Cloud centers bring high-tech flash but not many jobs to beaten-down towns


Apple’s new data center in Maiden, N.C. (Todd Sumlin/THE CHARLOTTE OBSERVER)

Here in this once-thriving town of furniture makers and textile mills, where Main Street businesses have vanished, nearby fast-food joints have closed and unemployment is rampant, government officials have lined up behind a flashy digital answer to all the heartache: The cloud.

Just off Startown Road, on the edge of town, Apple recently completed a massive $1 billion data center to help power its cloud computing products.

Total new full-time jobs running the facility: 50.

Apple’s data center has been a disappointing development for many residents, who can’t comprehend how expensive facilities stretching across hundreds of acres can create so few jobs, especially after thousands of positions in the region have been lost to cheaper foreign competition. But in the newer digital economy, capital investments that a generation ago would have created thousands of new positions often equal only a handful today, with computers and software processing the heavy lifting while the key programming is often done by engineers back in Silicon Valley.

“Apple really doesn’t mean a thing to this town,” said Tony Parker, the owner of Temple Furniture, one of the last surviving furniture makers in Maiden.


His son-in-law, Kelly McRee, the company’s operations manager, said: “Apple was the apple of everybody’s eye, but that’s about it. It was something for everyone to ooh and aah over.”

That hasn’t stopped state and local officials from awarding huge financial incentives to some of the biggest names in computing — Apple, Google, Facebook — to locate their data centers in the battered North Carolina foothills region, where unemployment is near 13 percent. Cloud computing is a fast-growing sector of technology, allowing companies to store data and run software on off-site servers. The data centers that power the cloud and run programs such as Gmail and iTunes employ thousands of servers but only dozens of people.

The mismatch between investment and jobs created is illustrative of the structural unemployment challenges the country faces, experts say. Blue-collar workers laid off during the downturn find far fewer job openings in the high-tech sector and usually lack the necessary skills. The Obama administration has called this the “brawny-man problem,” and one key piece of evidence for it is in North Carolina’s unemployment rate. Despite cozying up to iconic technology firms, the state still has the one of the highest overall jobless rates in the country, at 10.5 percent.

Apple’s data center is also supposed to create 250 indirect contracting jobs for maintenance and security. But many in this close-knit town of about 3,400 people — it essentially shuts down Friday nights for high school football — do not know anyone working at Apple.

Samantha Saunders, the longtime owner of a Main Street hardware store, where the old hardwood floors creak and a fresh-paint scent wafts through the cramped aisles, said the only contact she has had with an Apple employee is when one came in to make keys for the facility.

Asked how tough things were in the town, Saunders said, “The extreme of tough.”

The consensus among some residents is that the only people who benefited from Apple’s data center are Donnie and Kathy Fulbright. Apple paid them $1.7 million for their land, and the Fulbrights built themselves a new home nearby.

Most were not as lucky. The other day, just up the road in Hickory, Steven Sumpter arrived at the state unemployment office just before closing time after losing his job cutting cloth at a furniture factory. He looked tired. At 33, he’s a single father, and he discovered when he tried to register for assistance that his former employer terminated him instead of laying him off, meaning he was not eligible for benefits.

He laughed when asked about whether data centers might provide him a future.

“People from around here don’t get those jobs,” he said. “Really, furniture is the only thing I know. Those data jobs are not for us.”

That sentiment has not stopped governments from falling over themselves to attract companies such as Apple. North Carolina legislators, after debating for less than a minute, amended the state’s corporate income tax law to win Apple $46 million in tax breaks, according to published reports.

State officials concede that cloud computing does not create as many jobs as traditional industries, but they argue that construction jobs are important and that data centers are just one tactic in a host of economic development strategies, including incubating high-tech corridors and cultivating advanced manufacturers such as aerospace firms.

Still, after Facebook announced plans to open a data center in the state, North Carolina Gov. Bev Perdue said, “The investment and jobs at the data center will be a boon to that region of the state.”

In Maiden, local authorities cut Apple’s property taxes by 50 percent and personal taxes by 85 percent. Town Manager William “Todd” Herms said Apple’s presence boosts the town’s tax base and helps it lower overall taxes, not to mention providing an influx of construction jobs.

“I think the average citizen sees it affecting life,” Herms said. “They are a great corporate neighbor.”

