Los Angeles County is losing another major corporate headquarters.
Pasadena engineering firm Parsons Corp. announced Feb. 28 that it is moving its HQ to Centreville, Va., in the Washington, D.C., metro area, effective immediately, to be closer to its customer and employee bases.
Parsons, founded in 1944, has grown into an engineering and consulting giant, with more than 16,000 employees globally and 2018 revenue of $3.6 billion. The company ranked No. 8 on the Business Journal’s 2018 private companies list, based on its reported $3 billion in 2017 revenue.
About 500 employees work at the Pasadena headquarters and about 800 at other locations in California.
According to spokeswoman Virginia Grebbien, no layoffs or relocations of those employees are planned, at least through the end of the lease period on the Pasadena building, which ends in 2026. She noted that many of the company’s top executives have long worked in other locations, including Chief Executive Chuck Harrington, who works out of the firm’s Charlotte, N.C., office.
New center of gravity
In the move announcement, Harrington cited the concentrations of company employees and customers in the Washington, D.C., metro area as the main reason for the headquarters move.
On the employee front, Harrington said, “Our strategic actions over the past 10 years, including acquisitions, have led to the Washington metropolitan area having Parsons’ largest concentration of employees worldwide. The move of our corporate headquarters to the Washington area will support this concentration of employees in the region.”
Just this past January, for example, Parsons acquired OGSystems, an imaging, mapping and data analytics company based in Chantilly, Va., just 5 miles from Parsons’ Centreville office that has now become its headquarters.
As for the customer base, Parsons has over the years obtained numerous federal contracts, including from the Department of Defense. The Pentagon in Arlington, Va., is about 20 miles from Centreville.
“Relocating to the Washington region puts us in closer proximity to many of our existing and potential clients, as well as key decision-makers who influence policy and funding initiatives across our markets, particularly critical infrastructure,” Harrington said.
But Parsons still plans to maintain its presence in the Los Angeles region and in California. According to the announcement, Parsons “remains committed to serving California-based clients.”
Long local history
Parsons was founded downtown in 1944 by engineer Ralph Parsons and moved to Pasadena in the early 1970s. Locally, the company in 1948 built the Point Mugu Missile Test Facility, now the Point Mugu Naval Air Station, in Ventura County, and completed a major upgrade of Los Angeles’ Hyperion Wastewater Treatment plant in the 1980s. More recently, Parsons coordinated the movement of the retired Space Shuttle Endeavour through L.A. city streets in 2012 to its new home at the California Science Center in Exposition Park.
Parsons is the lead design company on the first phase of the $3.1 billion Metro Purple Line Extension from Koreatown to Beverly Hills. The company is also program manager for the $5.5 billion plan to improve rail and vehicular access to Los Angeles International Airport, a plan that includes construction of an automated people mover, connection to the Metro Crenshaw/LAX rail line and the construction of a consolidated car rental facility.
Parsons’ work on another airport project has become more uncertain. The company won a $100 million-plus program management contract to oversee the construction a new international airport in Mexico City. But new Mexican President Andres Manuel Lopez Obrador suspended that project in January, leaving the fate of that contract up in the air. The company said in January that the contract was still in force, and negotiations were continuing over whether the contract could be applied to an alternate airport expansion plan being developed by the Obrador administration.
Corporate exodus
Parsons is the second major engineering firm to move its headquarters from Pasadena recently. In 2016, Jacobs Engineering Group Inc. relocated its headquarters to Dallas.
Northern Virginia has been a popular corporate headquarters relocation destination for several Los Angeles area companies, including Northrop Grumman Corp., which moved its headquarters from Century City to Falls Church, Va., in 2011; Hilton Hotels Holdings Corp., which moved its headquarters from Beverly Hills to Fairfax County, Va., in 2009; and, more recently, Nestle USA Inc., a subsidiary of Vevey, Switzerland,-based consumer products giant Nestle S.A., which completed its move from Glendale to Rosslyn, Va., in early 2018.
Unlike most of these relocations, Parsons intends to leave its Southern California operations intact – at least through the next seven years.
Nonetheless, the high cost of doing business and the high cost of housing in the region were likely factors in Parsons’ decision to relocate its headquarters, according to Eric Sussman, adjunct professor of accounting and real estate at UCLA’s Anderson School of Management.
As for the overall trend of major corporate headquarters relocations outside the Los Angeles area, “These corporate brand names leaving are offset in whole or in part by other major companies, such as Google, moving operations into the region and startups launching,” said Robert Kleinhenz, executive director of research at Westchester-based Beacon Economics.
