Diebold suspends plans to build $100 million world headquarters in Green

"Investing more than $100 million in a headquarters facility is not economically feasible given the other priorities for the business at this time," Diebold President and Chief Executive Thomas W. Swidarski said.

 Main entrance rendering of proposed Diebold Global Headquarters campus. Diebold announced today it was suspending its plans to build the new headquarters. Diebold Inc.

GREEN, Ohio -- ATM maker Diebold Inc. has changed its mind about building a $100 million global headquarters, but said it is committed to staying in the City of Green.

The $2.8 billion technology company, whose overseas operations have been battered in recent months, said it was suspending "indefinitely" its plans to build its new corporate headquarters in order to focus on growing its business through investment and acquisitions.

"As we've been analyzing our near- and long-term growth priorities, it has become clear that investing more than $100 million in a headquarters facility is not economically feasible given the other priorities for the business at this time," Diebold President and Chief Executive Thomas W. Swidarski said in a statement.

As part of efforts to cut costs, Diebold will also eliminate about 500 jobs in North America and Brazil over the next 30 days, including fewer than 75 positions in Northeast Ohio.

The company has 17,000 employees in nearly 90 countries, including about 2,000 workers at seven buildings in Summit and Stark Counties.

The Fortune 1000 technology company said it will decline the more than $97 million in state and local incentives it had been offered toward the cost of the new facility, "thus allowing those assets to be redirected to other programs that will benefit our state and region."

Diebold stressed its headquarters decision was not related to the company's 58-percent drop in third-quarter earnings, to $17.4 million, announced Thursday.

"Had we announced 'up' earnings, we still would have suspended the new headquarters," said spokesman Mike Jacobsen.

Instead, Diebold wants to invest in opportunities similar to its recent acquisitions of Altus, an information technology company that provides ATMs and other services to Turkey's financial sector, and GAS Tecnologia, a Brazilian banking, online payment and mobile security that tries to prevent phishing, pharming and other threats to mobile transactions.

Swidarski spoke to Ohio Gov. John Kasich Wednesday night and told local officials and employees on Thursday.

Kartik Mehta, research analyst with Northcoast Research in Cleveland, said he's not worried about Thursday's poor earnings or the headquarters decision.

"I think all good companies evaluate themselves and try to determine what they need to focus on and what areas need greater attention," he said. "Diebold seems to be very focused on making smart acquisitions to make the business stronger."

Gil Luria, a stock analyst for Wedbush Securities Inc. in Los Angeles who has covered the company for seven years, said shareholders would likely welcome news that the company wants to increase its sales and profits instead of spending money on a new building.

"Given that the global economy isn't helping very much and other sources of growth are not materializing, they need to do some more cost-cutting to return to earnings growth," he said.

Diebold, which had envisioned building a world-class, state-of-the-art corporate campus, will now explore more modest updates to keep its employees happy.

"Our intent is to solidify our presence in this region as we invest in growing our business globally - and continue to make a significant economic contribution to the state," Swidarski said.

Jacobsen said a future corporate campus is possible.

"Five, six, seven, 10 years from now, depending on how our business is doing, we might want to dust off our plans and take another look at them."

If that happens, Diebold may not have the same opportunities it would have had today.

For one thing, the company received that $57.1 million in state aid as part of incentives for agreeing not to leave Ohio for Virginia and North Carolina.

Under legislation specifically crafted to keep Diebold and American Greetings Corp. in Ohio, Ohio lawmakers created a refundable job retention tax credit for businesses of at least 1,000 employees who had received a written offer from another state in 2010 and who were planning to make more than $25 million in capital improvements.

Katie Sabatino, spokeswoman for the Ohio Development Services Agency in Columbus, said Diebold's incentives, valued at more than $57.1 million, included a $30 million job retention tax credit, a $10 million research and development investment loan and other grants that will now be available for other companies.

"Obviously we're thrilled that they're committed to staying in Ohio," she said.

Diebold had also signed agreements to build on about 55 acres in the Union Square and Park Place area in Green, about five miles from its current headquarters.

"We're disappointed to learn the news, but being in business we know that sometimes you have to make difficult decisions to right the ship," said Bob DeHoff, president of DeHoff Development Co., the owner and developer of the 250-acre site.

Mehta, the Cleveland analyst, said: "I'm not sure why people are so focused on the fact that they're not building a new headquarters.

"People should be more focused on the fact that they want to be a stronger company, because in the end, a stronger company is more of what Northeast Ohio really needs."