Sunday, March 11, 2007

The Ultimate Outsource

Halliburton, VP Dick Cheney's favorite private-sector employer and one he still receives paychecks from, has pulled the ultimate outsource: they're reportedly moving their C.E.O to Dubai, one of seven emirates that makes up the United Arab Emirates. Dubai, receieves an economic benefit not from oil but from the Jebel Ali Free Zone which offers lucrative incentives and tax breaks to corporations.
Halliburton's corporate offices will remain in Houston, Texas but CEO David J. Lesar will move his personal offices to Dubai. There are a number of issues that Halliburton currently faces:

1. Breaking away from its military contracting unit KBR to focus on oil drilling and
2. an investigation by the SEC and Justice Department because of questionable
dealings in Iraq, Nigeria and Kuwait.
3. has agreed to pay billions in an recent asbestos litigation suit.

A spokeswoman for Halliburton said:
Ms. Norcross added, “As companies usually refer to the C.E.O.’s office as the corporate headquarters, that’s what we are doing. Basing the C.E.O. in Dubai to focus on our Eastern Hemisphere growth makes good business sense, as it is the center of our Eastern Hemisphere operations and a global business hub. We will maintain our company’s legal registration in the United States and we are not leaving Houston.”

This move is symbolic but also points to a key shift in the energy epicenters of the world. Now, a major energy firm of North America is moving it's corporate "headquarters" to Dubai, a Middle Eastern economic power house that is fast-becoming a powerplayer in the global energy business. Houston once served as a center of energy deal-making and commerce, but does this move say Dubai has taken over? The younger oil fields of the Middle East trumping the aging fields of North America. Last year, Halliburton reported $2.3 billion in overall revenue, 60% of which was in North America.

The loser in this deal appears to be American business, who once again is having jobs chipped away and sent overseas. The winner looks to be Lesar, Halliburton and of course, Dubai who continues to establish itself as a "regional commercial center rivaling Singapore and Hong Kong."

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