Apple's growing presence in Austin starts to come into focus [Austin American-Statesman]
(Austin American-Statesman (TX) Via Acquire Media NewsEdge) Oct. 26--For a company that is celebrated for its stylish design, Apple Inc.'s expanded Central Texas campus on West Parmer Lane has a pretty utilitarian look about it, at least from the outside.
The California-based computer company is building on a 39-acre site adjacent to its present Austin operations, which employ more than 3,000 people in its Americas Operations Center.
The Austin center is being built as Apple starts on its new headquarters complex in California, which has a celebrated circular "spaceship" design. The Austin center has a far less futuristic look, but it will have a walking trail around the complex. It already boasts at least one entrance sign that reads: "Welcome to our smoke-free campus."
Right now, two hulking four-story office buildings are nearing completion alongside an enormous parking garage. The project looks dense, sort of like an iPad Mini, with a lot of stuff packed into a tight package.
Apple hasn't invited media types inside the campus yet, and it might not ever. The company continues to earn its reputation for intense secretiveness.
The fast-growing electronics giant has had to give up some details about its Austin project in return for the the estimated $35 million in state and local tax incentives it will recent for the Austin expansion, which was known locally as "Project Hudson."
The company has said it plans to spend $282 million on new buildings and equipment in Austin over the next decade. That is expected to include seven new office buildings with a combined 1 million or more square feet of space. Those buildings will house an estimated 3,600 new workers needed to support Apple's continued growth. The average wage for those new jobs will be $54,000 a year in the first year of the expansion and will expand to $73,500 in year 10.
The jobs will run the gamut of skills required to run Apple's business operations for the entire Western Hemisphere. A look at Apple's job openings for Austin shows what kinds of different skills are being sought -- including fraud prevention, finance, customer support, corporate sales, information systems and accounts payable. Some of those openings are aimed at employees who are fluent in Spanish or Portuguese, which is critical for working with the company's sizable business in Latin America.
But the Apple website also shows other kinds of job openings in Central Texas. It recently listed more than 50 openings for employees involved in chip design and development. Those jobs presumably are supporting the Intrinsity Inc. design team that Apple acquired in 2010. That design team, analysts say, has been heavily involved in developing the new systems chips that run Apple's mobile products -- both iPhones and iPads. That engineering team, at present, does not work at the Parmer Lane campus.
Added to that mix is the pledge made by company CEO Tim Cook this year that Apple will invest about $100 million in bringing back some of its computer manufacturing to the United States. Cook told a congressional committee in May that the work will be based in Texas.
Those plans could coincide with the recent plans by Flextronics Inc. to expand its existing manufacturing plant in Northwest Austin and make it a Foreign Trade Zone for tax purposes. Flextronics has said that its expansion will be tied to manufacturing for "next-generation desktop" computers. Analysts say that description fits with Apple's announced plans to have some of its computers built in Texas.
Cook talked about the company's manufacturing plans when responding to a congressional committee's concern about the company's extensive use of federal tax loopholes to minimize taxation of its profits. Moody's recently estimated that Apple's reported $147 billion in cash represents about 10 percent of the cash held by all U.S. companies. And much of that cash is held overseas away from U.S. taxing authorities.
Apple and its sometime electronics supplier, Samsung Electronics, are the two fastest growing of the major tech employers in Central Texas these days. Samsung is spending the most money -- new chip factories are enormously expensive -- but Apple is adding the most jobs.
To tech analyst Patrick Moorhead with Moor Insights & Strategy, Apple's expansion in Central Texas makes sense. The company has grown enormously. Analysts expect it to report more than $167 billion in annual revenue on Monday, about seven times as much as 2007 when the iPhone was introduced.
The company needs workers to support that burgeoning growth and some of them will be hired in Austin, where wages are considerably less than those paid at the Cupertino, Calif., headquarters.
"They already have a massive footprint in Silicon Valley," Moorhead said. "And if you are going to expand, Austin is one of the more likely places you would go."
But some financial analysts are concerned that Apple's enormous growth engine is running out of steam.
They point to the latest iPhone introduction in September. The high-end model, the iPhone 5S, is selling at a rapid clip, but the lower-priced model, the 5C, is selling at a far slower rate. The verdict from analysts is that Apple did not create a strong enough price differential for the 5C to make it compelling to those consumers looking for a more affordable new smartphone.
Toni Sacconaghi, an analyst with Bernstein Research, says that Apple is showing signs of becoming a "high-end niche player" and missing its chance to take a big share of the expected immense market for lower-cost smartphones.
If the company continues down that path, the analyst said, Apple's recent growth could slow sharply in the next few years. And if that happens, then its expansion plans for Austin might be pared down.
(c)2013 Austin American-Statesman, Texas
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