Jobs Coming to Conway (school district, universities, median income)

[strumpeace]

Originally Posted by nmnita

let's hope they will stay. There is no guarantees in life, companies do re-locate, but isn't it pretty negative to think this will happen? Would you rather see no new business in the area or none in all of Arkansas?

Nita

I would rather see sustainable business in Arkansas. You know -- the kind that pays its own way, rather than taking handouts from overtaxed taxpayers. (Remember that Arkansas is one of the very poorest states in the nation. And has one of the highest tax burdens. Something here just ain't right.)

Not all business is good business.

Hopefully, HP will stay and the government investment will pay off in the long run. That does not happen often. I hope HP will be the exception.

[SwinerBock]

Though I was a bit taken aback by the $43 million figure as well, even if the AVERAGE salary (which was blacked out on the AEDC's response to the FOI.... why?) ....even if the average is only $20K per year, multiply that by 1200 and that comes out to $24 million per year in payroll.

Add to that the fact that any operation this size is bound to send business to local vendors for other things like lawn care, vending services, plumbing, office supplies, janitorial services, security, electrical work, etc.

Not to mention a short-term bump in the Conway economy from construction jobs (even if the construction is paid for by state money). As well as whatever Conway earns from leasing the building to HP (I'm assuming it's not one of those $1/year leases).

Even if HP only stays there, say, 4 years, Conway comes out ahead. Way ahead.

[nmnita]

Swinerbock,

My point exactly.

Strumpeace,

I think you are totally looking at the negative side of this. Most companies today are given tax breaks for re-locating to a particular area.

Yes, AR does have a very high tax burden, this was one of the things we weighed closely when deciding to re-locate to NWA. That being said, as for one of the poorest states, this also is true but they are not at the bottom or near the bottom if my information is correct. I can name several states poorer that AR.

I just can't see the bad side of HP coming here. Maybe I am dreaming, but 1200 jobs is certainly worth something especially if a good part of them are above minimum wage.

Nita

[Bull Winkus]

There's another angle to this story that hasn't been mentioned. College towns are attractive for their students, sure, but also for their graduates. Not too long ago, Austin, TX was completely not known as a silicon valley alternative. Now it is thriving in that capacity. Corporations are having a tough time in California with high property taxes and newly imposed government regulation. Many such silicon valley companies are relocating some of their facilities. This HP move is but a small piece of the whole story. If it is successful, there will be many others to follow. With 3 colleges (there are still 3 colleges, right?), Conway has a lot of untapped intellectual capacity. Silicon valley companies want idealistic types to fill their management and engineering positions.

This is a first rate opportunity for Central Arkansas. The reality is that companies do consider the financial incentives when choosing a new location. In my humble opinion, at $43 million, Arkansas is getting their hat in the ring for a potentially huge well spring of future revenue at a bargain price.

[nmnita]

Originally Posted by Bull Winkus

There's another angle to this story that hasn't been mentioned. College towns are attractive for their students, sure, but also for their graduates. Not too long ago, Austin, TX was completely not known as a silicon valley alternative. Now it is thriving in that capacity. Corporations are having a tough time in California with high property taxes and newly imposed government regulation. Many such silicon valley companies are relocating some of their facilities. This HP move is but a small piece of the whole story. If it is successful, there will be many others to follow. With 3 colleges (there are still 3 colleges, right?), Conway has a lot of untapped intellectual capacity. Silicon valley companies want idealistic types to fill their management and engineering positions.

This is a first rate opportunity for Central Arkansas. The reality is that companies do consider the financial incentives when choosing a new location. In my humble opinion, at $43 million, Arkansas is getting their hat in the ring for a potentially huge well spring of future revenue at a bargain price.

another good point!!!

When we moved to Texas 20 years ago, we were in the Dallas area (jobless after leaving a political appointment in DC) anyway, we wanted to be closer to our kids (all 3 were there) as well as grandkids. Well hubby almost took a job in Austin because the cost of living was so much lower even though the job paid less than he was hoping to get. As you mentioned, we all know what has happened to Austin since then.

Thanks for pointing this out.

Nita

[SwinerBock]

Originally Posted by Bull Winkus

There's another angle to this story that hasn't been mentioned. College towns are attractive for their students, sure, but also for their graduates. Not too long ago, Austin, TX was completely not known as a silicon valley alternative. Now it is thriving in that capacity. Corporations are having a tough time in California with high property taxes and newly imposed government regulation. Many such silicon valley companies are relocating some of their facilities. This HP move is but a small piece of the whole story. If it is successful, there will be many others to follow. With 3 colleges (there are still 3 colleges, right?), Conway has a lot of untapped intellectual capacity. Silicon valley companies want idealistic types to fill their management and engineering positions.

This is a first rate opportunity for Central Arkansas. The reality is that companies do consider the financial incentives when choosing a new location. In my humble opinion, at $43 million, Arkansas is getting their hat in the ring for a potentially huge well spring of future revenue at a bargain price.