But analysts who study the economics of data centers say the overall benefits for communities such as Maiden are fleeting.

“Data centers are there to house a factory of IT systems,” said Michelle Bailey, an International Data Corp. vice president who studies data center trends and consults with municipalities about their benefits. “There is not an immediate payback — there’s no doubt about that. What you hope is that you can modernize the town, hope it can be relevant in the future and attract more companies.”

Todd Cherry, director of the Center for Economic Research and Policy Analysis at Appalachian State University, said data centers “are more of a political benefit for those communities and politicians than for the community itself. They give the region the psychological benefit of having someone who wants them — somebody wants to come there and locate there.”

Local residents who manage to find work in data centers are treated like lottery winners. While Apple did not return a request for comment, Google officials made three local employees available for interviews at its three-year-old, $600 million data center, which employs more than 100 people, including contractors.

Two of the workers interviewed had previously worked in the furniture industry but went back to school to earn associate degrees in technology. They help upgrade and fix servers inside Google’s enormous and heavily secured data center, which is decorated with NASCAR memorabilia and pictures of legendary drivers such as Dale Earnhardt. They have found working with data to be transformative.

“I was told in my past jobs, ‘We don’t pay you to think.’ You would never hear that here,” said Paul Bowman, 39. “I don’t have to worry anymore that I will wake up and discover they are moving overseas. I have a more relaxed sense in my job security.”

Christopher Hood, a 22-year-old data center worker who used to manufacture tables, agreed.

“Technology is a growing industry, and especially Google — they are like the big dog in the industry,” he said. “Furniture went overseas, and now there’s no future in that.”

He need only look at his own family to confirm that. His father and his aunt, both furniture workers, have been out of work more than three years. They do odd jobs here and there to make whatever money they can. They are struggling. Data centers are probably not in their future.

“They’re kind of old-school,” Hood said. “They don’t get into computers and stuff.”

More news from Post Business :

AT&T, T-Mobile drop FCC merger applications

High oil prices fuel economic worries

Black Friday 2011: News, deals and more

Michael Rosenwald is a reporter on the Post?s local enterprise team. He writes about the intersection of technology, business and culture.
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Apple’s new data center in Maiden, N.C. (Todd Sumlin/THE CHARLOTTE OBSERVER)

Here in this once-thriving town of furniture makers and textile mills, where Main Street businesses have vanished, nearby fast-food joints have closed and unemployment is rampant, government officials have lined up behind a flashy digital answer to all the heartache: The cloud.

Just off Startown Road, on the edge of town, Apple recently completed a massive $1 billion data center to help power its cloud computing products.

Total new full-time jobs running the facility: 50.

Apple’s data center has been a disappointing development for many residents, who can’t comprehend how expensive facilities stretching across hundreds of acres can create so few jobs, especially after thousands of positions in the region have been lost to cheaper foreign competition. But in the newer digital economy, capital investments that a generation ago would have created thousands of new positions often equal only a handful today, with computers and software processing the heavy lifting while the key programming is often done by engineers back in Silicon Valley.

“Apple really doesn’t mean a thing to this town,” said Tony Parker, the owner of Temple Furniture, one of the last surviving furniture makers in Maiden.


His son-in-law, Kelly McRee, the company’s operations manager, said: “Apple was the apple of everybody’s eye, but that’s about it. It was something for everyone to ooh and aah over.”

That hasn’t stopped state and local officials from awarding huge financial incentives to some of the biggest names in computing — Apple, Google, Facebook — to locate their data centers in the battered North Carolina foothills region, where unemployment is near 13 percent. Cloud computing is a fast-growing sector of technology, allowing companies to store data and run software on off-site servers. The data centers that power the cloud and run programs such as Gmail and iTunes employ thousands of servers but only dozens of people.

The mismatch between investment and jobs created is illustrative of the structural unemployment challenges the country faces, experts say. Blue-collar workers laid off during the downturn find far fewer job openings in the high-tech sector and usually lack the necessary skills. The Obama administration has called this the “brawny-man problem,” and one key piece of evidence for it is in North Carolina’s unemployment rate. Despite cozying up to iconic technology firms, the state still has the one of the highest overall jobless rates in the country, at 10.5 percent.

