Aon, the world's number 2 insurance broker, announced this morning that its moving its country of domicile and senior management to London from Chicago. My sources tell me that the principal motivation for this action is to reduce the corporate tax rate by something like 10 percentage points. The question that I'm sure is being raised with this announcement is: Will MMC follow suit with such a move to obtain a similar long-term tax benefit??? Clearly Aon's announcement is a text-book case of what's wrong with US corporate tax policy. However, company managements aren't going to wait for the U.S. Congress to get its act together before taking unilateral action. Consequently, it will be quite interesting to see what officials of Marsh say about this move by its closest competitor, Aon.
At the risk of emphasizing what I believe you already know,the non-US parts of MMC, AON and WSH are already larger and more significant. And they are growing faster than the US business. So, it's just the opposite. Moving the corporate headquarters is simply a recognition that the US is not the center of the known universe. The consulting side is more US centric for both AON and MMC. But even those operations have significant international components.
Employees are an expense at Aon, not a resource. See Peter Drucker for latter defined. Case and the McKinsey mindset are bent on EXPENSES ONLY and growth cut cutting. If the move to London is really motivated by Tax savings, then a poor management team indeed is at the helm. The argument that this makes Aon a more GLOBAL company is PR fantasy talk. The world is inter-connected by internet, video conferencing, etc. Being able to walk out the door, walk a few blocks into Lloyd's of London (or good seats for Manchester United) is a joke. Smokescreen and I cannot wait to see Case try and explain it that way. He is a MONEY PINCHER pure and simple and nothing else.
No--I'm saying it's larger in the "rest of the world" than it is in the US. If you look at the results for Aon, Marsh and Willis, they are growing well in the rest of the world and stangnat or only growing slowly in the US and Canada. And, while large global US based customers are important, Aon, Marsh and Willis also have customers that are insurance companies and non-US global companies. They all still need strong local management, sales and service. Where they are light in those areas, they are losing the battles. Still I think it's a pretty shrewd move to become a truly global company by moving the headquarters from the US to Europe.
Nobody in their right mind could disagree with the idea of doing the best possible job for customers. But in a global organization, where you need a presence everywhere, why not be 1) where the action is, 2) where the tax rates are most favorable, 3) closer to your customer. Growth and profits for all three global brokers (AON, MMC and WSH) are coming from everywhere but North America. Why be North America centric when all the signals tell you that you shouldn't be?