A tech giant connected dozens of North American cities through a circus-like contest that prompted mayors and governors to desperately pitch their regions, and offer huge sums of public money, in hopes of achieving a shiny new corporate campus. The other entered quietly before making his big move.
The Apple logo is seen outside the main store in downtown Milan, Italy, October 23, 2018. REUTERS / Stefano Rellandini – RC13307ADEF0
The result was pretty much the same: Amazon and Apple are running out of space in their West Coast cities and establishing a major foothold in a handful of US cities already known as second-tier tech hubs.
But this week, at least, Apple may have won the award for completing its search with the least amount of hurt feelings.
Apple announced plans Thursday to build a $ 1 billion campus in Austin, Texas that will create at least 5,000 jobs, from engineers to call center agents, while adding more sparkle to a city that has already become a destination for tech companies and larger companies.
The decision comes 11 months after Apple CEO Tim Cook revealed plans to open a major office outside of California after a massive tax cut on overseas earnings, prompting the company to return some $ 250 billion to the United States.
The company said it will also open offices in Seattle, San Diego and Culver City, California, each of which will employ at least 1,000 workers in the next three years. Apple also pledged to add hundreds of jobs each in New York; Pittsburgh; Boston; Boulder, Colorado; and Portland, Oregon.
“They’re just picking the most established superstar cities and tech hubs in the United States,” said Richard Florida, an urban development expert at the University of Toronto.
Apple’s scattered expansion reflects growing competition from engineers in Silicon Valley, which has long been the high-tech capital of the world. The supply for programmers is driving up wages, which in turn is catapulting median home prices in many parts of the San Francisco Bay area above $ 1 million. Many high-tech workers are choosing to live elsewhere, prompting top tech employers like Apple, Amazon and Google to look elsewhere for the employees they need to pursue their future ambitions.
“The talent, creativity and innovative ideas of the future are not limited by region or zip code,” Cook said in a statement.
Cities across the country offered financial incentives in an attempt to get to Apple’s new campus, but Cook avoided a high-profile competition that pitted them against each other, as Amazon had done before deciding to build huge offices in New York and Virginia. .
Amazon could get up to $ 2.8 billion in incentives in New York, depending on how many people you hire there and up to $ 750 million in Virginia. Apple will receive up to $ 25 million from a Texas job creation fund, in addition to property tax refunds, 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 along the lines of normal business site selection” compared to Amazon’s public “shakedown,” said Mark Muro, senior fellow at the Brookings Institution’s Center for Metropolitan Policy.
“There is a growing reaction in the country against the whole process of subsidies and incentives for relocation,” Muro said. “That said, Apple’s numbers for a very significant increase in jobs are much less conspicuous than Amazon’s numbers.”
The places where Amazon and Apple decided to expand were obvious choices, based on an analysis published this year by CBRE Research. Washington, DC, ranked third best in North America for tech talent, behind Silicon Valley and Seattle. New York ranked fifth and Austin sixth. Number 4 was outside the US: Toronto.
The new Austin campus, with roughly 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 of Silicon Valley, even before the expansion.
The new jobs are expected to reflect the same mix Apple already has at its Cupertino, California headquarters, ranging from technology and research jobs paying more than $ 100,000 to lower-paying positions in customer call centers.
Cities have been eager to attract more tech employers because their employees often earn six-figure salaries. That can ripple through the economy, with new employees filling restaurants and theaters, buying property and paying taxes.
However, the influx of wealthy tech workers can also drive up rental and housing prices, making it difficult for those in lower-paying jobs.
“When tech companies invest in one place and try to hire thousands of workers, it’s good news for tech workers who are already there and want to be there,” said Jed Kolko, chief economist at the employment website Indeed .com. “But it can put a strain on the housing and transportation market.”
Texas Governor Greg Abbott called Apple’s new campus a milestone that “elevates Austin as one of the most important technology hubs in the world.”
Apple’s decision was hailed Friday by President Donald Trump, who thanked Cook in a tweet for “agreeing” to expand its operations in the United States. It was a sharp change in tone from September, when Trump responded to Cook’s concerns about the tariffs and told Apple to make its products in the U.S. Apple uses plants in China and elsewhere to produce components. and assemble your products.
