(Interesting article on a columbus newspaper.)
LEAVING ON A JET PLANE?
NetJets, one of the sexiest businesses in town, suddenly feels unappreciated. Now it’s looking for love in Raleigh and Orlando.
by dan williamson / December 13, 2007
Ben French
“They want to be embraced”: The NetJets facility at Port Columbus
NetJets Aviation is a lot like the baseball player Alex Rodriguez. As you sit on the other side of the negotiating table, it seems so self-absorbed and greedy that its threats to bolt for another city tempt you to say, “Good riddance.”
On the other hand, it puts up great numbers. So you end up gritting your teeth and forking over whatever it wants.
State and city officials are doing just that, scrambling to put together a deal that will persuade one of Columbus’s most glamorous companies to maintain and expand its permanent home here.
“Of all the companies to have in Columbus, NetJets is a pretty good one,” said Bob Milbourne, president of the Columbus Partnership.
But he and others familiar with the negotiations are worried they’ve already lost it.
Currently owned by billionaire Warren Buffett’s Berkshire Hathaway conglomerate, NetJets is an international company with a clever business model: It allows rich people to avoid the hassles of commercial air travel without the expense or responsibilities of owning their own planes outright.
Through its headquarters on Hamilton Road next to Port Columbus, NetJets allows people to purchase stakes in private airplanes so they can have them more or less at their disposal. The company employs about 1,500 people at its Columbus headquarters and is growing.
Earlier this year, NetJets declared itself unsatisfied with its current conditions and is listening to other suitors, namely Raleigh, N.C., and Orlando, Fla.
Word on the street is that city officials, as much as they’d hate to lose the company, wouldn’t miss the people who represent it. Some sources say Columbus’s negotiators have found their counterparts at NetJets to be insulting and difficult to work with.
NetJets, meanwhile, feels unappreciated and would simply like its home city to show it the kind of affection with which Raleigh and Orlando have showered it.
“They want to be embraced,” said Milbourne, whose organization, the Columbus Partnership, is composed of the city’s most powerful business and civic leaders. “For whatever reason, NetJets
hasn’t really felt like Columbus has embraced them, loved them, as a major employer in the community.”
A team headed by Ohio Lt. Gov. Lee Fisher plans to make a presentation to NetJets corporate leadership Monday and expects a decision sometime next month.
“I’m feeling very good about it,” Fisher said this week. “The discussions have been very positive.”
However, Milbourne said he thinks it could go either way.
“It’s going to be a close call,” Milbourne said. Raleigh, in particular, is likely to provide stiff competition for Columbus, Milbourne said.
“We’ve got a package that’s been put together, and it’s about as good a package as Ohio and Columbus can put together,” he said. “The question is, is it as good as what North Carolina can put together?”
Milbourne said NetJets has been aggressive in its demands.
“That would be fair to say. On the other hand, North Carolina and Florida have been aggressive in making an offer that they would like Columbus to meet,” he said. “I’m sure they would interpret that as, ‘Why wouldn’t the city we’re currently in be as competitive with their offer as a city that we might go to?’”
NetJets has three tangible requests, Milbourne said.
The first is a relationship with Ohio State University that would allow the company access to a steady stream of college-educated potential employees.
The second is the ability to build a major corporate headquarters on International Drive near the runway—a request that could be complicated by a nearby radar station.
The third is an economic incentives package, including “training money, workforce development money, internship programs,” Milbourne said. “They want us to offer up everything that we know how to offer up, and we’re trying to do that.”
And then there’s the love thing. “When you go to North Carolina and you say, ‘Well, we might move our whole company to your location,’ I’m sure the reaction is, ‘We will love you to death,’” Milbourne said.
“They compare that to the way, for whatever reason, they feel they have been treated in Columbus. They say, ‘No one has ever really treated us as a major employer in Columbus, and people have kind of taken us for granted,’ and that’s kind of a natural reaction that I can understand.”
How did the NetJets-Columbus relationship get to this point?
The lieutenant governor said he’s unsure. Fisher, who is also Ohio’s development director, said he learned in late October that the company was giving “serious consideration to relocating and looking at other states,” and he immediately arranged a meeting.
“At that meeting, I did become aware of the fact that there had been some discussions prior to that with the chamber of commerce and the city of Columbus,” Fisher said.
