RELATED: Teradata says it will leave Dayton
In a filing with the Securities and Exchange Commission this week, the company said the estimated cost of the move was in the range of $35 million to $45 million.
Teradata said the charges — which are substantially all cash expenses — consist of:
• $21 million to $26 million for employee severance and other employee-related costs.
• $6 million to $8 million for lease costs.
• $8 million to $11 million for outside service, legal and other associated costs.
The company expects to incur these costs and charges this year and next, with the majority of the cash expenditures hitting in 2019.
The move will be completed next year.
In a notice sent to the state of Ohio, as required by the Worker Adjustment and Retraining Notice Act, Teradata said in June the move will impact 267 of the 306 employees then working at the company’s Miami Twp. offices.
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“Teradata is offering 39 employees currently working at the Dayton facility the opportunity to continue working in this area; their salary and benefits will not change due to this action,” Teradata said in its letter to the state. “After the Dayton facility is closed they will be exclusively virtual and will not be working from this location.”
Teradata said it would offer 202 Dayton-area employees a chance to move to other company locations in the U.S.
A spokeswoman for Teradata declined to comment on the SEC filing or the company’s plans.
Bruce Langos, a retired chief operations officer for Teradata, said most of the moving costs will be wrapped up in employee severance expenses going to displaced workers now working in Dayton.
The lease expense would involve exercising a right to break with the company’s current Austin Landing lease, he said.
“I think the trade-off in (the move) they’re making is what we don’t know,” Langos said.
What isn’t known yet, is whether Teradata intends to hire new employees to replace displaced employees in Dayton — or whether the company will seek to outsource those functions in a bid to save money.
Labor costs in San Diego are significantly higher than in Dayton, Langos said.
“If they outsource order management, for example, then there could be significant cost savings ongoing, not just one time,” he said.
On the flip side, if Teradata is going to replace most of its Dayton-area workforce in California, “that compensation is going to cost you more.”
Teradata was "repeatedly offered to discuss incentives and other issues with the company over the past year" but the company declined, according to JobsOhio, the state's private development arm.
The new details about Teradata’s departure also highlight the challenges small metros face holding on to businesses when companies would rather turn down incentives and pay more to be in top cities where the workers they want to recruit want to live.
Technology companies in particular are facing sharp competition for a limited number of workers who are trending more toward picking the place they want to live in over a particular company they want to work at.
“Everyone plays the incentive game to some degree but the real talent attraction and real corporate attraction is creating amenities that will attract the workforce,” said John Yung, senior project executive with Urban Fast Forward, a Cincinnati planning and real estate firm.
Yung said Dayton has good infrastructure and good neighborhoods, but more could be done to tell the city’s story and create places that draw in people.
“The potential is there but there needs to be more efforts into those type of investments … We need to develop great places and great neighborhoods that attract the current generation,” Yung said.
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