Corporate courtship - East Valley Tribune: Business

Corporate courtship

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Posted: Sunday, October 23, 2005 6:58 am | Updated: 8:22 am, Fri Oct 7, 2011.

Punch in General Motors on a Google search and 27,200,000 hits come back. McDonalds only returns 6,400,000. IBM nets a respectable 250,000,000.

But simply googling Google results in an astonishing 797,000,000 hits.

The numbers show why the area’s economic leaders have been ogling Google since it announced a week ago it would open a regional engineering and operations center that will employ 600 in the Valley.

Google is a geeky-cool household name. It’s high-paying, young and hip. It’s cutting-edge. But above all, it’s more than an Internet search engine, says Robert Mittelstaedt, dean of the W.P. Carey School of Business at Arizona State University.

"When they say they’re going to come to your town it’s exciting because what people imagine . . . is this is a company that’s just at the beginning of their growth, has a long way to go, and has designs on competing with the likes of Microsoft and Yahoo and a lot of other big people in those spaces," he said. "This could be become a sizeable company and if their presence in Phoenix becomes significant, then that’s a big deal."

Google would bring some high-profile diversity to the Valley. The area is heavy on computer hardware and defense and light on the computer information companies. The economic engine here continues to be home and commercial construction fueled by growth.

But economic development gurus say the cache of a company like Google is more important than whether it fits perfectly.

"If it was a semiconductor project, I’d be at the top of the list," said Christine Mackay, Chandler economic development specialist for industrial and office space. "If it was an aerospace project, I’d be at the top of the list. Would Chandler like to be all things to all people? We definitely would."

Mackay says landing a company like Google, with its interest in public transit and creative spaces to live and work, is much different than wooing Intel, Orbital Sciences, Motorola or Freescale.

"It doesn’t mean we don’t still stand an opportunity," she says. "It just means that we’re not just the natural suspect."

Gilbert economic development director Greg Tilque says his town would love to have a shot at the tech giant, even though Gilbert was left off the list of communities invited Google’s announcement.

"The number of jobs is pretty good," he says. "There’s a lot more companies with a lot more jobs . . . but I think it’s $80,000 a-year-kind-ofjobs. Any of us would love to have those kind of jobs in the community."


Google’s interest in the Valley shows it is attractive to high-end industry and "isn’t this sort of of tourism and lowwage labor economy so many people in Phoenix suggest that it is," said Joel Kotkin, an urban planning expert and author who wrote a policy paper on the area that was released in April.

Kotkin said his research found the area already has a lot of technical industry and is a natural place in the West for a high-tech labor market. It’s business-friendly and relatively easy to get around, he said.

"In the 1990s, Phoenix actually enjoyed a higher percentage of overall ‘job growth,’ or the creation of higher wage jobs, than Portland, Ore., Seattle or Denver," Kotkin wrote in his report. The Valley’s low cost of living also makes the economy more competitive than many assume, he said.

"Although economies like San Francisco and Silicon Valley may generate higher wages in fields like software and financial services, weighted against the cost of living, Phoenix actually pays its workers, in real terms, higher salaries," Kotkin wrote.

Viewed from that perspective, Kotkin said the Valley’s average wages are competitive with the average wages offered in Atlanta and Denver and are higher than in San Francisco, Portland and San Diego.

"It’s still relatively affordable," Kotkin said. "Putting those 600 jobs in Silicon Valley would probably be difficult."

Mittelstaedt, who came to ASU from Philadelphia in June 2004, said it’s no secret why Google is on everyone’s radar screen.

"They are extraordinarily successful, they had an amazing IPO and have a tremendous amount of cash sitting on their balance sheet,"he says. Google’s initial public offering last year raised $5.8 billion.


Rumors of late have the company possibly buying a piece of AOL. Google recently elected the president of Princeton University to its board of directors, building on its efforts in science. The company is said to be interested in bioinformatics, the use of computers to characterize the molecular components of living things.

Google said recently that it may add free word processing and spreadsheets to its services, a direct attack on Microsoft Corp.

"They have, through their own study and analysis, selected Arizona as a state to do their expansion in and that says tons for our state and for all the people in the leadership who have been trying to get Arizona focused as a technology state, not just one of the old five Cs," said Ron Schott, Arizona Technology Council president and CEO. "We’re trying to get the three Ts, which is trade, technology and tourism. They will be a magnet. Maybe it’s not a big magnet, but it’s a mini-magnet that will get other industries in other locations and states to say ‘Gee, what it is that Arizona has that we’ve got to go see.’ "

Google’s selection of the Valley reflects something Mittelstaedt says he’s been saying since he moved to Tempe.

"Other people see Phoenix as more attractive than maybe people in Phoenix do," he says.


Google’s presence also is recognition the area has attracted and created a lot of information technology companies and related talent, Mittelstaedt said. ASU, which produces graduates in computer science and computer engineering, also plays a part in that feeling, he said.

Google will fit well with companies like DHL, Vanguard and USAA, which have some software design and engineering functions, Mittelstaedt said. Many of the big business that are in town, whether Intel, Honeywell, or Boeing, while not pure IT companies have IT functions that employ IT employees, he said.

"If Google came here and investigated, they’ve decided there are probably people they can hire locally as opposed to having to import a lot of people in here," Mittelstaedt said. "Those things tend to snowball, so the excitement about Google on the first wash is Google itself. But if you think more about it, it’s an indication that the place is validated in other companies that are in the IT arena that have already decided to be here.

Experts stop short of suggesting Google is the missing link to creating a Silicon Desert. But they say it’s a good example of what cities in the Valley are trying to attract, the so-called creative class who toil in industries like software and bio-technology.

"Those companies don’t come along every day," Tilque said. "It helps diversify."

Mackay says the mystique of Google likely has a lot to do with how geeked-up Valley leaders are about its arrival. The company survived the dot com bust, but it is still relatively young, she says. Its novel working conditions include having doctors and massage therapists on site. The company values and provides time for creativity.

"To me, it’s just as exciting when you have a Countrywide who brings 4,000 jobs into the community," Mackay said. "And we’ve got Intel, who has announced Fab 32 and that’s 1,000 jobs and $2 billion of capital investment. I think they’re all equally as exciting. I think a lot of the hype had to with perhaps the way that it was all announced."

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