What’s Behind The Move Of Arrow Electronics?

Written by Alan Gionet
DENVER (CBS4) – It was clearly a plum for Gov. John Hickenlooper. At a news conference in his office he introduced Arrow Electronics CEO Michael Long. It’s a company with 50 locations in the U.S. and 300 around the world.

“We believe in being close to our customers. That is something we do. And because we believe in that it has always propelled our employment at headquarters where we need to support those operations,” Long said.

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That leaves open a big question. Who are those customers and what is Arrow doing moving its headquarters from Melville, N.Y., on Long Island to Englewood?

Many companies move because of the tax incentives. It’s the carrot offered time after time as states and towns compete to bring in new jobs.

“Colorado is never going to compete with other states in terms of the … size of incentives,” Hickenlooper said. “Relative to the world of incentives, this is modest.”

That was a reference to the $11.4 million tax credit over 5 years Arrow has been offered to come to Colorado, if it creates more than 1,250 jobs during that time. Long also seemed to treat the incentive under Colorado’s Job Growth Tax Credit as no big deal.

“Colorado didn’t come to us and say, ‘We have incentives,’ because the truth of it is, Colorado doesn’t have a lot of incentives compared to other places,” Long said.

So what was it? Well it started with discussion during Hickenlooper’s campaign last year after Arrow hired Rich Kylberg, a former radio station owner and Hickenlooper friend. Hickenlooper wasn’t even in office as governor yet.

“And he was the one who kind of during the campaign mentioned that this was a possibility out there and it was a relationship that might be worth pursuing,” Hickenlooper said.

So they did. Including a dinner at Hickenlooper’s home in May when other Colorado CEOs joined in making the case, including Kent Thiry, who runs DaVita, a company that moved from California to Colorado only a year ago. They considered what would push a move.

“What are the points of persuasion that would make a company like Arrow really do better here in Colorado than they would anywhere else?” Hickenlooper said.

Long already knew Colorado well. He has a home in Winter Park and another in Elbert County. He’s on the board of the Denver Zoo. Earlier in his career he ran Capstone Electronics in Colorado, which is now a part of Arrow.

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“Most places that companies exist, there’s not cooperation with the government,” Long said. “There’s really nothing that says, ‘Look, we want to help expand the airport, so we can make you more competitive, so less wear and tear on your people who are traveling around the world. We want to make it easy to get products in and out of this state. We know you need a highly-educated workforce. We’re willing to put our educational resources together with that to help you do that.’ ”

Read more on the website of CBS4 partner the Denver Business Journal.

Electronics sales are big in Asia. While there still aren’t the flights Arrow will need, Long is hopeful. Part two is the future for Arrow. One of the company’s fastest growing operations is in what it calls “reverse logistics.” That’s basically computer recycling – keeping used equipment out of landfills, a huge growth area in the computer business. That part of Arrow’s operations is already headed out of Englewood. The company owns 35 acres across the street and “Won’t be land shopping,” Long said.

There’s proximity. Arrow has customers and suppliers here. There’s the potential looming as well of acquiring another company. But don’t expect hints.

“To get real specific to you would be to start laying out an acquisition plan and as you guys get to know me, you’ll find out I never do that,” Long said.

Another part is the partnership they’ve developed with the University of Colorado to produce the kinds of people they need.

“I have one comment when it comes to education,” Long said. “And that is, produce more engineers. Produce more people that are technically capable and the state’s problems will take care of themselves.”

And what about New York?

“I do not believe at putting people out on the street and I don’t believe a move from one state to another creates an atmosphere of loyalty to any company so I won’t do that,” Long said.

The company will grow in Colorado, according to Long. Executives have been quietly moving in advance of this week’s announcement.

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“We’re placing a bet on Colorado and I believe it’s a good bet,” Long said.