This article is the fourth in a four-part series that we’re publishing this week.
Apple’s new $1 billion data center — one of the highest-profile new data centers in the world — has put the town of Maiden, North Carolina (population: just over 3,000) on the tech map. But it almost didn’t get built.
Economic development officials in Catawba County, and a data center development group, had been talking with Apple for months to get the company interested in setting up its data center in town. Then the developer spent months making sure that an abandoned mill building — a remnant of the region’s days as a vibrant textile manufacturing area — would be ready to house the new facility.
But as Apple executives got closer to making a decision, they suddenly decided that the building was just too small. It looked like Apple was going to have to go elsewhere for its massive 500,000 square-foot iCloud data center.
However, the county had one more shot: Just three miles down the road, it had been developing a 180-acre park that they envisioned would be a campus to a handful of data centers. Faced with the possibility of seeing Apple walk, the county changed tack, and offered it the entire park.
“We almost lost it,” says the President of the Catawba County Economic Development group, Scott Millar, who has a background in advertising and a penchant for crossword puzzles. That would have been a major missed opportunity — at the peak of construction of Apple’s data center there were 1,400 construction workers on-site on a single day, says Millar. But beyond just the construction jobs, Apple’s influence — as one of the world’s largest and most-watched tech companies — is enormous. “It gave us the ability to be able to convince others to locate here, too,” says Millar, adding, “They are a powerful company.”
As I’ve laid out in this series of articles, North Carolina has emerged as one of the newest mega data center clusters in the U.S., attracting business from Apple (s AAPL), Google (s GOOG), Facebook (s FB), AT&T (s T), Wipro and others, thanks in part to the state’s cheap and reliable power and aggressive tax incentives.
Google kicks it off
In Maiden, it all started with Google. Millar and his team fought for the search company’s data center back in the 2005/2006 timeframe, eventually losing out to Lenoir, in Caldwell County, just 30 miles southeast.
But partly because of Google’s interest, the local utility Duke Energy started courting tech companies to build data centers, says Tom Williams, a spokesperson for Duke Energy. Data centers are attractive customers to utilities because they buy a large, and consistent, amount of power. Some industrial power customers, or even residential homes, have spikey — or inconsistent — energy demands, which can be hard for utilities to predict. Data centers, on the other hand, have a relatively set temperature and a set amount of servers to power, and their needs are mostly predictable. They also use power 24/7. Utilities like both of these features.
The possibility of Google’s business also helped prompt Millar and his team to go searching for a site that could be transformed into a data center park. The site they found, off of Startown Road, is the one that years later Apple settled on.
Millar and the county also helped Duke Energy begin aggressive marketing aimed at data centers, helping organize an annual site tour for tech companies called The Data Center Information Exchange, which is now in its 7th year; it attracts about 50 data center bigwigs a year. The county also created Datacentersites.com to show off the Startown Road park as well as other potential sites.
Tech companies that build data centers tend to go where others have gone before — the decision-makers generally feel more comfortable making what could be a billion-dollar decision if another company has already made it before them. In addition, once the needed fiber lines are built out to connect a data center in an area, other data centers can use those communication links for their data backbones.
With Millar’s advertising background, he started promoting the region as the North Carolina data center cluster: “We coined that term and started urging other communities to start using it,” he says.
What comes after manufacturing?
It was clear the area needed a new industry. In the 1960’s, 70’s and 80’s, the region had been a leader in manufacturing of textiles and furniture. In the 90’s, fiber cable production companies set up shop there as well. But the changing global economy has led to a massive contraction in the area’s textile and furniture-making sectors — and much of that business went overseas to China and Vietnam. The dotcom bust led to the exodus of the fiber folks, too.
The region’s unemployment spiked to 16 percent in the recession of 2008, says Millar. That has slowly inched back down in recent years. Data centers, which can provide hundreds of jobs during construction and dozens of jobs during operation, have helped.
But they haven’t solved the problem. The manufacturing jobs that dominated the area in the previous decades, like a furniture-making plant or a textile mill, provided thousands of jobs and propped up generations. The jobs were labor-intensive, and required training, but didn’t require a college education or higher degrees.
Contrast that with data centers, which when fully built offer dozens of highly skilled jobs to engineers and other highly skilled professionals. In its first year of operation, the Apple data center employed 67 full time “badged” workers. Facebook, likewise, has 60 full-time workers for the first building of its two-building data center complex.
The reality is that data centers don’t directly provide enough jobs to come even close to making up for the area’s manufacturing bust. “We led the nation in the percentage of workforce involved in manufacturing in the late 1980’s,” says Millar. That, unfortunately, will never return.
Still, there are a lot of indirect benefits of creating a data center cluster. The thousands of construction workers that built the data centers shopped in the local markets and ate at the local restaurants. And Millar and the county are hoping to use the cluster to attract more niche data center operators, like those storing health data, and firms analyzing big data.
Millar says he’s working with another unannounced data center company that could bring many more service jobs to the region through a service center. The idea is to go beyond just the Internet service providers like Google, says Millar, and predict the future of where the Internet and IT is going.
A lucky break
It was a couple of data center developers who joined one of the The Data Center Information Exchange tours that first brought Apple to Catawba county. T5 Partners, which specializes in building, owning and operating data centers, already had a relationship with Apple and saw the benefits of the low cost, reliable power in North Carolina.
But Apple landed in the town through a combination of targeted marketing, state and local incentives, the area’s existing resources, and a little bit of luck. A year before the county almost lost Apple through the Carolina Mills pitch, Millar says he almost sold off the 180-acre park to a titanium maker. “We were marketing it as a data center park, but if someone else had wanted to buy it, would I have sold it off? Heck yeah.”
In the end, the county acted more like a nimble web startup than a bureaucratic government agency, taking risks, predicting how the future would unfold, and remaking itself. Turns out the Silicon Valley pivot is alive and well in this Southern county.
When I ask Millar what advice he would give to the regions that want to help bring industry to their areas in similar ways, he’s at first hesitant to give advice. He doesn’t want tons of communities copying what Catawba has done. But after a moment he says: “Examine your assets that are existing, find new assets that are going to make sense to the clients, and go ahead and push your chips into that corner.”
Essentially make a smart bet. And who knows: maybe an early gamble on a new sector could deliver an Apple-style win like it did in Catawba County.
Here’s the rest of the 4-part series from this week: