Wyndham Hotel Group CEO Geoff Ballotti paid a surprise visit to his employees at the Wyndham Hotel Group call center in Aberdeen yesterday. He told them that, come January, Wyndham is shutting down their Aberdeen call center. The closing will allow some employees to work at home, but around 240 Aberdeen employees will lose their jobs as much of the work moves to a Wyndham office in Indianapolis:
“The call center operation will be consolidated into an owned facility in Indianapolis. It is a facility that is much larger and we’ve been investing heavily in,” said Ballotti. “We will be transitioning our call center operation at the end of January 2016” [Kathy Jensen, “Wyndham Closing in Aberdeen,” Aberdeen American News, 2015.09.10].
Wyndham is the parent company of Super 8, which started in Aberdeen in 1973. The call center began in 1975 as Superline, Super 8’s centralized reservation center.
Wyndham says it will make jobs available for Aberdeen workers who are willing to move to Wyndham call centers in Indianapolis and St. John, New Brunswick.
Consider: an international company is closing a call center in South Dakota while keeping similar facilities open in Indiana and Canada.
In its new study of the cost of doing business in the fifty states, the Tax Foundation says South Dakota has the fifth-lowest effective tax rate for call centers, 12.8% for established operations. We’re fifth lowest in large part because we have no corporate income tax. Indiana imposes a business tax of 6.5%. Add that corporate income tax to sales, property, and other taxes, and call centers in Indiana pay an effective state tax rate of 23.5%, ranking 37th-lowest.
New Brunswick’s general corporate income tax rate is 12%. New Brunswick has fifth-highest personal income taxes (provincial and federal) out of the thirteen Canadian provinces and territories. If those taxes daunt, remember that businesses save lots of money on health insurance, which Canada provides through its splendid single-payer system.
South Dakota’s low-tax/no-tax policies appear not to have been enough to convince Wyndham to keep its call center in South Dakota and close one of its operations in a more heavily taxing state. Wyndham’s choice doesn’t prove that no corporations will ever come and stay in South Dakota to take advantage of our tax climate any more than the ability of schools to find teachers to fill most of their positions. But it is a counterexample to the propaganda purveyed by the Governor’s Office of Economic Development: for some companies, like Wyndham, tax policy does not override all other considerations in choosing where to do business and where to close up shop.
You mean to say that the the governor’s charm did not work this time? LOL
Indiana may have offered the company more corporate welfare than South Dakota put on the table. South Dakota government likes to create winners and losers by handing out public funds, and Indiana or whatever locality the call center is in may do that too. At least this company is not outsourcing its call center to the Philippines – yet.
There is more to business than taxes. The lower taxes most likely DO influence companies to set up shop here and most likely do have an impact on employment in the state. The article that you quoted itself states that they are moving to some already improved and owned facilities. Chances are the tax benefit here did not make a difference because the overhead of running another center here was higher than any savings, if there really was much of any savings to begin with considering their structure.
It is my opinion that this really doesn’t prove anything regarding how our tax rates influences economic growth in our state.
There is so much more to a good business climate than a lousy, regressive tax system. It sure seems like the Republican/Koch government in SD doesn’t comprehend that.
For better jobs, better pay, better conditions and a better life —- vote Democratic!
Outsourcing—I was surprised, Rohr, by the fact that we weren’t losing this center to the Philippines or elsewhere overseas. I’ve heard people talk about perhaps promoting South Dakota as a middle ground for call center work—not as expensive as other states, but with none of the hassle of dealing with foreign laws and language barriers. But here we are losing jobs to Indiana and to a fellow G-8 country.
Nate, you’re right, no major proof in this event, but certainly a case study worth dissecting so we know exactly what factors overcame tax considerations and by how much.
You know, JeniW, I wonder if the Governor got a chance to jawbone these guys, or if Wyndham even bothered to check whether GOED could make some sugar available to keep them here.
That would be an interesting study.
Maybe it was just the opposite, maybe the cabal tried to put the squeeze on Wyndham with an offer they could not refuse, but they did anyway. With the corrupt politics in Pierre, noting surprises me about them anymore. Where was Joop during the negotiations? St. John is about a four canner of Heineken from Dutchman country.
According to your citation, a new call center in Illinois is 8.6% compared to SD’s old call center’s 8.2.
Are their corporate taxes deductible from their Federal tax burden?
If Wyndham was investing heavily in Indianapolis there is good reason. If our tax advantages were really so attractive, those investment dollars would have went here instead, but many companies find that attracting the best talent is often more difficult in a low population, slow-growth state like South Dakota where our two major exports are corn and college graduates.
This is just like Capital One pulling out of Sioux Falls – it shows that even when you can find and retain employees at bargain wages and even when your tax climate is extremely attractive it may not be enough. You might be able to find people to staff the phones in many locations, but if you want to find quality management teams and support personnel you might find it a challenge to find them in SD because many of those people realize they can be paid 30% more simply by moving a few hundred miles to the East.
If anything this just tells me that the state needs to get out of the business of offering financial incentives for companies to relocate or expand here – because at the end of the day it appears other factors are much more important.
Hello Daugaard, here is what will bring jobs jobs jobs to South Dakota and have all of those positions remain. Solar energy along with wind energy. The product that will be getting Greece out of the hole is not just tossing moolah at the problem, it is addressing the problem. The big problem solver is renewable energy, you can do it slim. You can make it happen and it need not be a corrupt system for you and your cabal to cash in on.
If you’re shopping for an item and you’ve 5 choices of price for similar products, do you buy the cheapest one?
I worked here as a teen. Memory lane thyme