AP­PLE UPSTAGES AMA­ZON IN SE­LECT­ING NEW TECH HUB LO­CA­TIONS

Apple Magazine - - Summary -

One tech gi­ant 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 to build a $1 bil­lion cam­pus in Austin, Texas, that will cre­ate at least 5,000 jobs rang­ing from en­gi­neers to call-cen­ter agents while adding more lus­ter 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 $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 high­tech 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 $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

Ap­ple will build a $1 bil­lion cam­pus in Austin, Texas, break ground on smaller lo­ca­tions in Seat­tle, San Diego and Cul­ver City, Cal­i­for­nia, and soon ex­pand in other U.S. cities, too.

an­other, as Ama­zon had be­fore de­cid­ing to build huge new of­fices in New York and Vir­ginia.

Ama­zon could re­ceive up to $2.8 bil­lion in in­cen­tives in New York, de­pend­ing on how many it ul­ti­mately hires there, and up to $750 mil­lion in Vir­ginia. Ap­ple will re­ceive up to $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.”

The spots where Ama­zon and Ap­ple de­cided to ex­pand were ob­vi­ous choices, based on an anal­y­sis re­leased ear­lier this year by CBRE Re­search. Wash­ing­ton, D.C., ranked as the third best place in North Amer­ica for tech tal­ent, be­hind Sil­i­con Val­ley and Seat­tle. New York ranked fifth and Austin sixth. No. 4 was out­side the U.S.: Toronto.

The new Austin cam­pus, with about 3 mil­lion square feet (nearly 280,000 square me­ters) of of­fice space, will be about a mile from an­other large of­fice that Ap­ple opened five years ago. Ap­ple cur­rently em­ploys about 6,200 work­ers in Austin, mak­ing it the com­pany’s largest hub out­side Sil­i­con Val­ley even be­fore the ex­pan­sion.

The new jobs are ex­pected to mir­ror the same mix Ap­ple al­ready has at its Cu­per­tino, Cal­i­for­nia, head­quar­ters, rang­ing from jobs in tech­nol­ogy and re­search that pay well over $100,000 to lower-pay­ing po­si­tions in cus­tomer call cen­ters.

Cities have been ea­ger to bring in more tech em­ploy­ers be­cause their hires of­ten make six-fig­ure salaries. That can rip­ple through the econ­omy, with new em­ploy­ees fill­ing restau­rants and the­aters, buy­ing prop­erty and pay­ing taxes.

But an in­flux of af­flu­ent tech work­ers can also drive up rent and home prices, mak­ing it more dif­fi­cult for those in lower-pay­ing jobs to make ends meet.

“When tech com­pa­nies in­vest in a place and try to hire thou­sands of work­ers, it is of course good news for tech work­ers who are al­ready there and want to be there,” said Jed Kolko, chief econ­o­mist for em­ploy­ment web­site In­deed.com. “But it can put a strain on the hous­ing mar­ket and trans­porta­tion.”

Texas Gov. Greg Ab­bott hailed Ap­ple’s new cam­pus as a mile­stone de­vel­op­ment that “truly el­e­vates Austin as one of the pre­mier tech­nol­ogy hubs in the en­tire world.”

Ap­ple’s move was cheered by Pres­i­dent Don­ald Trump, who thanked Cook in a tweet for “agree­ing” to ex­pand its U.S. op­er­a­tions. It was sharp change in tone from Septem­ber, when Trump re­sponded to Cook’s con­cerns about tar­iffs by telling Ap­ple to make its prod­ucts in the U.S. in­stead of China. Ap­ple uses plants in China and else­where to pro­duce com­po­nents and as­sem­ble its prod­ucts.

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