Stunned by Lockheed loss, Eagan braces for job exodus

The lunch rush is steady at restaurants along Yankee Doodle Road in Eagan, where a mini-village of eateries is just steps away from more than 1,000 employees of the Lockheed Martin campus on the corner of Pilot Knob Road.

But those employees -- potential customers for local businesses of all kinds -- are going to disappear over the next three years as Lockheed Martin shutters the plant.

"You can see these people walking across the street during the day," said Jim Basta, co-owner of the family-run Italian Pie Shoppe. "It's going to really screw up our lunch business."

There's no doubt that the effect of Lockheed's departure will be felt across Eagan, even after 2013 when the last workers leave the 623,000-square-foot facilities. The 50-acre campus, a symbol of high-quality, technology-driven jobs at one of Eagan's most prominent intersections, could sit empty.

"There's a ripple effect across all of these small businesses and a collective holding of breath," said Eagan Mayor Mike Maguire.

The company announced last week that it would be closing the plant, transferring 650 jobs to other states and letting go of remaining employees. About 70 percent of the employees are engineers who work on communication systems used on military ships and aircraft, including P-3 surveillance planes.

The news of Lockheed Martin's closing, which surprised many, comes two years after the Northwest Airlines-Delta merger that cost Eagan hundreds of jobs and left behind a 252,000-square-foot corporate office building that is still for sale.

Thomson Reuters, the city's largest employer, is also cutting back, letting go of 60 employees last week.

"That's a really big hit to the number of jobs in a city like Eagan," Maguire said. "The fact of the matter is, it's a hit to the region overall."

City still has assets

Losing high-tech, well-paying jobs will hurt, Maguire said -- but, he added, "One of the things that you do to deal with that ripple effect is to make sure you remember that you didn't lose all."

Eagan, local officials say, is well equipped to handle the loss of Lockheed. There were still about 48,500 jobs in the city in the first quarter of this year, even after the fallout of the airline merger and layoffs at Thomson Reuters. That's down from a peak of 50,900 in the first quarter of 2007, but 6,000 more jobs than there were in Eagan at the beginning of the decade.

Eagan is the commercial capital of Dakota County, and it's different from many suburbs because it attracts more commuters than it loses each day. At times during the decade, job growth in Eagan surpassed that of entire counties elsewhere in the state.

A 2008 study commissioned by the county's community development authority found that nearly half of the 14.4 million square feet of office space in Dakota County was in Eagan. The city was also home to all 11 corporate offices then located in the county.

Maguire said there are many factors, which haven't changed with the recession, that attracted businesses to the suburb.

"Our access to the Twin Cities, to the airport and to major transportation infrastructure is certainly one of those assets," he said. "The other one, quite frankly, is the community in Eagan. Our quality of life is nationally recognized."

Still, given the economy, those attributes may not be enough to bring in replacements for Lockheed Martin and others.

Prof. David Vang of the Opus College of Business at the University of St. Thomas said the city and state will have to think about offering incentives such as tax breaks if they are going to lure other big companies to the metro area.

"The whole process has been more complicated because they're probably going to have to give away something to get a business to move in, at least in the short term," he said.

What's next?

Maguire and Gov. Tim Pawlenty have asked Lockheed Martin to reconsider. When the governor spoke with company CEO Robert Stevens on Monday, Stevens said "the company's decision to close its Eagan facility was unlikely to change, given current market conditions," according to a Pawlenty spokesman.

City officials and local business boosters are staying optimistic, even if they can't persuade Lockheed Martin to stick around.

Eagan spokesman Tom Garrison said the city has fielded calls from businesses interested in contacting Lockheed Martin employees and companies that scout sites for other firms.

Bill Coleman, head of the nonprofit economic development group Dakota Future, wondered if some Lockheed Martin employees might find a new niche at Goodrich Sensors. That company received a sales tax break from the state and is expanding its Burnsville operation, planning to add 200 jobs over the next three years.

"Maybe there's a real opportunity there," he said. "The skilled workforce that the Lockheed folks represent is a valuable asset."

Dakota Future has been working to attract high-quality technology jobs to the south metro area, and Coleman said the Lockheed Martin building -- secure, well located and wired for cutting-edge technology -- might be a good site for another company.

The real estate market may be another reason for Lockheed Martin employees to stay put in the Twin Cities area.

"If a large chunk of them leave, that will be a large chunk of people who will be looking to sell their homes," said Apple Valley-based Realtor Bill Wallace. "It has the potential for putting more downward pressure on prices of homes in the surrounding area."

Ruthe Batulis, president of the Dakota County Regional Chamber of Commerce, said Eagan has proved its resilience and business sense over the years. "We can absolutely overcome this," she said. "It's a shift in business, but the next door will open. We don't know what the door is yet, but we can't be scared."

Katie Humphrey • 952-882-9056