Downers Grove, IL, August 30, 2006--ServiceMaster Co., is considering relocating its headquarters to Memphis from Downers Grove to be closer to the company’s major business divisions, according to Crain’s.
The company notified employees at its headquarters on Monday that a final decision on the move will be made in about six weeks, a company spokesman said Tuesday.
The move would affect about 175 people, mostly in finance and information technology positions.
ServiceMaster executives have been contemplating the move since J. Patrick Spainhour was hired as CEO in late June. Mr. Spainhour, a former CEO of Ann Taylor Stores Corp., believes ServiceMaster would benefit from having its corporate headquarters and major business operations in close proximity to one another.
“Memphis is the operational center of the company,” the spokesman said. “We’re trying to take a look at the company … and make sure we have the best possible organization for staying focused on customers.”
ServiceMaster has about 2,000 employees in Memphis. Terminix, ChemLawn, Merry Maids cleaning service and American Home Shield, a household warranty service, are all based in Memphis. Mr. Spainhour, who lives in Mississippi, recently purchased a home in the Memphis area to be closer to those businesses.
Although ServiceMaster’s Chicago-area roots go back decades, the company’s local workforce has been dwindling since the company sold its commercial cleaning service to Aramark Corp. in 2001. Before the sale of the Management Services business unit, ServiceMaster employed 1,200 people in Downers Grove.
The ServiceMaster spokesman said the company hasn’t completely ruled out staying in Downers Grove, but added that the company isn’t looking for tax breaks or other economic incentives from the state of Illinois or the village of Downers Grove.
The Illinois Department of Commerce and Economic Opportunity has contacted ServiceMaster, but a spokesman declined to offer details about talks with the company. Greg Bedalov, president of the Downers Grove Economic Development Corp., said he hasn’t spoken with ServiceMaster executives and said he just learned about a the company’s possible move on Tuesday.
“Obviously, we don’t want to lose them,” he said. “At this point, nothing has been finalized.”
Company observers say ServiceMaster's interest in moving is not unexpected.
"The structure as it stands today is not how you'd draw it up on a drawing board. The dual headquarters is a reflection of the company's past structure," said stock analyst Matthew Litfin of William Blair & Co., in Chicago.
Alexander Paris Jr., an analyst with Chicago-based Barrington Research Associates Inc., noted that moving would initially be a drag on the company's earnings because of relocation expenses and other costs. And the company runs the risk of losing executives who aren't interested in moving to Memphis.
"There's no real cost savings, but there could be operational efficiencies," he said. "The top executives are spending a lot of time going back and forth (to Memphis) on airplanes."
