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Tutor Perini moving headquarters to LA

By Erin Ailworth and Todd Wallack
Globe Staff / October 22, 2009

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Construction giant Tutor Perini Corp. is switching coasts, trading its longtime Framingham headquarters for digs in Los Angeles, where it has a number of public and private projects.

The company’s Framingham office will remain open. Roughly 200 people work there for subsidiary Perini Management Services, and most will remain, said chief financial officer Kenneth R. Burk. Framingham will lose about 30 jobs; however, some of those will shift to California as part of Tutor Perini’s effort to consolidate its “back office’’ operations, such as information systems and human resources - a move that will slice about $10 million in overhead costs.

Tutor Perini has worked on several high-profile projects in Los Angeles, including a new police headquarters and an airport runway expansion. In part because of that business, company officials believed it had “a reasonable center of gravity already here in the western part of the US,’’ Burk said. The move is expected to create thousands of jobs in California as the construction company grows.

The firm owns 15 acres in Framingham, where it has 100,000 square feet of office space and a storage yard. But most of its operations are based elsewhere, including seven office facilities and two storage yards in California.

“No offense to Boston or Framingham; we’re just trying to do what’s best for our shareholders,’’ Burk said. “At the end of the day, that’s what’s going to help employ people: our success.’’

The company, twice ranked number one on the Globe 100, the Globe’s annual list of the state’s top-performing publicly traded companies, has deep roots in Massachusetts. Tutor Perini springs from a September 2008 merger between Perini Corp., a local construction firm founded in 1894, and Tutor-Saliba Corp., the privately held California-based company of Perini chief executive Ronald N. Tutor. Last year, the company generated more than $5.6 billion in revenue. It also had an average of about 8,000 employees worldwide, though the number fluctuates based on the time of year and how many construction projects it has going at any one time.

State and local officials were caught by surprise by the announcement. Framingham Town Manager Julian M. Suso said in a statement late yesterday that he was still trying to confirm the news that Perini was moving its headquarters to the West Coast - a decision he said the town would “deeply regret.’’

“This prestigious company has been an integral part of the economy and history of the town of Framingham, as well as the entire Commonwealth of Massachusetts,’’ Suso said.

Greg Bialecki, the state’s secretary for housing and economic development, said in a statement that “Massachusetts will continue to have a robust construction industry.’’

Burk said the company was offered no financial incentives, nor were there any negotiations with state officials on either coast about whether to stay or go, though the company did speak with Mayor Antonio Villaraigosa of Los Angeles about its plans.

The relocation will not likely mean a big tax revenue loss for Massachusetts, because the state taxes Perini’s local operations only, most of which will remain intact. A spokesman for the Department of Revenue said the state taxes that companies pay are based on a combination of their payroll, property, and sales in Massachusetts.

Burk said Tutor Perini long has tried to downplay “the whole headquarters thing,’’ given the decentralized nature of construction - employees work where projects are located. But officials at the firm also realized that since the merger, some consolidation was needed. Los Angeles, Burke said, made the most sense given that Ronald Tutor lives in the area and the company already has so many offices there.

“We still have a very important business here, so it’s not like we’ve packed our bags and left town and thumbed our noses at it,’’ Burk said.

Still, the move is something of a loss for Massachusetts, said William Guenther, president of Mass Insight Corp., a public policy and economic development consulting firm in Boston. He called corporate offices an “engine for civic engagement.’’

“Headquarters matter,’’ Guenther explained, “because of the civic and community leadership that CEOs provide and the kind of staff that’s available in the corporate office to support that broader leadership.’’

In Los Angeles, Villaraigosa celebrated Tutor Perini’s move, saying, “We’re elated.’’ He said the company’s expanded presence in California - where Tutor-Saliba has long been located - will bring needed jobs and revenue to the city, which has an unemployment rate of 14 percent.

“There’s a lot of work in the state that makes sense for the company to be sited here,’’ Villaraigosa said, ticking off projects the company has already completed, as well as local efforts the state has in place to spur more construction projects at schools and on roadways.

“Yes, we did work them,’’ he said.

Erin Ailworth can be reached at eailworth@globe.com. Todd Wallack can be reached at twallack@globe.com.

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