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Austin may be competing with Phoenix for new Apple facility

Wednesday, October 30, 2013 by Mark Richardson

Phoenix and Austin could be in competition again, this time in a race to lure Apple to manufacture computers in a local facility with the possibility of hundreds of jobs and millions in economic development to either region.


An article in the Phoenix Business Journal Monday quoted unnamed sources in the commercial real estate business as saying that Apple could be the “mystery buyer” for a now-abandoned solar panel plant in the suburb of Mesa. First Solar Corp. built the $300 million manufacturing plant in 2011 at the site of the former GM Proving Grounds next to Phoenix-Mesa Gateway Airport, but the bottom dropped out of the market for solar panels before it could occupy the building.


There has been rampant speculation since First Solar announced that it was negotiating with a possible buyer for the facility three weeks ago, but officials have been very tight-lipped about who the possible buyer might be. The southeast part of the Phoenix Valley – including the suburbs of Mesa, Chandler and Tempé – already host several high-tech firms, including Intel, Honeywell, Hewlett-Packard and Raytheon.


Apple CEO Tim Cook announced in September that the company planned to move the manufacturing of one or more of its personal computers from China to the United States, and possibly to Texas.  With that, speculation began in Austin that a plan by Flextronics Corp. to hire some 300 new employees in its North Austin facility was also making way to build components for Apple.


Austin and Travis County officials even voted a few weeks back to make the Flextronics facility a Foreign Free Trade Zone in anticipation of some kind of manufacturing going in. The designation gives Flextronics a major tax break on its inventory. At that time, there was a fair amount of nudging and winking over whether they would be building an Apple product.


Economic development officials in Arizona have a lot on the line with a possible Apple facility landing in their state. Phoenix officials are still smarting over losing out to Austin in 2012 for a 3,600 employee Apple back-office center, which is currently under construction in North Austin. The City of Austin, Travis County and the State of Texas granted Apple an estimated $38 million dollars in incentives to bring that operation to Austin.


Local critics in Arizona opined that that Arizona officials were ill-prepared to entice a company like Apple to locate in Phoenix, and those officials vowed to be better prepared if such an opportunity came along again. After losing the Apple deal, some Phoenix officials complained that Texas offered a disproportionately large economic incentive with which Arizona officials could not compete.


The Phoenix area has many of the same selling points that Austin uses to attract high-tech businesses to the area: a large, well-educated work force; a relatively low cost of living; a major university nearby (Arizona State); a location in the Sun Belt, and plentiful and reliable sources of power. Both areas, however, are currently “water challenged.”


But as a state and region, Arizona has not been able to put together the same type of incentives offered by states like Texas, New York and California. Part of the problem is blamed on a lack of coordination among the multiple cities in the Phoenix Valley, and others blame it on a political atmosphere that prefers low taxes and small government.


Of course, all of the speculation is merely an academic exercise until Apple indicates where it plans to locate its manufacturing facility, and there’s been no indication coming out of the company’s Cupertino, Calif. headquarters as to which direction it might go.

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