This week Johnson Controls announced its plan to merge with Tyco International, a company based in Ireland. Johnson Controls is Wisconsin’s largest, publicly owned company, with thousands of people employed in the state.
The merger means the company will shift its corporate and legal headquarters to Tyco’s base in Cork. Johnson Controls specializes in heating and air-conditioning services, while Tyco specializes in security and fire systems.
“Their combined services provide kind of a one stop shop for a building manager for a big commercial office building,” says Olivia Barrow, a reporter for the Milwaukee Business Journal.
This is just the latest example of a U.S. based company buying a company based in a foreign country, and shifting its headquarters overseas. The strategy is often called, “corporate inversion,” and it allows companies to avoid high, federal taxes. The move will save the company $150 million in annual taxes.
“The majority of that is in the federal taxes,” says Barrow, “So it is going to be a bigger impact across the nation, and that’s a lot of why you see people like Hillary Clinton and Bernie Sanders coming out and railing against this deal.”
Regarding the merger's impact on jobs, Barrow says the companies are "looking at operational savings from what they call increased efficiencies, fewer redundancies, which always brings up the question of 'is that clever language for layoffs' and it often is, but you never know where it is going to happen."
Lake Effect reached out to Johnson Controls, but they declined to comment on what this will mean for the company’s future in Wisconsin. According to the company, the reasons for the merger aren’t purely motivated by money. Johnson Controls CEO Alex Molinaroli says the acquisition of Tyco will allow both companies to provide a better service to their customers.
“Everything is sending data and as one combined company if they can process that data and find ways to help building owners manage their buildings more efficiently, more cheaply, then there’s a huge opportunity there,” says Barrow. “It’s kind of an untapped world of available innovation in building management.”