Yes, there are still 3 colleges: University of Central Arkansas (state-funded), Hendrix College (private liberal-arts), and Central Baptist College. Throw in the fact that Little Rock is just "down the road" with its various institutions of higher learning.

[strumpeace]

Originally Posted by nmnita

Swinerbock,

My point exactly.

Strumpeace,

I think you are totally looking at the negative side of this. Most companies today are given tax breaks for re-locating to a particular area.

Yes, AR does have a very high tax burden, this was one of the things we weighed closely when deciding to re-locate to NWA. That being said, as for one of the poorest states, this also is true but they are not at the bottom or near the bottom if my information is correct. I can name several states poorer that AR.

I just can't see the bad side of HP coming here. Maybe I am dreaming, but 1200 jobs is certainly worth something especially if a good part of them are above minimum wage.

Nita

1) Actually, no you cannot name 'several states poorer than AR'. You can name one--maybe two. If you use the Census Bureau's median household income (the most accurate measure, imo), Arkansas ranks 48th of 50. If you use per capita income (not quite as accurate a measurement for a slew of reasons), Arkansas ranks 48th of 50. More recent numbers actually show Arkansas moving into number 49 for per capita income.

2) I'm looking at the negative side because I am an economic development professional. As one who recently left a job as a senior planner for a city-county economic development office, I know what it takes to lure a company to town. I know the ugly backroom details because I've sat in many of those backrooms myself. I've written tens of millions of dollars in state grants for relocating companies. And since I lived in a city-county that waived property taxes (at the expense of the local school district) for relocating companies, I think I'm fairly qualified to offer my own opinion of this deal.

3) It's sad that you use 'minimum wage' as your measuring stick of what makes a good job. That's the mentality that keeps Arkansas at number 48. Just being 'above minimum wage' alone does not make a job a good job.

4) A call center is a call center is a call center. Call centers are notoriously shaky. As an economic development professional, I've watched many, many call centers come and go. They are not fertile ground on which to plant your city's future.

5) I hope HP does well, and I hope they invest as much into our community--I live in Conway--as we're investing into them. I hope they partner with our local colleges. I hope they work with local charities. I hope they're in it for the long haul.

[Bull Winkus]

Originally Posted by strumpeace

4) A call center is a call center is a call center. Call centers are notoriously shaky. As an economic development professional, I've watched many, many call centers come and go. They are not fertile ground on which to plant your city's future.

I agree with the quoted statement 100%.

However, if I understand what I have been reading on the subject, it is not firmly established that the facility is JUST a call center. There is no way to find out until there is an official announcement, but we can make some logical assumptions based what we know about economics and the current World Market in the digital age.

Most companies have been off-shoring their call centers for the cheap labor and availability of cheap telephone bandwidth. In fact, the nationwide trend is in about its 10th year with many of the Fortune 500 companies leading the way. I haven't researched it but I'd be willing to hazard a guess that HPQ has been involved for some time as well. Call centers overseas are usually contract arrangements to avoid entanglements with company sponsored benefits, and can handle huge call volumes at relatively little expense to the bottom line. The down side to these entities is the risk of alienating the customer base due to the increased level of frustration in dealing with a non-native-English speaking person.

For this HP facility to be nothing more than a call center, 3 things must happen:

1> Management must realize that US based call centers are somehow better for the bottom line, even though they are more expensive to operate due to the much higher wage rate.

2> Management must decide that HP employees, together with their expensive benefits and relatively high median wages, can do a better job for less cost than a contract firm would incur.

3> Management must admit that they were wrong to start off-shoring call centers in the first place.

It is hard for me to imagine that Mark Hurd's management team, stellar as their record is since replacing Carly Fiorina as CEO in 2005, could leap all those hurdles just to start building generic call centers in the US. No, what's going on is that HPQ is taking advantage of their superior position in a down market to trounce their competition and go on the expansion trail. Witness the acquisition of Opsware in 2007, a company co-founded by Marc Andreessen, a well known serial entrepreneur, and this year EDS (Electronic Data Systems) founded by the somewhat infamous H. Ross Perot.

HPQ is in the process of making a huge bid for more enterprise business. They want to radically expand sales to big corporations and the EDS acquisition is a big part of that strategy. Most people think of HP's printer business and fail to notice the enterprise IT services part of the concern. As HPQ aligns EDS to its expansion strategy, the company will need a strong IT support infrastructure with an army of IT support consultants in order to service an expanding corporate clientele.

Sure, I'm just guessing. But, it's quite likely there's more to this "call center" than a minimum wage could support. An estimated $50,000 average annual salary may actually be too low.

[SwinerBock]

Spot on analysis, Bull. I had completely forgotten about the EDS purchase.

[Bette]

I just did a term paper on offsource outsourcing so I am glad to see some jobs going somewhere in the United States. I was not a fan of outsourcing offshore and after doing the paper, even less so.

Even on Squawk on the Street the other day, there was a commentator on about globalization and that it's going to bite us you know where....