500 workers to Rhode Island and New Hampshire by 2008. Officials including Massachusetts Economic Development Secretary Ranch C. Kimball have held talks with the company about its employment plans but wouldn't provide details or agree to be interviewed for this article.
Fidelity continues to hire in Massachusetts and now has 12,900 workers in the state, up from 12,800 at the start of the year. But worldwide, its employment has risen to 38,000, up from 37,000 in January.
Fidelity isn't the only local company expanding its workforce more quickly outside of Massachusetts than within. Data storage maker EMC Corp. of Hopkinton, for instance, said last week it will double its workforce in India to 1,600 by 2008. EMC now has 8,000 employees in Massachusetts out of 27,000 worldwide, and is hiring in foreign countries because that is where it has more opportunities to grow sales, said spokesman Michael Gallant. He also noted recent domestic acquisitions that have grown EMC's workforce in other states.
These moves fit a pattern described by siting consultant Dennis J. Donovan of New Jersey: No company wants to get too tied to a particular location. He said clients including retailer Target Corp. of Minneapolis have told him of similar worries. Executives often want no more than 2,500 people in any location, to keep labor costs down, though the number can be higher for headquarters or in big cities.
``You need to be in an area where the competitive demand [for workers] is not so intense," Donovan said.
Fidelity's Crowley reiterated the closely held company expects to keep its headquarters in Massachusetts and remain one of the state's larger employers. She also noted population trends influence Fidelity's thinking.
Though she did not say so, the declining population in Boston and the state's slow-growing population overall will also limit the labor supply Fidelity and other companies can tap -- a chicken-and-egg problem since job growth in Massachusetts also lags behind national trends.
Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, notes that Fidelity's proportion of its total workforce in Massachusetts, 34 percent, is significantly higher than most other companies of its size and is particularly valuable because of its highly paid headquarters jobs. EMC's figure is 30 percent, and other large employers' numbers are lower, as well: Natick medical-devices company Boston Scientific Corp. , employs just 8 percent of its 28,000 workers in Massachusetts, and Waltham defense contractor Raytheon Co. , has 15 percent of its 80,000 workers here.
Financial services companies are especially important because they provide entry-level jobs with opportunities for advancement, said Widmer and others. Call center jobs might pay $11 an hour and have good healthcare and other benefits, said Michael McMahon, a former Rhode Island economic development official who now runs a private equity fund in New York.
Companies create these jobs with an eye on how easily they could get employees to fill them, McMahon said. He cited the example of a new Bank of America call center in East Providence that could employ up to 900 people. While welcome, the decision could make it harder for the state to attract more call center jobs from Fidelity or other employers, he said. ``That was a real drain on talent," he said.
Long a mainstay of the Massachusetts economy, employment in the financial services sector has taken major hits in recent years from an economic slowdown and mergers that eliminated the headquarters first of BankBoston Corp. and then of FleetBoston Financial Corp. From a peak of 55,200 jobs in 2001, there are now just 46,800 people in employed in securities, commodities, and investment services , state figures show.
Joseph D. Alviani , a former Massachusetts economic development official, said the state's population trends will make it harder for the sectors' numbers to recover because of companies' concerns they could become too reliant on the local workforce.
``I think that's a fundamental issue, not just for Fidelity but for a lot of other companies considering whether to expand or locate here," he said.
Ross Kerber can be reached at
kerber@globe.com.