Recently Merged Firm Trades Boston for Sylmar

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While the job creation numbers are relatively modest, the secondary benefits of Tutor Perini Corp.’s surprising announcement last week to move its headquarters from suburban Boston to Sylmar are wide-ranging.

The move, announced Oct. 20, will likely result in more California business for the publicly traded civil and building construction company. It is also shot in the arm to a city that has seen its share of publicly traded companies bolt for other locales in recent times.

Hilton Worldwide, Computer Sciences Corp. and DaVita Inc. have all left Los Angeles in the last two years, strengthening a longstanding perception that the city is a place that big companies leave. That was at least part of the reason why Ron Tutor, chief executive of Tutor Perini, decided to make the opposite move.

“There have been so many people leaving and nobody coming. When I said I was going to move people were first in disbelief, like, ‘Why are you dong it?’” said Tutor, an L.A. native who built his family construction company here from the ground up. “And then it was a nice thing because this is still our home.”

The move follows the April 2008 merger of Tutor-Saliba Corp. with Perini Corp., a deal valued at $862 million. Tutor-Saliba’s predecessor company, A.G. Tutor Co. Inc., was founded by Tutor’s father, Albert, in 1949. The Sylmar company then partnered with another firm to form Tutor-Saliba Corp. in 1981. Last year’s merger with Perini Corp., an old-line Boston-area construction company, created one of the largest construction firms in the United States. Until last week’s announcement, Tutor Perini had retained the old Perini Corp. headquarters in Framingham, Mass., as its center of operations.

Robert “Bud” Ovrum, L.A.’s deputy mayor of economic development, said that the city played no formal role in facilitating the move and that Tutor Perini has not been given any economic incentives. He said the city plans to take advantage of the surprising decision.

“You use it for a marketing tool,” he said. “Every time one company moves to town other companies think, ‘I wonder why they did that?’”

California business

With the company headquartering in Los Angeles, the city has gained one of the biggest construction firms in the United States. Tutor Perini reported net income of $38.8 million on revenue of $1.38 billion in the second quarter. Last year, the company reported annual revenue of $5.6 billion.

Perhaps more importantly, Tutor said that the relocation will likely result in more business in California, where the company is already a large player. The company was No. 11 on the Business Journal’s list this year of general contractors, ranked by the value of work in Los Angeles County.

Over the years, the company has built significant local projects, such as the Los Angeles International Airport runway expansion, the Alameda Corridor transportation development and, most recently, the new Los Angeles Police Department headquarters.

Tutor said that after the April 2008 merger he realized that the company would be best served by moving to California.

“I think we will probably take an even more aggressive role in California,” he said. “The real strength of the company’s operations is in California and being a native I still think that’s where the future is.”

The move of employees to the company’s existing Sylmar offices has already begun and should be wrapped up by April. The company will retain its Framingham office but will downsize. About 100 executive-level employees will be added at the Sylmar office and Tutor believes the move should create between 300 and 400 local jobs for companies that do business with Tutor Perini.

Jack Kyser, chief economist for the Los Angeles County Economic Development Corp., said that the move is a boon for professional service companies such as law and accounting firms.

“They are probably clapping because this is one of the issues for them; they want to serve big companies. All of the sudden we have a new big company,” he said.

There has been a spate of new public companies cropping up in Los Angeles, but by way of IPOs. Real estate investment trusts PennyMac Mortgage Investment Trust and Colony Financial Inc. both have gone public in recent months, while produce company Dole Food Co. has filed its IPO prospectus, and boutique investment bank Imperial Capital Group Inc. announced plans to go public last week.

But there haven’t been any other notables companies moving from outside the state to Los Angeles in recent times, though Ovrum noted talent agencies Creative Artists Agency and International Creative Management recently moved from Beverly Hills to Los Angeles.

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