The True Cost of Kerr McGee Departure
What will loss of Kerr-McGee cost the city?
By Paul Monies
The loss of high-paying Kerr-McGee Corp. jobs will cause almost $247 million to vanish annually from the local economy, according to an analysis by the Greater Oklahoma City Chamber of Commerce.
While that number is dwarfed by the effects of the closure of Oklahoma City's General Motors Corp. factory and the possible closure of Bridgestone-Firestone's Dayton Tire plant, chamber officials said the loss of Kerr-McGee will be about more than economics.
"It's so much more than that," said Monty Evans, manager of research and information services. "With their history and philanthropic efforts, it's hard to put a dollar-and-cents figure on that."
Anadarko Petroleum Corp. said last month it will acquire Kerr-McGee in an $18 billion deal. Most of the 209 local jobs at Kerr-McGee's Oklahoma City headquarters are expected to be eliminated in the consolidation.
Evans said his analysis shows the average salary for Kerr-McGee employees in Oklahoma City at more than $110,000.
"They are clearly in the highest-paying sector in our economy," Evans said.
The loss of the headquarters jobs alone will leave the local economy $135 million worse off, Evans said. After taking into account job losses among suppliers and less spending on consumer goods, the total economic impact reaches $247 million a year.
More than half the local property taxes paid by Kerr-McGee Corp. go to Oklahoma City schools, County Treasurer Butch Freeman said.
Kerr-McGee paid more than $955,000 in taxes to Oklahoma County in 2005, Freeman said. About one-fourth of that total -- $288,000 -- came from property taxes on the company's downtown Oklahoma City headquarters, he said.
"Kerr-McGee has got several different properties here in the county," Freeman said. "Of course, the one with the consequences is the main (headquarters) building itself."
Tax revenues on equipment and furnishings at the headquarters -- called business personal taxes -- are in excess of $638,000, he said. More than 53 percent of Kerr-McGee's county tax bill is allocated to Oklahoma City Public Schools, Freeman said.
"As far as the impact, it's going to be the business personal taxes," he said. "As for the buildings, unless they sell some of these buildings, including the big one, we do not anticipate much change in their tax bill for 2006."
Kerr-McGee paid between $30 million and $31 million in salary and benefits to its Oklahoma employees in 2005, spokesman John Christiansen said. Another $7.3 million was spent buying goods and services from Oklahoma companies.
The company estimates its total state and local Oklahoma tax bill was $3.1 million for the first seven months of 2005, Christiansen said. That includes Energy Department taxes, gas severance taxes, marginal producer taxes and withholding taxes.
Kerr-McGee operates about 300 mostly older wells across the state, with the bulk of them in western Oklahoma. Christiansen said daily production translates into roughly 123 barrels of oil and 26 million cubic feet of natural gas. The state's energy taxes on those wells would be Anadarko's responsibility -- or a new owner's should the Texas company sell them.
Anadarko's buyout of Kerr-McGee is expected to close in the third quarter.
http://www.newsok.com/article/1883137
Ouch.
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