CLEVELAND -- Mayor Frank Jackson is not giving up the fight to try to keep Eaton Corporation's headquarters downtown.

The company announced it's negotiating to build a new headquarters campus in Beachwood at Dick Jacobs' Chagrin Highlands project.

It had been in serious talks to become part of developer Scott Wolstein's Flats East Bank neighborhood project.

Jackson told reporters he is disappointed by the decision, but respects it.

He admitted it will be a psychological blow to downtown and a setback to its image.

"We've survived other things. We'll survive this," Jackson said.

Eaton was not a part of the original East Bank proposal. The project will continue as planned.

The timing of the announcement is more hurtful on the heels of the Jewish Commmunity Federation's decision to move its operations from downtown to Beachwood.

Eaton is taking on a new corporate mission and planning to expand. It's switching its focus from manufacturing to energy management.

Jackson said Eaton CEO Sandy Cutler told him the nine-acre site on port property was not big enough and had problems because of it's closeness to a working port.

The city would make money even if Eaton goes to Beachwood. It owns the Chagrin Highlands property and would sell the land to Eaton. It would also keep half the income tax from Eaton workers in a tax-sharing arrangement with Beachwood.

Jackson claimed Cutler sounded like his mind was made up to go to Beachwood. But an Eaton spokeswoman stressed the deal was not done.

Jackson pledged to call Eaton and see if the deal could be reshuffled or changed to keep Eaton here.

Jackson admitted Cutler told him Eaton was unhappy about the city's policy to tax executives' retirement income. But he said Cutler never connected the issue with the headquarters talks.

You can hear Jackson's complete interview with reporters about the Eaton announcement.