Austin @ Large: Money for Love
There's a word for that sort of thing. It starts with an 'F.'
We all kind of knew this already, but now it's official: Freescale Semiconductor, the now-all-grown-up and spun-off former Motorola chip division, is seeking "substantial" incentives to keep the corporate headquarters here in Austin. "Substantial" as in the biggest Austin incentive package ever, reports the Statesman. (Although it's best not to take the daily's assessments at face value when either history or math are concerned.) No tax candy, and we're looking at CEO Michel Mayer's go-gettin' French backside as he flies off to Phoenix, or Dallas, or maybe Chicago. Or so the narrative goes.
It's actually a bit refreshing that all parties here, from Mayor Will Wynn and the City Hall crew to the über-boosters like Pete Winstead and Pike Powers and Angelos Angelou working the save-Freescale beat for the Chamber of Commerce, feel no need to be less than honest about the game here. In direct bottom-line terms that is, in ways you or I will actually see and feel losing the Freescale HQ might be a bummer but hardly a tragedy worth uncorking a public money gusher to prevent. But in symbolic terms, losing Freescale, one of only three Fortune 500 firms based in our area, would be a huge blow to those whose quality of life is linked intrinsically to Austin's prestige. As Angelou, the business elite's go-to economist, told the Statesman, "They need to feel like they are wanted and loved, and we will do whatever we can to keep them happy. That's what economic development is about."
And all this time you thought it was about bringing tangible benefits to the average citizen! Well, now you know. Unless you're a big corporation, there is no Santa Claus. However, I have to wonder if Angelou's pronouns are inadvertently misplaced. Isn't it Austin that needs to feel wanted and loved here? And isn't that why people usually trade money for love?
About that "direct bottom-line" deal. While we talk about potentially "losing hundreds of Austin jobs" if Freescale's topsiders take their love elsewhere, we have to remember that the definition of "Austin job" here is somewhat elastic. Mayer himself, for example, has only lived in Austin (or worked for Freescale) since May. In the old days, Motorola typically promoted from within, but that was then, and while Mayer has recruited some new senior types from other Austin tech firms, we're really talking about a couple hundred support positions that are basically interchangeable with others in the Austin market, and then a couple hundred executive positions that are filled through national recruiting, whose incumbents are more than likely to follow Freescale wherever it goes.
Giving 'Til It Hurts
Certainly not great news, but that's still less than 10% even Freescale doesn't really know of the company's actual Austin workforce of more than 6,000, which is more than a quarter of its worldwide headcount; more Freescalers work in Austin than in any other city. (About 3,500 work in Phoenix, which is where Motorola's chip division was first formed in the Sixties and then based until 1997.) Losing those jobs, or to be precise more of those jobs after the layoffs of the bust would genuinely suck. But that seems unlikely, particularly for a company that's newly public, fighting to turn around its formerly anemic fortunes and to convince customers and investors that they're backing a winner.
On the other hand, the shiny stuff with which some boosters still feel the need to veneer this deal the notion that a big Austin candy bag would well position our fair city to land a few thousand more jobs with the next big new-generation Freescale plant (a "300mm fab"), if and when such is ever built is more than a little absurd. (Although it's the only rationale that, using the city's newly adopted incentive scorecard, would draw a clear bright line between "Freescale" and "biggest incentive package ever.")
Opinions vary, of course, as to the value of having your executrons within driving distance of the shop floor. But Freescale could put its next plant pretty much anywhere in the world from China to Chile to the Czech Republic. At least Austin is only competing with a handful of other U.S. cities for the home base. (The company says it got unsolicited offers from a host of domestic and overseas locations as soon as it completed its IPO, but Chicago, Dallas, and Phoenix appear to be the only real contenders.) But anyone who thinks Austin could realistically compete, on the strength of incentives alone, for a whole new fab has no business calling himself an economic development pro.
But would we be competing on the incentives alone? Well, sure looks that way, which brings us back to who's lovin' whom here. Some companies are suffused, culturally, with a deep enough loyalty to and identification with a place that they'll make what are, on the usual metrics, bad business decisions in order to help the hometown crowd. Despite its occasional querulousness, Dell seems to be one of those companies; the firm argues it's kept as many jobs in Austin as it thinks we can accommodate, and its executives aren't going anywhere.
Will That Be All, Your Eminences?
It does not appear that Freescale is one of those companies, at least not any more. The between-the-lines narrative in the Statesman and elsewhere basically makes Mayer sound like a snob who feels trapped here in Bumsquat Falls although he moved here from Paris, for God's sake, so cut him some slack. (And it's not exactly an unprecedented sentiment among new-to-Austin tech poobahs, although some of them like, say, Mort and the late Angela Topfer end up coming around.) But Freescale PR honcho Tim Doke (a former Dellion) told The Arizona Republic that, in addition to the usual spoils of the candy hunt, the firm is looking for (in the paper's words) "closer proximity to customers; more efficient airport connections to Chicago, Detroit, and international locations; and a lifestyle attractive to highly paid executives." Ahem.
Would it be heresy to suggest that maybe Freescale is right that unless you're truly homegrown like Dell (or our third F500 firm, National Instruments), Austin isn't such a great place to be an international business diva? And would it be further heresy to suggest that's OK that, like the Holy Grail of the big convention trade, this is one prize that isn't really worth the cost? I know that's not the typical Austin booster mindset inevitable, I suppose, in a town formed by the best-at-everything ethos of the Capitol and UT but I have to wonder whether trying too hard to seduce Freescale is really playing to Austin's strengths. Sure, I'd be sad to see them go, too, but even a fine romance can come to an end.