Rumors of Apple Server Farm in Area

[JayGee]

The Shelby Star says it could be as little as 45 jobs. Of course they also think they have lost out to Catawba county so this could just be sour grapes, (4 days ago). I can't figure out why they think this has happened, BTW.

Catawba county comes closest to the CLT metro a the extreme NW side of Lake Norman.

The report I saw today only cited about 50 full time jobs, the rest being contractors for landscaping, security, etc. and construction. It's a big investment, but it doesn't look like its a huge jobs generator.

From the O:

The data center is expected to have at least 50 full-time employees, although another 250 contractors could be employed to manage security, landscaping and heating and air conditioning systems. Including construction jobs, the presence of the facility could put a total of 3,000 people to work, according to Department of Commerce estimates.

Sounds like the 3000 number is the 'multiplier' effect.

[HopHead]

The Shelby Star says it could be as little as 45 jobs. Of course they also think they have lost out to Catawba county so this could just be sour grapes, (4 days ago). I can't figure out why they think this has happened, BTW.

Catawba county comes closest to the CLT metro a the extreme NW side of Lake Norman.

Actually it's the total number of jobs as a result of building a facility: construction, landscaping, security, etc, etc... Of course it won't be that many by the time the data center is up and running. So yea, it's more like around 50 once the facility is finished. Should've stated that...

[jednc]

I didn't go back and read every post here, so sorry if this has already been brought up...

Hasn't it been suggested that the server farm would be a first step toward building an East Coast Headquarters type operation with customer support for products and such? I saw the headline in the paper a couple of weeks ago but I didn't have time to read the article, and I never went back to it. In other words...couldn't the 50 jobs (plus contracted workers) just be the first wave? The deal is $1B in investment over 10 years. That doesn't sound like just a server farm which could be built and up and running in a year or so.

[monsoon]

^Well.... Apple is coming here because of the $49M tax incentive to come here. It sounds more to me like what Dell and Google did. As I mentioned in another topic, Apple once had a rather sizeable technical operation in Charlotte until the early 90s when they decided to close it and basically move it all to Texas.

[JayGee]

I didn't go back and read every post here, so sorry if this has already been brought up...

Hasn't it been suggested that the server farm would be a first step toward building an East Coast Headquarters type operation with customer support for products and such? I saw the headline in the paper a couple of weeks ago but I didn't have time to read the article, and I never went back to it. In other words...couldn't the 50 jobs (plus contracted workers) just be the first wave? The deal is $1B in investment over 10 years. That doesn't sound like just a server farm which could be built and up and running in a year or so.

Uh. . . no.

At least I don't think so. They needed a server farm in this part of the country and they needed to build it as cheaply as possible, which means out in the country and with lots of $$ incentives. This one is pretty straightforward. No good business climate issues, no international airport issues, no skilled workforce issues, just plain old 'let's do it as cost-effectively as possible'. Nothing wrong with that.

There might have been some siting issues with regard to power or something I don't know.

I don't know how they calculate the $1B. Usually these numbers are somewhat inflated.

[krazeeboi]

Better Hickory than Bangladesh.

[swampfox43]

In an ironic twist, the County Seat of Catawba County is........Newton.

those who follow Apple will know what I mean.

[Neo]

In an ironic twist, the County Seat of Catawba County is........Newton.

those who follow Apple will know what I mean.

Those that follow Apple also know that Apple is one of the most secretive companies in the world. Unless your job title has three letters with the first being C, you don't have a clue what the company has up its sleeve. I wouldn't put it past Apple to be planning something in addition to a simple server farm for NC, but given what we know about Apple I don't think it is probable.

Apple currently has $29 billion George Washingtons that it can spend on whatever it desires, so spending $1B on a freakishly large server farm in rural NC isn't much of a hint that we can expect more from this project than what has been said already.

Apple does have a massively growing iTunes and App Store market, not to mention their other services like MobileMe. I can imagine that their current facility in Newark, CA is nearing capacity and the obvious answer to solving that issue is to build a new data center in the cheapest place possible with the most incentives.

I'm glad NC won and that the facility will likely go somewhat near the Charlotte area, but I'm not completely sold that there is more to this than what is on the surface. Trying to predict Apple is like trying to predict the return of Jesus though, so I would take my opinion with a grain of sand.

PS, the Newton was a flop, so hopefully that doesn't create an issue with this project.

[JayGee]

PS, the Newton was a flop, so hopefully that doesn't create an issue with this project.

Actually, there are recent rumors that it will be revived, on an iPhone/iTouch platform.