“I did not sense any unhappiness. It was really that they felt that other states had been very responsive, and they wanted to make it clear that they really were in a situation where they had to look at all their alternatives. But they never expressed to me that they were unhappy with the city or the chamber. It’s possible that they’ve said that to others.”
Sources say NetJets officials have told people they were virtually ignored when they approached the city and Columbus Chamber in March about improving their facilities. So in July, NetJets CEO Richard Santulli determined his company wasn’t valued here and would look elsewhere.
Columbus officials, on the other hand, have privately told people they’ve been responsive to NetJets. However, they think they’re being jerked around by an arrogant negotiating team led by David Powell, a former Columbus Chamber executive. Powell initially represented NetJets on behalf of Schottenstein Zox & Dunn before joining the company full time.
Powell declined to speak publicly about his role in the negotiations.
“I’ve been involved with a project,” he said last week, “but it’s nothing that I’m going to talk to you about.” He referred questions to NetJets’ communications office, which responded by referring to a Nov. 2 statement released in response to a story about the negotiations in the Orlando Sentinel.
“As NetJets business continues to grow and as we expand and add more employees and more aircraft we also must add new infrastructure to maintain the highest standards of service and safety,” the statement said. “We are looking at adding new buildings in Columbus and perhaps outside the Columbus area as well.”
Columbus Chamber President Ty Marsh wouldn’t comment on the NetJets situation. Columbus Mayor Mike Coleman’s office declined to characterize the negotiations other than to say the city is doing all it can.
Mike Reese, Coleman’s chief of staff, said the mayor has been “very aggressive” in his efforts to keep NetJets. Reese said he’s unsure when NetJets first contacted the city but that negotiations have heated up considerably.
“The last three months it’s been very, very intense, so to speak, but I’m sure it started well before,” Reese said.
Asked if Columbus could have done more to make NetJets feel loved, Reese said, “I don’t think that’s our role. I think our role is to go after them as hard as we can.”
He added, “The mayor is fighting for jobs here, like he always does, and NetJets, if they weren’t important, then we wouldn’t be fighting as hard as we are.”
NetJets evolved from a company called Executive Jet Aviation, which began in Columbus as the world’s first business-jet charter operation in 1964. It was founded by Dick Lassiter, an Air Force buddy of the late Paul Tibbets, the famed pilot of the Enola Gay, which dropped the atomic bomb on Hiroshima.
Tibbets, who died last month, joined the company in 1966 and became its president and CEO in 1975.
When Tibbets retired in 1986, he handed the company off to Santulli, a New York investment banker who brought with him the fractional-ownership formula, which was called Nationwide Efficient Transportation, or N.E.T. Jet Systems.
The business—which eventually became known as NetJets—continued to flourish through 1998, when Warren Buffett’s company bought it. The NetJets business model became even more attractive after the terrorist attacks of 2001, which led to new hassles for air passengers.
Now that commercial air travel is commonly associated with canceled flights and long waits on the runway, Santulli looks like more of a genius than ever. And his product has celebrity heat to spare. NetJets ad campaigns have featured endorsements from Tiger Woods and Buffett’s pal Bill Gates.
So, as Fisher put it, NetJets is “clearly a treasure for Central Ohio.”
“I had a deeper appreciation for the value of NetJets after going through their facility,” he said. “I was blown away by the operations. I couldn’t have been more impressed.”
Milbourne said he has traveled on the company’s planes before and pronounced them “fabulous,” adding, “It’s a pretty convenient way to travel.”
The NetJets folks will appreciate that compliment, but will it be enough?
The state and the city are putting together what they believe is a generous offer, but they know Raleigh and Orlando are doing the same.
“North Carolina is pretty good at this stuff,” Milbourne said. “We don’t know what they’ve offered, but we know that it’s pretty good.”
One example is that North Carolina is promising NetJets strong relationships with the three major universities in the Raleigh area: North Carolina State, UNC and Duke.
“One of the things I keep hearing is they don’t feel that they have the same sort of relationship with OSU as what these three universities are offering them in North Carolina,” Milbourne said. “We are working hard to get an OSU relationship and proposal that will be compelling to them.”
And if it’s not?
“If they’re not in Columbus a year or two from now, we’re not just going to sulk about it,” said Reese. “We’re going to go after the next company.”