Apple veers from Amazon in locating new operations
One tech giant AUSTIN, TEXAS strung dozens of North American cities through a circus-like contest that led mayors and governors to desperately pitch their regions — and offer huge sums of public money — in hopes of landing a gleaming new corporate campus. The other swept in quietly before making its big move.
The outcome was largely the same: Amazon and Apple are running out of room in their West Coast hometowns and establishing a major foothold in a handful of U.S. cities already known as second-tier technology hubs. But this week, at least, Apple may have won the prize for completing its search with the fewest hurt feelings.
Apple announced plans Thursday to build a US$1 billion campus in Austin, Texas, that will create at least 5,000 jobs ranging from engineers to call-centre agents while adding more lustre to a city that has already become a destination for tech startups and bigger companies.
The decision comes 11 months after Apple CEO Tim Cook disclosed plans to open a major office outside California on the heels of a massive tax cut on overseas profits, which prompted the company to bring about US$250 billion back to the U.S.
The company said it will also open offices in Seattle, San Diego and Culver City, California, each employing at least 1,000 workers over the next three years. Apple also pledged to add hundreds of jobs each in New York; Pittsburgh; Boston; Boulder, Colorado; and Portland, Oregon.
“They are just picking America’s most established superstar cities and tech hubs,” said Richard Florida, an urban development expert at the University of Toronto. Apple’s scattershot expansion reflects the increasing competition for engineers in Silicon Valley, which has long been the world’s high-tech capital. The bidding for programmers is driving salaries higher, which in turn is catapulting the average prices of homes in many parts of the San Francisco Bay Area above US$1 million. Many high-tech workers are thus choosing to live elsewhere, causing major tech employers such as Apple, Amazon and Google to look in new places for the employees they need to pursue their future ambitions.
“Talent, creativity and tomorrow’s breakthrough ideas aren’t limited by region or ZIP code,” Cook said in a statement. Cities around the country offered financial incentives in an attempt to land Apple’s new campus, but Cook avoided a high-profile competition that pitted them against one another, as Amazon had before deciding to build huge new offices in New York and Virginia. Amazon could receive up to US$2.8 billion in incentives in New York, depending on how many it ultimately hires there, and up to US$750 million in Virginia. Apple will receive up to US$25 million from a jobs-creation fund in Texas in addition to property-tax rebates, which still need approval. The figure is expected to be a small fraction of what Amazon received. The government incentives offered to Apple seem “more in the line of normal business site selection” compared with Amazon’s public “shakedown,” said Mark Muro, a senior fellow at the Brookings Institution’s Metropolitan Policy Center.
“There’s a growing backlash in the country against the entire process of subsidies and relocation inducements,” Muro said. “That said, the Apple numbers for a very significant increase in jobs are much less eye-popping than the Amazon numbers.”