Philip Morris USA recently transferred their corporate headquarters from New York City to Richmond, a move that will bring Virginia an estimated $300 million in new investments.
Gov. Mark R. Warner and Michael Szymanczyk, Philip Morris USA chairman and chief executive officer, announced March 4 the company's intention to consolidate its center of operations with the Richmond manufacturing plant, which currently employs 6,800 Virginians.
"Virginia has been courting Philip Morris for years," said Rick Richardson, director of communications and promotions for the Virginia Economic Development Partnership. "From our viewpoint, it was a fairly logical move for them."
Philip Morris USA is a subsidiary of the Altria Group Inc., the world's leading cigarette producer, controlling nearly 50 percent of the tobacco market.
"We are very pleased with the reception we've received from the greater Richmond community," said Jennifer Golisch, Philip Morris USA spokesperson. "In terms of looking to the future, we are excited about integrating our workforce."
Because Richmond is already home to the company's largest manufacturing facility, executives travel weekly between Virginia and New York, Richardson said.
"It's a huge shot in the arm for this community," Warner spokesperson Kevin Hall said. Warner "is excited about what it means for this area."
However, other members of the community are not so thrilled about the decision.
"There is a negative side to this whole business," said University Medical Prof. Dudley Rochester, volunteer and former president of the American Lung Association of Virginia. "For the city and state to be very proud of themselves gives a bad image."
A retired pulmonary physician, Rochester is a member of the Virginia Tobacco Settlement Foundation, which is in charge of the anti-smoking activities funded by rewards of the 1998 Master Settlement Agreement. Signed by the nation's four largest tobacco companies and 46 states, the agreement instituted compensatory payments of over $200 billion over the next 25 years.
Rochester added that he thinks it is wrong for only 10 percent of Virginia's share of the settlement to be used for anti-smoking purposes.
Negotiations for Philip Morris USA's relocation began last fall. Under the final agreement, Philip Morris USA qualifies for a $25 million performance-based Virginia Investment Partnership grant as well as a $3 million Governor's Opportunity Fund grant to renovate existing facilities in Richmond and Henrico County.
In addition, Philip Morris is eligible for tax credits of about $8 million.
Hall said the decision to relocate was reached in part because Warner and Szymanczyk served on the Virginia Board for Independent Colleges together.
"Virginia is known for being business-friendly when it comes to taxes and regulation," Hall said. "It's a slower, more affordable community to live and work in" than New York City. The same day Warner made the announcement, his office issued a press release listing his appointments to the Tobacco Settlement Financing Corporation, a new mechanism created to help secure future payments of Virginia's share of the Master Settlement Agreement.
Proceeds from the settlement are being used to fund economic development, aid farmers with new skills and machinery, as well as extend the state's high-speed Internet infrastructure.
"It's the chance of a lifetime for those regions to really work in a unified way to market themselves so there could be some growth," Hall said.
Hall acknowledged the coincidence that the appointments were announced the same day as Philip Morris USA's decision to relocate its headquarters to Richmond.
"I can see a little bit of irony there," he said.
The company expects to finish the transition process by June, creating 450 new jobs with annual employee salaries ranging from $90,000 to $133,000.
The health risks associated with smoking overshadow the benefits of housing the headquarters of a Fortune 500 company, said Donna Reynolds, director of community relations for the American Lung Association of Virginia.
"None of the health data has changed in terms of how tobacco affects Virginians," Reynolds said. "There's still going to be a lot of work to do."
In response to grievances with tobacco companies, Richardson stressed the economic advantages, notably the increased state revenue from personal income taxes.
"It's a legal business," he said. "If it's going to exist, why don't we get the benefits?"
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