Austin could land 500 jobs from Facebook, Chinese solar company

Both companies seeking local and state incentives to establish service center, manufacturing plant/U.S. headquarters.

February 25, 2010

By Kirk Ladendorf, Barry Harrell and Marty Toohey
Austin American-Statesman

Austin could land a solar panel manufacturing plant and a local office for the Facebook social networking service, projects that together could bring 500 jobs within the next few years, city and state officials said Thursday.

Facebook Inc. plans to create a 200-employee sales and operations center in Austin, and Yingli Green Energy Americas Inc. is considering Austin and Phoenix, Ariz., for a large solar panel manufacturing plant and its North American headquarters.

The City Council is scheduled to hold hearings and vote on both proposals March 11, after a public briefing Wednesday.

Facebook appears to be more of a sure thing. The company has indicated it will expand to Austin if the City Council approves incentives worth $200,000 over 10 years. Gov. Rick Perry announced Thursday that the Texas Enterprise Fund would provide $1 next page.4 million in incentives, tied to approval of the local incentives.

Yingli has only a few weeks to choose between Austin and Phoenix to meet the requirements for a $4.5 million federal tax credit tied to the project, said Dave Porter, senior vice president for economic development at the Greater Austin Chamber of Commerce.

The company is a subsidiary of Yingli Green Energy Holding Co. Ltd. , a Chinese company that is one of the world’s largest makers of solar power panels.

"This would be a big deal for us, if we are able to land it," Porter said, because it would add to Austin’s alternative energy companies.

Over the past few years, several solar power companies have bypassed Austin to choose locations in other states, including New Mexico and Arizona. Some of those projects were never completed because the global recession held up financing.

But Yingli is far more established than many smaller companies that are attempting to build solar plants, Porter said. "It is making money, and it’s listed on the New York Stock Exchange," he said.

The company uses a manufacturing process that is somewhat similar to semiconductor manufacturing, one of Austin’s core technology industries.

Pete Winstead, an Austin lawyer representing Yingli, said Austin has a couple of factors in its favor: Texas is a top market for solar power, and Suntech Power Holdings Co. Ltd., a Chinese-based competitor to Yingli, already has chosen Phoenix for a new plant site.

The company’s agreement with the city says it would create 303 jobs within three years and spend $19.9 million on plant improvements and manufacturing equipment.

Most of the jobs – 240 – would be for entry-level assemblers, but 63 more jobs would include higher-paid managers, supervisors and professional staff. The city is proposing an 80 percent break in the property taxes on improvements Yingli makes to the plant and the equipment, worth $354,561 over 10 years.

The company is in negotiations with the state on further incentives.

"We are in the process of coming up with our final decision between Phoenix and Austin," Yingli spokesperson Helena Kimball said. "It is a very competitive process."

Facebook Chief Operating Officer Sheryl Sandberg said her company likes Austin for its base of tech-savvy talent.

"Facebook continues to grow, and Austin, with its deep talent pool, would allow us to hire the high-caliber employees we need," she said in a statement.

"This is the kind of industry we’re trying very hard to persuade to move to Austin," Mayor Lee Leffingwell said. "These packages that we’ve done recently are good for the city, and we’re going to continue to roll them out; we’ve got several more in the works."

The new projects could help kick-start Austin’s job growth engine, which faltered during the recession. The city lost 2,300 jobs between December 2008 and December 2009, and had not attracted a major new employer in some time.

But in recent weeks, the City Council has approved incentives deals for Hanger Orthopedic Group and LegalZoom Inc., which combined would create 850 jobs over the next several years.

Economist Jon Hockenyos, president of the TXP Inc. consulting firm, said Austin’s approach to the latest projects "has been almost textbook."

The city has proposed generally modest incentives, which have enabled new employers to seek larger incentives from the Texas Enterprise Fund.

"Incentives have to be the icing, not the cake," he said. "The fundamentals have to be in place – the labor force, access to markets, all the key things that a company looks for – but the incentives can be the determining factor" in a company’s site decision.

Bernard Weinstein, an economist at the Cox School of Business at Southern Methodist University , said he "is not a big fan of incentives in general" but the new proposals appeared to be low-risk for Austin, given the relatively small financial commitment.

"If you’re talking $200,000 to get 200 Facebook jobs, that’s chump change," Weinstein said. "I don’t believe the incentives are the key reason (the companies would come to Austin), but maybe it was the deal clincher."

Facebook

Jobs: 200 by 2014, with that level maintained through 2019; 90 percent would be local hires.

Pay levels: $50,000 a year for staff workers, $85,000 for managers.

Location: Company is looking at East Austin sites but would consider downtown or South Congress Avenue.

Incentives: $200,000 over 10 years, tied to job creation.

City benefit: $312,731 at the end of 10 years, considering direct costs and direct benefits such as sales tax and city utilities revenue.

Yingli Green Energy

Jobs: 303 within three years, with that level maintained through 2019.

Pay levels: The range would be from $13.50 an hour for manufacturing workers to $50,000 a year for staff-level jobs and up to $125,000 annually for 2 executives.

Location: No site has been chosen, but the company would lease an existing facility.

Incentives: 80 percent property tax break for 10 years on the plant improvements and equipment, estimated at $354,561, tied to job creation.

City benefit: $903,000 at the end of 10 years, considering direct costs and direct benefits.

kladendorf(at)statesman.com;445-3622
bharrell(at)statesman.com; 912-2960
mtoohey(at)statesman.com; 445-3673

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