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Goin’ to Carolina

Business Report
December 28, 2009
by David Jacobs

Madhu Beriwal started IEM in Baton Rouge in 1985. Over a quarter-century, her one-woman, emergency-management consulting business grew into a $38 million enterprise with eight branches across the country and about 200 employees here alone.

About two years ago, Beriwal realized she wasn’t running a small business anymore. The time had come to start thinking about the next level, and the best home base for getting there.

So IEM started looking at a handful of regions. At first, Beriwal thought they might be able to drop every city’s vital stats into a spreadsheet and pick their next home quantitatively, but that approach quickly was abandoned. Instead, they tried to visualize how each place might fit into their success. How do they attract good people to this city? What are the travel options? What is the cost of doing business? How aligned is an area with what they want to do? What is that area’s image nationally?

For more than a year, local and state officials tried to convince Beriwal that the future home of IEM’s headquarters could be the same as its first one, while throwing money and perks at her to sweeten the pot. But in the end, North Carolina’s Raleigh-Durham-Chapel Hill area was the clear choice. On Dec. 14, IEM announced the move, with expectations of completing the process by September.

“The three most important factors were education, innovation and collaboration,” Beriwal says.

Let’s take education first. IEM employs more Ph.D.s per capita than many national laboratories, she says, and many have dual master’s degrees. Some of the disciplines in which they work are fairly esoteric, and there might only be one or two available people in the country qualified for a given opening. Attracting such people to Baton Rouge is difficult for any business.

Research Triangle Park, on the other hand, is a 7,000-acre development with more than 170 companies and more than 42,000 full-time knowledge workers, according to its Web site, and is situated near Duke University, University of North Carolina and North Carolina State University. This concentration of highly educated people and progressive businesses presents a twofold advantage over Baton Rouge: The area has a deep bench of potential IEM employees, and a recruit from outside the area reasonably can be assured of finding a job nearby if the IEM gig doesn’t work out. Raising Cane’s relocated its headquarters to restaurant-hub Dallas for similar reasons. If a talented young restaurant executive moves to Big D to work for Cane’s but decides the job isn’t for them, the exec easily can find work nearby without having to uproot their life again.

And while a number of IEM employees have children in local public schools, the system’s negative reputation can scare off professionals with young families, Beriwal says. Other top executives have described the same problem: A recruit might want a professional opportunity in Baton Rouge, but a spouse will veto the move on education and quality-of-life grounds.

Innovation, Beriwal’s second factor, might not entirely be absent from Baton Rouge, but face it: This city is not known for its enthusiastic embrace of new ideas.

“The value of America lies in its innovative capability,” says Beriwal, a native of Calcutta, India. “We would like to be in an area where people are living and breathing innovation, and are receptive to change. We can feed off of that energy, as well as feed into that energy.”

Factor three, collaboration, refers to the ability to work with the universities and local government. Hewlett-Packard grew into a top-10 Fortune 500 company thanks in part to early support from Stanford, and the Research Triangle schools are known for their work with the private sector.

One university organized a meeting with Beriwal and five college deans, all of whom spoke about ways they could work with her company, she says. Years ago, IEM wanted to use a product developed by Carnegie Mellon University, and easily arranged a deal with a few e-mails and phone calls. But over the years, partnering with Louisiana universities has been difficult.

“It is probably a problem with process rather than people,” she says, noting that many people have come and gone in 24 years. “There’s not a good streamlined process for how to work with companies. My guess would be that there are just many steps to it internally, and many signatures needed to do something.”

Asked for an example of help IEM might have needed from government, Beriwal starts talking about flight options, an issue she says can only be addressed by local government and the airport authority. Travel from Baton Rouge to Washington, D.C., where many of IEM’s federal clients are based, can involve a connecting flight and the better part of a day. From Raleigh, she can easily catch a direct flight and be in D.C. in an hour or so.

A tough loss

In the aftermath of IEM’s announcement, officials urged the public not to read too much into the decision. They reemphasized that Albemarle and Bercen, two specialty chemical manufacturers, moved their headquarters to the Baton Rouge area during the past two years, and The Shaw Group recently made a long-term commitment to stay.

“We’ve had an unprecedented string, but this is tough,” City-Parish Administrator Mike Futrell says. “It’s disappointing to lose a home-grown company that started with one employee that owes a lot of its success to the Baton Rouge community.”

In late 2008, representatives of the city-parish, Louisiana Economic Development, Baton Rouge Area Chamber, Baton Rouge Area Foundation and LSU, later joined by members of the Louisiana FastStart workforce-training team, formed a task force to retain IEM. The support package they came up with included state and local financial incentives and customized workforce training. While officials wouldn’t divulge a dollar value, LED Secretary Stephen Moret says the deal went well beyond North Carolina’s offer, which reportedly included $9 million in state-tax breaks.

Moret says people are working on the long-term issues that make it difficult for high-tech firms like IEM to prosper here. The state is in the second year of a workforce-development overhaul, the Legislature created the Louisiana Innovation Council in its last session, and LED is embarking on an effort to improve flight options throughout the state, he says.

IEM says it will maintain the Baton Rouge office. Of the 200 local employees, only about 50 have headquarters-related jobs; the rest are support workers on projects who will have the option of moving to North Carolina or not, says Ted Lemcke, IEM’s vice president for technology. Moret says the company hopes for annual growth better than 20% in every market, meaning the Baton Rouge office actually could regain many of the jobs it’s losing in a few years.

“As we go forward, we will decide which positions [throughout IEM’s eight offices] need to be in a specific location,” Beriwal says. “And if they don’t need to be in that location, we would want to put them in Raleigh.”

So does that mean the Baton Rouge office might shut down at some point?

“We’ve never closed an office in 24 years,” she says. “The people that we have are wonderful people, they’re talented, they’re passionate about what they do, and we’d like to keep every last one of them if we can.”

Daily Report Editor Timothy Boone contributed to this report.