Apple’s data center is also supposed to create 250 indirect contracting jobs for maintenance and security. But many in this close-knit town of about 3,400 people — it essentially shuts down Friday nights for high school football — do not know anyone working at Apple.

Samantha Saunders, the longtime owner of a Main Street hardware store, where the old hardwood floors creak and a fresh-paint scent wafts through the cramped aisles, said the only contact she has had with an Apple employee is when one came in to make keys for the facility.

Asked how tough things were in the town, Saunders said, “The extreme of tough.”

The consensus among some residents is that the only people who benefited from Apple’s data center are Donnie and Kathy Fulbright. Apple paid them $1.7 million for their land, and the Fulbrights built themselves a new home nearby.

Most were not as lucky. The other day, just up the road in Hickory, Steven Sumpter arrived at the state unemployment office just before closing time after losing his job cutting cloth at a furniture factory. He looked tired. At 33, he’s a single father, and he discovered when he tried to register for assistance that his former employer terminated him instead of laying him off, meaning he was not eligible for benefits.

He laughed when asked about whether data centers might provide him a future.

“People from around here don’t get those jobs,” he said. “Really, furniture is the only thing I know. Those data jobs are not for us.”

That sentiment has not stopped governments from falling over themselves to attract companies such as Apple. North Carolina legislators, after debating for less than a minute, amended the state’s corporate income tax law to win Apple $46 million in tax breaks, according to published reports.

State officials concede that cloud computing does not create as many jobs as traditional industries, but they argue that construction jobs are important and that data centers are just one tactic in a host of economic development strategies, including incubating high-tech corridors and cultivating advanced manufacturers such as aerospace firms.

Still, after Facebook announced plans to open a data center in the state, North Carolina Gov. Bev Perdue said, “The investment and jobs at the data center will be a boon to that region of the state.”

In Maiden, local authorities cut Apple’s property taxes by 50 percent and personal taxes by 85 percent. Town Manager William “Todd” Herms said Apple’s presence boosts the town’s tax base and helps it lower overall taxes, not to mention providing an influx of construction jobs.

“I think the average citizen sees it affecting life,” Herms said. “They are a great corporate neighbor.”

But analysts who study the economics of data centers say the overall benefits for communities such as Maiden are fleeting.

“Data centers are there to house a factory of IT systems,” said Michelle Bailey, an International Data Corp. vice president who studies data center trends and consults with municipalities about their benefits. “There is not an immediate payback — there’s no doubt about that. What you hope is that you can modernize the town, hope it can be relevant in the future and attract more companies.”

Todd Cherry, director of the Center for Economic Research and Policy Analysis at Appalachian State University, said data centers “are more of a political benefit for those communities and politicians than for the community itself. They give the region the psychological benefit of having someone who wants them — somebody wants to come there and locate there.”

Local residents who manage to find work in data centers are treated like lottery winners. While Apple did not return a request for comment, Google officials made three local employees available for interviews at its three-year-old, $600 million data center, which employs more than 100 people, including contractors.

Two of the workers interviewed had previously worked in the furniture industry but went back to school to earn associate degrees in technology. They help upgrade and fix servers inside Google’s enormous and heavily secured data center, which is decorated with NASCAR memorabilia and pictures of legendary drivers such as Dale Earnhardt. They have found working with data to be transformative.

“I was told in my past jobs, ‘We don’t pay you to think.’ You would never hear that here,” said Paul Bowman, 39. “I don’t have to worry anymore that I will wake up and discover they are moving overseas. I have a more relaxed sense in my job security.”

Christopher Hood, a 22-year-old data center worker who used to manufacture tables, agreed.

“Technology is a growing industry, and especially Google — they are like the big dog in the industry,” he said. “Furniture went overseas, and now there’s no future in that.”

He need only look at his own family to confirm that. His father and his aunt, both furniture workers, have been out of work more than three years. They do odd jobs here and there to make whatever money they can. They are struggling. Data centers are probably not in their future.

“They’re kind of old-school,” Hood said. “They don’t get into computers and stuff.”

More news from Post Business :

AT&T, T-Mobile drop FCC merger applications

High oil prices fuel economic worries

Black Friday 2011: News, deals and more

Michael Rosenwald is a reporter on the Post?s local enterprise team. He writes about the intersection of technology, business and culture.
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