Motorola’s job cuts undermine Emanuel’s tech hub hopes
Analysis By FRAN SPIELMAN City Hall Reporterfirstname.lastname@example.org August 13, 2012 6:54AM
The Motorola plant located at 600 N. Highway 45 in Libertyville. | Thomas Delany Jr.~ Sun-Times Media
Updated: September 15, 2012 6:07AM
Google’s decision to cut 4,000 jobs worldwide from its wireless phone business — 750 of them at Motorola Mobility in Libertyville — is a political blow that undercuts Mayor Rahm Emanuel’s efforts to portray Chicago as a burgeoning technology center.
In the nearly three weeks since Motorola Mobility announced plans to move 3,000 employees from Libertyville to Chicago’s Merchandise Mart, Emanuel has touted the jobs coup as “game-changing” proof that Chicago was poised to become the “digital capital of the Midwest.”
Now, Motorola Mobility will be bringing 2,250 jobs to the Mart next year — 750 fewer employees than previously planned.
Equally damaging, the corporation the mayor touted as the rock-solid anchor for the Mart’s “technology campus” has been unmasked as a somewhat shaky company in need of a turn-around after losses in 14 of the last 16 quarters.
Emanuel has held news conferences and issued press releases for developments that created fewer than 200 new jobs. To say the 750 Motorola job cuts are an embarrassment to Chicago’s rookie mayor would be an understatement.
The mayor virtually conceded as much by scheduling a blitz of one-on-one telephone interviews in an effort to minimize the political damage.
“It’s not a blow [to Chicago]. We didn’t have any of these jobs three weeks ago. We did not have a headquarters for wireless mobile. We have 2,250 jobs we did not have before and a headquarters in wireless mobile,” the mayor said.
“I’m very sensitive to [the hardship faced by] 750 individuals and their families. I know this is a hard decision. But, when [Google] bought them, they were going to try to reposition the company. I knew they were gonna be repositioned. They were not gonna continue to allow Motorola to slide.”
He bristled when asked whether the 750 Libertyville job cuts would reduce his bragging rights.
“It’s not about my bragging rights,” he said.
He added, “Based on all the calls I’m making to venture capital companies, they’re still planning to come here. Today, United Airlines signed a lease [through 2028] at the Willis Tower. Motorola signed [a 15-year lease at the Merchandise Mart]. I’m gonna continue to say we have Google and Motorola. Remember, they were thinking of moving to Sunnyvale, Calif., or Asia. We’re ahead of where we were just four weeks ago.”
Since taking office 15 months ago, Emanuel has cut hundreds of government jobs while relentlessly pursuing private-sector jobs.
He has made announcements large and small about 35 companies that together will create more than 20,000 jobs. He has used a University of Chicago study that showed Chicago led the nation in job creation over the last year as a clarion call for more corporate relocation.
A mayoral confidant, who asked to remain anonymous, acknowledged that Monday’s announcement is a blow to Emanuel’s efforts to create even more momentum for Chicago as a corporate headquarters and technology hub.
But, the mayoral confidant said the long-term damage has yet to be determined.
“A year from now, if there’s a perception of Motorola Mobility as a hot company and they’ve come out with a fast phone that everybody’s got to have and there’s a buzz around them that Google is uniquely positioned to create, then nobody’s gonna remember the 750 [lost] jobs,” the mayoral confidant said. “Rahm didn’t put taxpayers’ money into it. That was pretty smart. If he gave them $200 million and free rent for the rest of their lives, he’d look like a fool. But the fact that he was touting 3,000 new jobs at a time when there’s a certain contagion to it — who would blame him?”
The job cuts announced Monday would put on hold $100 million in state tax credits the Legislature agreed to, because the agreement is contingent on Motorola Mobility retaining a work force of 2,500 in Illinois, according to the Illinois Department of Commerce and Economic Opportunity. Motorola told the state its head count will fall to 2,256, said spokeswoman Sandra Jones. “The company can reapply for tax credits when its work force returns to at least 2,500,” she said.
Although Emanuel never talked about it publicly, mayoral spokesman Tom Alexander insisted that his boss has known for some time that job cuts were a possibility at a company in the midst of a “corporate restructuring” to reverse nearly four years of operating losses.
“Any time there are job losses, it’s not ideal. But this is an important step to make the company healthy for a long time. . . . We believe this will be a temporary reduction in staff as they get the company going in the right direction,” Alexander said. “They’re still taking 3.5 floors [at the Mart]. They’re still . . . making a $300 million commitment to Chicago [and] taking the same-sized lease. And they have every intention of growing the head count once they get to Chicago. They still want to develop new technologies and advance their business. None of that changes.”
Just last week, Emanuel bragged about the 3,000 new Motorola jobs as he showcased three fast-growing technology companies in the West Loop.
“Right now, within a mile of the Merchandise Mart, there are 5,000 employees in the digital, new economy. That didn’t exist before. There are 71 startups and digital companies, all within a mile of the Merchandise Mart. It’s becoming a new focal point for this new economy that’s adding to the depth and breadth of the city,” Emanuel said that day. “New York is led by its financial industry. L.A. is led by its entertainment [industry]. Chicago’s strength is the diversity of its economy and one of the pieces of that diversity, the depth of its diversity, is its technology force.”
Austan Goolsbee, the University of Chicago professor who wrote the job-creation study and served in the Obama White House with Emanuel, said Motorola’s move remains crucial to the city’s efforts to become a tech hub.
“If they had announced it as 2,250 new jobs on Day One, I think no one would have thought anything different,” he said. “It seems that the wider issue is whether it means that Google/Motorola have some underlying problems that would prevent them from growing in the short term.”