[monsoon]

They dirty little secret behind server farms, including those run by Google, Apple and others, is that they are environmental nightmares and they also provide a lot of opportunities to outsource labor. On the environment part of this, they consume vast amounts of electricity so that means the local power grid will be pumping a lot more pollution into the air considering that most power in this country is generated by burning coal. And the servers will come in new, so there will be large amounts of packaging material that will go into landfills and when they are obsoleted in 3 years (federal dep. rules) they will be scrapped. There are a bunch of issues with this disposal too. Usually they take the cheap and dirty method and send scrapped servers, or at least a part of them to the local landfill as well. Finally these place release a great deal of heat into the local environment. Usually this is in the form of hot water into the lakes and rivers. Not good at all.

However forgetting that, in this case the state of NC is apparently giving Apple $49M in tax abatements to build this place and in return they are promising what? Maybe 50 jobs. The way modern server farms work these days is that 99.9% of the technical support will be remote. The only people employed at the actual location will be the jockeys who unpack and hookup the machines, the janitor, someone to cut the grass, and a local manager. All of the technical work will be performed by people who will never step a foot in NC and might not know where it is even located. So in effect, the NC taxpayers are subsidizing workers in other states and countries and of course giving social welfare to Apple. (supposedly a company that is supposed to be above this)

IMO, the state would have been much better served, if they had spent this money to help attract the company to Mooresville that says they would create 500 jobs building hybrid buses. Or something similar.

[HopHead]

IMO, the state would have been much better served, if they had spent this money to help attract the company to Mooresville that says they would create 500 jobs building hybrid buses. Or something similar.

I can see that... I think the short-term benefit of having all the jobs created for building the facility for the server farm will be very positive. But in the long run having 50 or so permanent jobs versus 500 permanent jobs doesn't make sense if you're not throwing out tax incentives to the latter (hybrid bus company) too. Hopefully we can luck and land that hybrid bus facility too... Then I guess this may be a moot point

[JayGee]

I can see that... I think the short-term benefit of having all the jobs created for building the facility for the server farm will be very positive. But in the long run having 50 or so permanent jobs versus 500 permanent jobs doesn't make sense if you're not throwing out tax incentives to the latter (hybrid bus company) too. Hopefully we can luck and land that hybrid bus facility too... Then I guess this may be a moot point

Part of the deal was that they would make a $1B investment within 9 years. That sounds great, but I sure would like to see a breakdown of what that $1B investment is and how exactly it benefits NC. Building and site, yes. But if they spend a few hundred million dollars on servers, will they be purchased from an NC company? I hardly think so.

Monsoon is correct in that server farms use more electricity than the alternate, which is mainframe computers. Their electricity usage has increased dramatically over the last few years (# of farms) and in fact has gotten the attention of the EPA. However, I also read that, because they are less reliable than mainframes, they require more on-site staff, not less.

The community benefits a lot more when the attracted industry converts something (the bus company scenario). They buy materials, parts, etc. from many local companies and convert those into something which is sold for more than the sum of those materials and parts: profit. And they do provide jobs along the way, which is also part of the cost calculation.

This project provides jobs, and they purchase some local services and supplies, but it does not convert anything, ie, it does not add value to anything that it purchases.

Not saying its not a nice project to have, but there is always the cost/benefit debate.

This is two years old, but I believe still relevant

[Neo]

They dirty little secret behind server farms, including those run by Google, Apple and others, is that they are environmental nightmares and they also provide a lot of opportunities to outsource labor. On the environment part of this, they consume vast amounts of electricity so that means the local power grid will be pumping a lot more pollution into the air considering that most power in this country is generated by burning coal. And the servers will come in new, so there will be large amounts of packaging material that will go into landfills and when they are obsoleted in 3 years (federal dep. rules) they will be scrapped. There are a bunch of issues with this disposal too. Usually they take the cheap and dirty method and send scrapped servers, or at least a part of them to the local landfill as well. Finally these place release a great deal of heat into the local environment. Usually this is in the form of hot water into the lakes and rivers. Not good at all.

Perhaps you're not keeping up with the newest data centers. You are correct that most data centers are horrible for the environment, but newer facilities are being built with the environment much more front and center. For example, IBM just announced plans to build a data center that uses natural gas-fueled turbines to power and cool the facility. You can read more about that project here.

You also forget that taxes must be paid on the equipment and facility, so obviously the state benefits from much more than the 50 or so individuals that will be employed.

Apple is also a company that has taken environmentally friendliness more to heart than other tech companies. I doubt they would be sending their old equipment to the landfill. For some reason I though it was illegal to do so? I know we can't discard any computer or electronic equipment at our company, we must have it picked up by a facility that properly disposes of the equipment. I'm pretty sure these rules would apply to Apple as well.

I will also add that I doubt Apple will be outsourcing work on any systems in this server farm overseas. To my knowledge, Apple us 100% US based in this regard. If this were Dell then what you say would be true, but Apple does things a bit differently than what you're stating.

In 2006, Apple did announce plans to employ 1,500 at a call center in Bangalor, India, but the company scrapped those plans. To my knowledge, the work on this data center and the existing one in Newark, CA, is and will be done by technicians in this country.

