Winnebago Industries’ recently announced decision to relocate its corporate headquarters to Eden Prairie, Minn., a suburb of Minneapolis-St. Paul, can be viewed in the context of increasing competition for strategic human capital, especially among larger, multinational companies, says Carl Vieregger, an associate professor of management at Drake University.

The Iowa-based manufacturer last week announced plans to shift its corporate headquarters address from Forest City, Iowa, effective Dec. 1. Leaders of the recreational vehicle and boating manufacturing company pledged to remain loyal to the company’s Iowa roots. Company officials said Winnebago plans additional hiring at its Iowa plant and will continue to invest in training and capital improvement projects at the plant, which employs about one-third of its workforce.

The Business Record asked Vieregger, who last week participated in this publication’s Made In Iowa forum on manufacturing’s outlook, to weigh in on Winnebago’s decision, along with a couple of other experts. Vieregger’s research focuses on corporate strategy with an emphasis on resource allocation decisions of the top management team.  

“Historically, headquarters for manufacturing firms have tended to be located near the sources of production and transportation, where costs related to land and labor also tended to be lower,” Vieregger said. That affinity is shifting, however, as access to strategic human capital talent becomes increasingly important.

“The continued growth of Winnebago and its product brand portfolio is good for Iowa, but with that continued growth also comes the potential need for relocating its headquarters closer to a larger metropolitan area, for reasons related to strategic human capital,” he said.

With the increasing importance of developing corporate strategy and recruiting experienced senior executives, as well as maintaining competencies related to finance, marketing and information systems, “moving to larger metropolitan areas can become more important,” Vieregger said.

Mark Vitner, a managing director and senior economist with Wells Fargo Corporate and Investment Banking, said that in addition to access to a broader labor supply, larger markets also provide companies with greater access to the financial media and other professional services needed at the corporate level. Additionally, some firms also end up moving their design teams to large metro areas because they find it easier to hire engineers and designers there.

“The loss of corporate headquarters is always a big hit to a community’s ego and can have an adverse impact on charitable groups and the local arts community,” Vitner said. “Most firms maintain their commitments to charities and the arts. Good companies tend to be good corporate citizens in the communities they operate in.”

The Business Record also asked a corporate tax expert to weigh in. While tax climate is an important factor, there likely would be little, if any, corporate tax advantage that would have prompted a headquarters shift from Iowa to Minnesota, said Joe Kristan, a partner with accounting firm Eide Bailly in Des Moines.

Kristan cited a 2021 study conducted by the Tax Foundation and KPMG, “Location Matters 2021: The State Tax Costs of Doing Business,” which ranked Minnesota and Iowa near the bottom of all states for corporate tax costs, specifically looking at a corporate headquarters as one of eight model firms that were compared across all the states. The study accounts for all business taxes, including corporate income taxes, property taxes, sales taxes, unemployment insurance taxes, capital stock taxes, inventory taxes and gross receipts taxes. Iowa ranked 49th, while Minnesota ranked 48th.

“Unless Minnesota offered Winnebago some specific incentives, I suspect that the difficulty in getting executives and technology workers to relocate to Forest City was more important,” Kristan said. “For taxes, Minnesota is at best a wash, and in some ways worse. Taxes matter, but so do other things.”

Vieregger noted that Winnebago has announced plans for as much as $65 million in capital investments during the current fiscal year, “most of which I would expect to go toward its local manufacturing capabilities.”  

“It’s hard to not feel like Winnebago’s move is a loss to Iowa,” he said. “But I really do think — I hope — that we can expect the company to maintain its commitment to our communities here in the state.”