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EXCLUSIVE: Beebe details HP announcement Thursday, Jun 19, 2008 Editor's Note: Gov. Mike Beebe talked exclusively with Talk Business editor Roby Brock about the details of Hewlett-Packard's major Conway announcement today, how the deal came together and how he plans to use the victory to stimulate other economic development efforts. This story will be topped with breaking news as it occurs. By Roby Brock Special to Arkansas News Bureau Hewlett-Packard Co., one of the world's leading information technology companies, has selected Conway for a new $28 million customer service and technical support center that will employ up to 1,200 workers with an estimated annual payroll of $50 million. Based on state incentive data, average starting salaries will likely be in the low-$40,000 range, but some sales jobs could pay six-figure incomes. HP also announced Thursday it would build a similar center in Rio Rancho, N.M., near Albuquerque. HP said the Arkansas and New Mexico operations are designed to meet its growing customer requirements, and that the center will provide "sales, service and technical support" for customers. "The bulk of their investment is in human capital," Gov. Mike Beebe told Talk Business in an exclusive interview Wednesday with the economic development team that worked on the effort known as Project Sigma. Beebe committed $10 million from his Quick Action Closing Fund as part of the state's incentive package. That money will help construct the $28 million, 150,000-square-foot building in Conway's 180-acre office and technology park called the Meadows. The Conway Development Corp., a local economic development agency, will own the building and lease it to HP. Other performance-based payroll and investment incentives - part of the state's Advantage Arkansas standard incentive program -were used to lure the Palo Alto, Calif.-based tech firm to Arkansas. The 1,200 IT jobs will be phased in over a four-year period starting in 2009. However, Beebe stressed that work force readiness and his repeated theme regarding the marriage of education and economic development were the strongest factors for winning the bid. "This is a specific, applicable instance of addressing that philosophy," Beebe said. "And not only having the jobs for them when we educate them, but actually those that we've already educated, those that already have ties to Arkansas, but couldn't find those kind of jobs here." For those Arkansans who left the state for the type of jobs HP is bringing to Conway, Beebe had a simple message: "Come home. Come back." Conway's percentage of baccalaureate degrees per capita and average age were also important factors in the decision-making process, Beebe added. Almost 36 percent of Conway residents have four or more years of college. The median age of the community of 52,000 is 26.8 years, according to a 2005 special census. Officials with HP, ranked No. 14 among the nation's Fortune 500 companies, also cited Arkansas' business environment, standard of living and government cooperation as reasons for locating in Conway. The Arkansas and New Mexico announcements could also be part of a larger reorganization effort that the company has been undertaking for the last two years. In May 2006, HP announced plans to consolidate 85 data centers worldwide into six "state-of-the-art centers" in three U.S. cities. In July 2006, the company said it would consolidate "several hundred real estate locations worldwide" to fewer core sites in order to reduce IT spending and real estate costs over the next four years. Beebe and other state economic officials declined to comment on this aspect of HP's business plan and how it might signal a future expansion of the Conway complex. HOW THE DEAL CAME TOGETHER Beebe and other Arkansas officials learned June 6 that HP selected Conway - the day after mobile-phone giant Verizon announced it intended to acquire Little Rock-based Alltel Corp. Alltel employs approximately 3,200 workers in state, and Beebe expects that many information technology-related Alltel employees uneasy with their job status or ones who may be laid off will have prospects with HP. "The final decision was made before the Alltel announcement, so it didn't influence it," Beebe told Talk Business. "But the truth of the matter is that a lot of those folks may very well be the kinds of people that would find jobs there." The official memorandum of understanding closing the deal was signed on Tuesday, June 17. The original contact on the project came in the form of a Feb. 7 request for proposal to the Arkansas Economic Development Commission. There were 26 metropolitan statistical areas (MSAs) that made the first cut. By mid-April, Arkansas learned that Conway and two other communities in the Little Rock MSA had made the short list. Economic development officials declined to reveal the other Arkansas cities, but indicated that they would benefit from Conway's victory. "I made it real clear that I, as Governor, and AEDC, would not favor one side over another," Beebe said. "We'd fight like the dickens the other 49 states and every country in the world to get them to Arkansas, but then the community itself would have to sell itself between the other communities." Three HP representatives and their site selection consultant toured the three communities April 15 and 16. That led to a final round of visits May 27 and 28, with Beebe personally meeting with HP officials before a final persuasive phone call to HP CEO Mark Hurd. Beebe's sales pitch was that the state was "open for business." "Depending on what the particular prospect is we highlight what our advantages are," Beebe explained. "In this case, we talked about an educated workforce ? a highly educated, highly-motivated workforce in the Little Rock MSA." The University of Central Arkansas, University of Arkansas at Little Rock, and Hendrix College were included in the community presentations. The schools agreed to establish courses that will meet HP's workforce needs, according to Beebe. Workforce concerns were a major concern, said AEDC Deputy Director Becky Thompson. "That obviously was the question that the [HP] team had: 'Can you demonstrate to provide the workforce?' Conway stepped up to the plate," she said. Thompson chronicled how community leaders documented their ability to fill the proposed 1,200 jobs, including a presentation given on a site visit by an Acxiom job recruiter. Although she did not know the prospect's name, Allison Nicholas, a human resources manager with Acxiom, analyzed the criteria put forth by the company to assess workforce recruiting. Her assessment, according to Thompson: "With salaries like this, you're not going to have a problem. You're going to pull not just from Arkansas, but from out-of-state." James Hendren, founder of ArkSys, a software firm started in state and now known as Euronet, agreed that outsiders will be attracted to HP jobs in Arkansas. "Basically these high-tech companies all over the country are having trouble filling those jobs, so they do national recruiting," said Hendren, who is also a board member of Accelerate Arkansas, a non-profit group that is seeking to raise Arkansas' per capita income to the national average by 2020 through knowledge-based, high-wage job growth. "What's interesting is there's really an advantage in Arkansas because we don't have a huge number of these companies. There's not much turnover. In Silicon Valley, there's constant turnover because people are moving to the next best job down the road." AEDC Director Maria Haley expects the HP announcement to recruit out-of-state natives back to Arkansas. "Once a week, I get an e-mail: 'I would like to talk to you and ask you about the possibility of my coming home. What kind of jobs are coming up?'" CAPITALIZING ON THE SUCCESS Beebe and Haley plan to use HP as a springboard for recruiting more white-collar, high-tech jobs. "We're working on lots of things as we speak," Beebe said. "Other highly educated, economic development opportunities will look at this and say that those folks [HP] don't just make decisions randomly. They look at everything. And if they decided that this was a good fit for a company as credible as HP, then we ought to look at it too. It opens doors - it gives us more credibility." The governor also said Arkansas' image continues to present both a challenge and an opportunity. "I have found that in these discussions with these people the bar - in terms of their perception of Arkansas - is so low before they know anything about us, that we have a major advantage because once they see us, once they get here, they're pleasantly surprised. "Their initial impressions of central Arkansas, and Arkansas for that matter, inevitably are much better than what they were prepared for, which tells us that we're not yet where we need to be image-wise with the rest of the world. That's the bad side. The good side is once we ever get them here, they're usually kind of blown away with very positive feelings about our state." --------- FACT BOX Major Job Announcements This Decade 2008 Man Industries 275 jobs $100 million 2007 Welspun 300 jobs $100 million 2007 LM Glasfiber 1,100 jobs $150 million 2005 Hino 280 jobs $186.5 million 2001 Nestle 963 jobs $165 million Source: Arkansas Economic Development Commission |
