Government // Mobile & Wireless
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9/1/2009
08:09 PM
Bob Evans
Bob Evans
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Global CIO: HP And IBM To Add 4,000 U.S. Jobs In Three Small Towns

HP and IBM will open heavily subsidized customer-support centers in three small towns across the U.S. that will eventually employ 4,000 workers. The jobs are wonderful--but was the price for them fair?

HP's Conway, Ark. center: This facility, scheduled to open December 20, is also expected to eventually create 1,200 jobs, but those will be phased in over four years with most jobs paying more than $40,000, according to comments officials have made. Hey, in this economy, every new job is precious, so I'm not knocking the HP plan. But as with IBM, HP could have gained a lot more public credit by being more forthcoming about what financial incentives it's getting from Arkansas and from Conway, and in return what commitment it's making to that community. Here's what I was able to learn from published reports: --The new 150,000-square-foot HP facility in Conway will be built by the Conway Development Corp. at a cost of $28 million, and will then be leased back to HP for an undisclosed amount. --$10 million more will come from Arkansas governor Mike Beebe's "Quick Action Closing Fund" and will be applied to "infrastructure." --The city of Conway committed to spend $2.2 million to "prepare" the site.

That's $40 million for 1,200 jobs phased in over four years—is that a good investment? Like the good people of Conway, I surely hope so. One person who definitely thinks it's an outstanding investment is HP vice president of government affairs Gary Fazzino, who said this in an ArkansasBusiness.com article:

"It is very clear why Arkansas is such a great place to do business: Business environment, skilled work force, outstanding educational system, high quality of life and a commitment by the state's political, business and educational leadership to aggressively seek out opportunities for economic growth," Fazzino said during the announcement. "These factors helped Arkansas earn its way to the top of the list of U.S. states for HP investment."

HP's Rio Rancho, New Mexico center: This 200,000-square-foot facility, slated to open in Spring 2010, is expected to eventually employ 1,300 workers, again phased in over a few years. And with all due respect to the wonderful people of Rio Rancho and the surrounding areas, everyone should be crystal clear in understanding why HP chose it for this new facility: in a January 7, 2009 article about HP officials coming to down for the ceremonial ground-breaking, KRQE.com wrote, "The Fortune 500 company said it chose Rio Rancho because of the tax incentives offered by the state."

Again, there's not a darned thing wrong about that—I'm not sure about you, but when I'm buying something of significant value, I tend to make the final price a very high priority. But what's the value of the incentives the state and city are giving HP, and what in return is the value of the investment HP is making in Rio Rancho with this beautiful new facility? Some details on Rio Rancho:

--Most of the 1,300 jobs will pay $45,000 and up, says the state Economic Development Dept. And the department knows that because the state is offering HP between $20 million and $30 million in "high-wage tax credits," according to a New Mexico Business Weekly article. Salaries must be at least $40,000 to qualify for the "high-wage tax credit, a state official said.

--In addition, the new HP facility will qualify for funds under the state's Job Training Incentive Program, which offers two juicy benefits to prospective employers: first, it provides classroom or on-the-job training for new employees; and second, it reimburses the employer up to 80% of trainees' wages for up to six months.

--New Mexico's governor originally pledged $12 million in "capital outlay" funds for the project, but a later report boosted that figure to $16 million.

So what's the upshot here?

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