By Todd Wallack
March 16, 2011
Fidelity Investments will shutter its offices in Marlborough by the end of next year and move almost all of the 1,100 jobs there out of state, a spokeswoman said yesterday.
The financial services giant, based in Boston since it was founded in 1946, has steadily slashed its Massachusetts workforce in the past five years. Fidelity will probably have about 7,300 workers left in Massachusetts, just over half of the 13,000 it had in 2006.
The company has about 37,000 employees worldwide, down from 46,500 in 2007.
Spokeswoman Anne Crowley said Fidelity plans to relocate a “very small number of jobs’’ from Marlborough to its Boston headquarters. Most of the jobs will be relocated to other states, with the lion’s share going to existing offices in Merrimack, N.H., and Smithfield, R.I. Most of the Marlborough employees will be offered jobs at the new locations.
Crowley said Fidelity’s Massachusetts workforce has been cut for two reasons: first, as part of the company’s worldwide reductions during the global economic crisis, and second, to serve the company’s goal of spreading its operations across the country. By reducing its concentration here, Fidelity hopes to better serve customers across multiple time zones and attract enough talented employees, she said.
“We have long believed in expanding geographically,’’ Crowley said, adding that Fidelity long ago grew beyond its Boston roots. “We’re not the same firm we were 65 years ago.’’
Fidelity also said it wants to reduce the number of major operations in New England from four locations to three and eliminate excess office space. However, several observers said it appears Fidelity is relocating to states that will offer more tax breaks, or where it believes it can cut operational costs, especially since many of the jobs are moving only across the Massachusetts border.
“I don’t know how else to read it,’’ said James Lowell, editor of Fidelity Investor, an independent newsletter that tracks the company’s funds. “They could have just as easily moved jobs from Rhode Island or New Hampshire to Massachusetts.’’
Most of the 1,100 employees in Marlborough work in the Personal Workplace and Institutional Services unit, a vast operation that includes Fidelity’s brokerage and workplace benefits unit. Some are attached to Fidelity’s corporate services group, which includes technology, finance, and administration.
Lowell noted that the workplace benefits business is highly competitive, “where shaving pennies really matters.’’
Fidelity owns two buildings in Marlborough, measuring a combined 700,000 square feet, that it plans to sell or lease, Crowley said. The company leases another smaller building nearby.
Lieutenant Governor Timothy P. Murray issued a statement saying he was “disappointed that Fidelity is cutting these jobs in Massachusetts.’’
“We are committed, now more than ever, to competing for every job both at home and on the international market,’’ Murray said.
Governor Deval Patrick and the state’s economic development chief, Gregory Bialecki, were both in the United Kingdom yesterday on a trade mission.
In 1996, after Fidelity announced plans to build up operations in neighboring states, the state granted a permanent tax cut to mutual fund companies that added Massachusetts jobs in the following five years. With close to 10,000 employees in Massachusetts at the time, Fidelity reported that it added sufficient jobs to receive the tax break, and still does.
One state lawmaker said he plans to talk to colleagues about drafting legislation that would revoke the tax breaks for Fidelity and other companies that have since slashed their workforces below the original requirements.
“Obviously, today’s news is a big disappointment,’’ said Senator James Eldridge, a Democrat from Acton who also represents Marlborough. “We should stop giving money to companies that are shedding jobs instead of creating them.’’
Last week, Fidelity reported its first revenue growth since 2007. The company said revenue rose 7 percent in 2010 to $12.3 billion. Operating profits climbed 17 percent to $2.9 billion.
The Marlborough shutdown particularly irked the state’s treasurer, Steven Grossman, since Fidelity manages about $8 billion in short-term deposits for the state and local governments. Grossman said a Fidelity executive assured him that any employees in Marlborough who help to administer the fund will remain in Massachusetts, but he said he intends to allow other companies to compete for the contract.
“Our goal is to use the authority of the Treasury — consistent with our fiduciary obligation to the citizens of Massachusetts to protect their money and obtain competitive interest rates — to promote the preservation and creation of jobs in Massachusetts,’’ Grossman said in a statement. Fidelity also manages nearly $600 million in state pension funds.
State Representative Steven Levy, a Republican from Marlborough, said the state needs to find ways to reduce the cost of doing business here. “It would be nice if when companies consolidated for cost reasons, they would consolidate in Massachusetts,’’ he said.
Levy said the announcement is bad news for the Marlborough area as it struggles to recover from the recession. “It’s another hurdle to overcome,’’ he said.