Luring student loan company Sallie Mae to Delaware is an effort that has stretched back for years.
Student lending giant Sallie Mae is moving it’s corporate headquarters from the Virginia suburbs of Washington, D.C. to Newark by 2011.
The announcement of the move is the latest in a string of good economic news for Delaware. The other good news mostly deals with finding new companies or new uses for shuttered manufacturing facilities like the GM plant (bought by Fisker Automotive), the Chrysler plant (bought by the University of Delaware), and the Valero refinery (bought by PBF Energy). But Sallie Mae will bring hundreds of jobs in an industry in which Delaware has long been a leader: financial services.
Delaware Economic Development Office (DEDO) Director Alan Levin says, “This is a real positive step back to our roots in some ways in financial services.” He says the effort to draw Sallie Mae’s headquarters to Delaware stretches back to the Minner administration. Sallie Mae had been reevaluating its business following a government decision to require the federal government to originate federally guaranteed student loans. Levin says, “We continued to work with them and, I would say, subtly pressure them into considering Delaware into anything that they did.” That pressure apparently paid off.
Maybe it was the pressure combined with the fact that the state has a well defined history of being friendly to banking firms and has a skilled workforce in that industry. Levin says, “Financial services in general kind of took a step back over the last several years, not just in Delaware, but nationwide. This reasserts that position, and I think really puts us at the forefront once again.”
At a teleconference Friday morning, Al Lord, chief executive officer of Sallie Mae noted the merger of MBNA with Bank of America left a highly trained, financial based work force in the state. “We were massively pleased by the results there. That experiment worked well,” Lord said, adding that the work force played a role in Sallie Mae’s decision to move to Delaware.
The fact that the state is offering up to $3-million in Strategic Fund grants can’t hurt either, but Levin says that incentive is not the reason a major company makes a long term move of its headquarters to another state. “Strategic Fund money or any incentive money is really kind of a one time deal because it comes in and goes out very quickly.” Levin says there aren’t any specific requirements for Sallie Mae to establish a certain number of jobs in order to get the grant money, but the company is expected to bring as many as 2,000 jobs or more to Delaware over the next five years. The company currently has nearly 900 employees working at a facility near Newark. Lord called the accepting of Strategic Fund dollars, “an investment on our part”, noting his company would be expected to generate financial activity.
There’s not a clear timetable for Sallie Mae to start construction on a new facility or start moving into an existing facility, but the company expects to be in the state by March 2011. Levin says, “The worse case scenario would be that they lease temporary space while they build. The best case scenario would be that they have a facility that they purchase and start operations immediately.”