Progress lost but Red Hat gained | Citizen
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Monday, January 10, 2011

Progress lost but Red Hat gained

Posted by on Mon, Jan 10, 2011 at 12:13 PM

redhat.jpg
Duke Energy is buying Progress Energy (state regulators: can they really just buy it? is that in the state's best interests?), which would mean Raleigh loses its only Fortune 500 corporate HQ to Charlotte. But hours later, the Governor's Office announces a press event this afternoon, and WRAL is reporting that the news is good: Red Hat, after thinking about greener pastures somewhere else, is staying in Raleigh.

Update: Yup, Gov. Perdue just started her press conference by donning a red hat. She says Red Hat has committed to an additional 540 jobs here (above the current 2,500 — note: 690 in NC) in return for incentives the state extended in its campaign to keep the company here. The quality of the workforce, Perdue says, is the key to growing the state's economy. That and the incentives: "I did everything but make 'em a home-cooked meal," she says.

What incentives were offered? Perdue doesn't offer details, but does say that other states bid for the company and, like it or not, North Carolina would've lost Red Hat if it hadn't put cash on the table. (Commerce Secretary Keith Crisco says the value is roughly $18 million — over time and assuming the 540 jobs materialize.)

[Another Update: Perdue's press release puts the figure at up to $20 million. It's copied below the fold.]

Red Hat CEO Jim Whitehurst says the universities in the Triangle and Red Hat were prime factors in its decision to stay here as well as the low cost of living and the quality of life. But he adds that, "without the incentives, we would not have been able to stay here." He says Red Hat looked at Atlanta, Austin, Texas and Massachusetts, where it has other facilities.

Red Hat is located now on the NCSU Centennial Campus. Where, exactly, it will establish a permanent corporate headquarters hasn't been determined yet, Whitehurst says, but it will be in Wake County somewhere.

***

Perdue was asked about the merger of Duke Energy and Progress Energy. She didn't question it, but did say that with the combined company in a building phase, it would be appropriate for state officials to raise the issue of whether the mega-Duke/Progress Corp. should be moving faster toward renewable energy sources.

From the Governor's office:

RALEIGH — Gov. Bev Perdue announced today that Red Hat, a North Carolina based software developer and the world's leading provider of open source software solutions to businesses, government and other enterprises, will maintain and expand its headquarters in Wake County.

“Nothing makes me happier than to announce that Red Hat is staying in North Carolina — except, perhaps, to say they are also adding 540 new jobs,” said Gov. Perdue. “Red Hat is a homegrown, high-tech, global brand and we fought hard to keep them here. That’s because economic development — and growing jobs now — isn’t just about wooing outside companies. It’s about taking care of the ones we already have, and encouraging them to put down their roots even deeper.”

Red Hat is currently headquartered in Raleigh with satellite offices worldwide. Red Hat is a leading software developer and technology provider focused on making high-quality, low-cost open source technologies accessible to businesses, government and other enterprises. The company develops and provides operating system platforms along with middleware, virtualization and cloud computing solutions offering customers a long-term plan for building infrastructures leveraging open source technologies. The company currently employs more than 690 people in North Carolina.

From the Governor's office:

RALEIGH — Gov. Bev Perdue announced today that Red Hat, a North Carolina based software developer and the world's leading provider of open source software solutions to businesses, government and other enterprises, will maintain and expand its headquarters in Wake County.

“Nothing makes me happier than to announce that Red Hat is staying in North Carolina — except, perhaps, to say they are also adding 540 new jobs,” said Gov. Perdue. “Red Hat is a homegrown, high-tech, global brand and we fought hard to keep them here. That’s because economic development — and growing jobs now — isn’t just about wooing outside companies. It’s about taking care of the ones we already have, and encouraging them to put down their roots even deeper.”

Red Hat is currently headquartered in Raleigh with satellite offices worldwide. Red Hat is a leading software developer and technology provider focused on making high-quality, low-cost open source technologies accessible to businesses, government and other enterprises. The company develops and provides operating system platforms along with middleware, virtualization and cloud computing solutions offering customers a long-term plan for building infrastructures leveraging open source technologies. The company currently employs more than 690 people in North Carolina.

Red Hat’s expansion will take place in two projects. The first will expand its current headquarter operations and add jobs associated with its existing core product lines. The second will support the company’s expansion into new cutting edge technologies like software virtualization and technology cloud offerings. The two projects will result in a total of 540 jobs being created with more than $109 million in investment, including the construction of a new headquarters facility with future expansion possibilities. The total estimated positive impact to the state’s economy over the life of the grant terms is estimated to be $1.5 billion.

While individual wages will vary by job function, the 240 jobs in the first project will have an overall average wage of $80,525 a year. In the second project, the overall average wage will be $83,082 for the 300 jobs created. The Wake County average wage is $42,692.

“North Carolina has been a strategic partner to Red Hat for more than a decade. The talent base we've been able to attract headquartered in this state has been phenomenal,” said Jim Whitehurst, President and CEO at Red Hat. “We look forward to future growth and expansion within Wake County and on a global basis. It's an incredibly exciting time for Red Hat and its employees.”

The company is still considering site selection, but has confirmed that it has narrowed its search to Wake County.

To facilitate this expansion, the state Economic Investment Committee today voted to award Job Development Investment Grants to Red Hat for two projects. JDIGs are awarded only to new and expanding businesses and industrial projects whose benefits exceed the costs to the state and which would not be undertaken in North Carolina without the grant.

Under the terms of the JDIGs, the company is eligible to receive two grants equal to 75 percent of the state personal income withholding taxes derived from the creation of new jobs for each of the 12 years in which the company meets annual performance targets. If Red Hat meets the targets called for under the agreements, the JDIGs could yield as much as $15 million in maximum benefits for the company.
In addition, up to $5 million could be added to the state’s Industrial Development Fund for infrastructure improvements in economically distressed counties. When a JDIG is awarded in the state’s more economically prosperous counties such as Wake, 25 percent of the grant award is allocated to the Industrial Development Fund to encourage economic development in less prosperous counties.
Other partners that assisted with this project include: the N.C. Department of Commerce, Wake Technical Community College, Wake County, and the Greater Raleigh Chamber of Commerce.

Through Gov. Perdue’s JobsNOW initiative, the state continues to work aggressively to create well-paying jobs, train and retrain its workforce, and lay the foundation for a strong and sustainable economic future.

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