[monsoon]

.... For example, IBM just announced plans to build a data center that uses natural gas-fueled turbines to power and cool the facility. You can read more about that project here.......

Apple announced, a couple of years ago and very publically, that it was ending it's alliance with IBM and no longer using their technology. As mentioned above (not by me) a mainframe is much more efficient than a server farm and one of these devices can easily take the place of 20,000 servers.

[Neo]

Apple announced, a couple of years ago and very publically, that it was ending it's alliance with IBM and no longer using their technology.

What does that have to do with the price of tea in China? I was stating the fact that data centers can and are being built with renewable energy and mitigation of other harmful environmental effects.

[atlrvr]

To the best of my knowledge, the incentives appear to be net fiscal positive to the state, that said, I do agree that hopefully not a lot of energy was expended on this project unless there would be additional investment, as time and resources would be better spent towards financial companies, green energy, and bio-tech.

[monsoon]

Actually, after reading the difficult to find bill, Apple is not required to build a $1,000,000,000 facility. They have 9 years to spend $1,000,000,000 AT the facility. The bill specifically includes the provision allowing them to include the costs to equip and re-equip the place, and repair costs of existing buildings, over 9 years. So this means when they purchase a server for the facility, say a $10,000 device, this is included in the amount. Once they have depreciated it and then replace it with another server, they get to count it again and again and again. My guess is these servers won't be built in NC but it would have been nice if this provision had been included as there are server manufacturers in this state. Apple currently has most of its equipment assembled in Communist China.

The bill is also written to specifically exclude most of the corridor between Raleigh and Charlotte and including Wake and Mecklenburg. See this map. Apple can't build in any of the Tier 3 counties.

[browngeo]

Interesting map. Rumor has been Cleveland, Gaston, or Catawba. Anyone know why Lincoln County is a Tier 1 designation?

[monsoon]

There has been a huge amount of growth on the Southwest side of Lake Norman in the last 10 years which is all in Lincoln county. The new Hwy 16 just opened too and I don't think the knitting mills ever closed in Lincolnton. I could be wrong on the mill part, but there is still a real outlet there attached to one of the big mills that does give the impression they are doing work there. Maybe that is the reason but I am not sure how they come up with that map.

[jednc]

I'd like to see this new operation go to Burke Co. myself. Not sure why this wouldn't be as good a location as Catawba or Cleveland Counties.

[atlrvr]

Doesn't matter if the cost is in the land or the building as the property taxes are the same......the way they depreciate will affect income taxes, but I'm sure the commerce department has a good handle of average depreciation schedules for these types of facilities.

[monsoon]

Doesn't matter if the cost is in the land or the building as the property taxes are the same....

But would there not be taxes paid on the land now?

[atlrvr]

I actually meant it doesn't matter if the cost is in the land/building or the machinary, property taxes are typically calculated at both at the same rate. Even though there is faster depreciation on machinery/personal property, once replaced they will start the depreciation again. My point was that commerce people use realistic assumptions of what % of the total costs are attributable to different depreciation categories when determining the tax incentives to give, and I believe that this project will be net tax positive for the state.

Additionally, municipalities love these types of projects, as they get the benefits of new taxes with few people, which means fewer expenses (schools, police, etc.).

All that said, I don't think that sever farms raise the area's profile or make a meaningful impact in overall employment trends, so I'm pretty ambivalent about this project.

[JayGee]

I actually meant it doesn't matter if the cost is in the land/building or the machinary, property taxes are typically calculated at both at the same rate. Even though there is faster depreciation on machinery/personal property, once replaced they will start the depreciation again. My point was that commerce people use realistic assumptions of what % of the total costs are attributable to different depreciation categories when determining the tax incentives to give, and I believe that this project will be net tax positive for the state.

Additionally, municipalities love these types of projects, as they get the benefits of new taxes with few people, which means fewer expenses (schools, police, etc.).

All that said, I don't think that sever farms raise the area's profile or make a meaningful impact in overall employment trends, so I'm pretty ambivalent about this project.

It's a trophy project. Looks good because its a big name, fairly sizable $$ investment, but in reality, beyond that, there isn't much there. The economic development folks can point to it and say "look, Apple chose North Carolina", when in reality, this is one of those cases where this project could have gone almost anywhere and was pretty much incentive driven.

[monsoon]

I actually meant it doesn't matter if the cost is in the land/building or the machinary, property taxes are typically calculated at both at the same rate. .....

Well actually it does and there won't be any net gain from taxes on the land. Refit costs include labor to do the work which won't be subject to property taxes. You can bet they will maximize this. Spending a $B doesn't mean there will be a $B worth of property there to tax. I again contend the state would have been better off using the $49M in abatement to attract a more meaningful industry to the state.