By Timothy W. Martin and Russell Gold
Apple Inc. said it plans to invest $1 billion building a new
corporate campus in Austin, Texas, promising to create as many as
15,000 jobs, as it and a handful of other tech giants expand their
footprint well beyond the West Coast.
The Cupertino, Calif.-based iPhone maker said it would also
establish new offices in three cities -- San Diego, Seattle and
Culver City, Calif. -- where it said it would add more than 1,000
employees in each place. Over the next three years, Apple said it
would add hundreds of jobs in cities where it already has offices,
including New York, Boston and Portland, Ore.
Some of the new jobs are part of initiatives that Apple had
previously announced. Still, the specific cities named for new
offices and expansions came as a surprise. The announcement follows
big, new investment and job-creation plans by other big tech firms,
including Amazon.com Inc. and Alphabet Inc.'s Google.
All three companies have been eager to claim credit for creating
American jobs as their profits soar. President Trump has applied
specific pressure to Apple, calling on it repeatedly to bring
manufacturing jobs home from Asia.
Apple representatives weren't available to comment on the
details of their plans early Thursday. In a press release, Chief
Executive Tim Cook said Apple is "redoubling our commitment to
cultivating the high-tech sector and workforce nationwide."
The secrecy of the site-selection process by Apple -- which made
its announcement at midnight California time -- contrasted sharply
with Amazon's public search for its second headquarters. Amazon
spent months narrowing down a list of candidate cities, ultimately
deciding to split the new headquarters between New York City and
northern Virginia. The search triggered a race among competing
cities to woo Amazon with tax benefits and other enticements.
The e-commerce giant is promising the prospect of as many as
50,000 jobs as part of that expansion. Google, too, is expanding
quickly, saying it will bolster its workforce in New York City,
planning to add more than 14,000 new jobs there over the next
decade.
Apple, meanwhile, has been quietly meeting with local officials
for months. Mr. Cook said in March that Apple wouldn't be
discussing its search because it doesn't believe in the "beauty
contest" approach.
Apple's release didn't mention whether it had received any tax
incentives from any local governments.
All three companies have been under pressure to show the huge
profits they have generated are benefiting the U.S. economy more
broadly. That pressure has only increased amid political and
popular backlashes on several fronts -- including worry about the
industry's use of personal data and what many critics see as the
tech giants' growing and unchecked influence across an array of
industries.
By choosing Austin as its marquee job-creation locale, Apple,
unlike Amazon and Google, is expanding its footprint significantly
in the middle of the country, instead of the East Coast. Cities
like New York, Boston and the greater Washington, D.C., area have
long attracted top tech talent, setting up fierce competition
there. That's been less intense in much of the interior of the
country, though cities like Austin, Atlanta and Nashville have all
enjoyed a fair share of tech investment.
Apple's new campus will initially hire 5,000 workers. That total
could triple in future years, Apple said. Earlier this year, Apple
said it would invest $30 billion in capital spending in the U.S.
over five years, creating more than 20,000 jobs. Apple says it
employs 90,000 people in the U.S. and has added 6,000 jobs to the
American workforce this year.
That capital spending sum included a new campus, which the
company said will initially house technical support for customers.
The investment promise also included $10 billion toward data
centers across the country.
Mr. Cook has been under pressure by Mr. Trump over the company's
outsourcing of the iPhone and other devices' production to
factories in China. In an interview with The Wall Street Journal in
2017, Mr. Trump said Mr. Cook has committed to building three big
manufacturing plants in the U.S.
The expansion comes as Apple faces headwinds. Apple shares have
sunk more than 25% since early October, shedding more than $300
billion in market value, driven in part by investors' concerns
about the future of the iPhone.
Austin was an early candidate in Amazon's search, too, but ended
up losing to larger East Coast cities. Apple's decision is likely
to come as a big psychological boost for the city, apart from any
economic benefit.
Austin has shed its slacker college-town past and embraced a new
image as a high-tech employment hub. In addition to Apple, Google
and Facebook Inc. have all opened large offices in Texas' capital
city. Home prices have risen, as have median incomes and commuting
times.
A longtime lure of Austin, which once promoted itself as the
Silicon Hills, has been its low cost of living, compared with San
Francisco or New York, and lack of a state income tax. The
metro-area population of 2.1 million residents is younger and
significantly better educated than the rest of Texas and the U.S.
It hosts a parade of music festivals through the year and a surfeit
of high-end restaurants. All that has made it attractive to the
type of younger workers that firms want to hire.
The city was a bit of a dark horse in the quest to land Amazon's
second headquarters, dubbed HQ2. Amazon acquired Austin-based Whole
Foods and its downtown headquarters in 2017, making it an Amazon
company town of sorts already. But Austin's relatively small
airport, crowded highways and underdeveloped mass transit system
struggle to match what Amazon said it was looking for in a
headquarters city.
The Austin area is also home to Dell Technologies Inc., while
chip giant NXP Semiconductors NV has a major presence there after
buying Freescale Semiconductor in 2015. Many videogame companies
have studios around town.
The new 133-acre Austin campus will be located less than a mile
from Apple's existing facilities. Apple already employs 6,200
people in Austin, the largest group of employees outside of its
Cupertino headquarters. Newly created jobs will be in areas such as
engineering, finance and sales, Apple said.
It is unclear if any of the new sites will include manufacturing
facilities. Kylie Huang, a Taiwan-based analyst at Daiwa Capital
Markets, said the U.S. job expansions won't likely have a
significant effect on Apple's supply chain. "I think it's more a
gesture" that shows Apple's intention to invest more into the U.S.,
Ms. Huang said.
Most of Apple's devices, including the iPhone and iPad, are
assembled in China by its contract manufacturers such as
Taiwan-based Foxconn Technology -- formally known as Hon Hai
Precision Industry Co. -- and Pegatron Corp.
Analysts and people familiar with Apple's operations say it
isn't easy to shift production out of China. Much of the
electronics supply chain is based in China and neighboring
countries, and many steps of assembling the iPhones still rely on
the hands of hundreds of thousands of workers. To shift iPhone
production to the U.S. from China would mean Apple, or its contract
manufacturers, must secure an army of seasonal workers capable of
doing precision assembly -- not an easy task, they said.
Yoko Kubota and Stu Woo contributed to this article.
Write to Timothy W. Martin at timothy.martin@wsj.com and Russell
Gold at russell.gold@wsj.com
(END) Dow Jones Newswires
December 13, 2018 09:51 ET (14:51 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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