Apple dives deeper into Austin’s talent pool

This story was written by Lori Hawkins and appeared in the Austin American-Statesman.

Apple dives deeper into Austin’s talent pool

The tech giant’s California-style campuses, including a new engineering center, are adding thousands of jobs in Central Texas.

Apple Inc., which recently completed its expansive campus in Northwest Austin, has been discreetly building a core engineering team across town, fueling a new wave of growth in Central Texas.

The California-based technology giant is pulling back the curtain on its new engineering center, which sits on a bluff in Southwest Austin, near Capital of Texas Highway and Bee Caves Road.

Apple, the world’s largest computer electronics company, employs about 500 engineers at the seven-story Capital Ridge office building, Johny Srouji, an executive at Apple, told the American-Statesman.

The newly constructed 215,000-square-foot building has the ability to hold 1,000 workers, and Apple intends to fill it, he said.

“We have been quietly building out this team, which is one of our most important engineering groups,” said Srouji, Apple’s senior vice president, hardware technologies. “They play a very critical and integral role — they are designing chips that go into all the devices we sell.”

The Austin team, which the company began building several years ago, is now Apple’s biggest research and development group outside of its Cupertino, Calif., headquarters. When Apple decided to expand engineering work outside of Cupertino, Central Texas was the natural choice, Srouji said.

“The reason we came to Austin is there is a strong pool of talent,” said Srouji, who previously lived in Austin during stints at IBM and Intel. “There are lots of high-tech companies, and also the University of Texas.”

Apple’s growth in Austin

The Capital Ridge operation is just one piece of Apple’s multi-million dollar investment in Austin. Apple recently completed its sprawling 38-acre campus on West Parmer Lane in Northwest Austin.

The campus, which is responsible for running the company’s business operations for the entire Western Hemisphere, features seven limestone-and-glass office buildings with a combined 1.1 million square feet. The site includes restaurants; smoothie and coffee bars; a full-scale gym with saunas and a wellness center with services including medical, dental and eye care along with acupuncture and massage.

Work done at the site, known as the Americas Operations Center, includes finance, human resources, corporate sales, customer support, information systems and accounting.

Meanwhile, last year, Apple bought the nearby Riata Crossing complex, which has four buildings with 350,000 square feet of space. The company, which had been leasing it, has declined to say what work will be done there.

Apple is in line to receive $35 million in tax incentives from the city, county and state for its Austin expansion. To date, the company has received $10.5 million in incentives payments from the state-operated Texas Enterprise Fund, documents show.

The company says it has already created more than 6,000 jobs in Austin. add the amount of jobs created since the incentives deal. That makes Central Texas Apple’s largest U.S. hub outside of Cupertino.

The ripple effects are already being felt, economic experts say. Austin economist Brian Kelsey estimates that the Capital Ridge operation alone, with 500 engineering jobs, would result in at least $140 million in new earnings and create about 1,000 spinoff jobs.

“For every one new engineering job created at Apple, we could expect to see approximately two additional jobs created in the region,” Kelsey said.

Apple’s investment, Kelsey said, shows the depth of Central Texas’ tech roots, which can be traced back to IBM and chip makers like AMD, before Austin became known as a global software center and a top place to launch a startup.

“Austin’s tech credentials are well established, but most of the headlines lately have been about startups, access to capital, and the like,” Kelsey said. “Apple’s recent investment serves as a reminder that Austin is a key center of innovation for companies of all sizes, including one of the largest employers and most recognized brands on the planet.”

Austin ‘an ideal fit”

Apple began hiring building its engineering operation in Austin in 2010, with a 100-person team. Over the past several years, the group has been spread out at different locations.

Now, the Capital Ridge site will provide a single base for its 500-person team and give Apple room for a major expansion push.

The company said the group has a range of high-level hardware and software engineering expertise, but declined to give specifics. Jobs in Austin currently posted on the Apple website include CAD engineers, CPU microarchitecture engineers, physical design engineers and power integrity engineers.

“The chip development work they do goes into hundreds of millions of devices every year,” Srouji said. “If they miss a beat, we don’t ship.”

The Capital Ridge offers amenities similar to the Americas Operations Center, including a cafe, espresso bar and a wellness center that offers preventative and urgent care, as well as acupuncture, massage and physical therapy. It also has a fitness center with group and private classes and terraces for Friday afternoon beer bashes.

Roger Kay, an analyst with Massachusetts-based Endpoint Technologies Associates Inc., said building and retaining a world class team in Austin is critical to Apple’s continued growth.

“They have an almost infinite need for really good engineers, and the supply is limited,” he said. “They’ve got plenty of money, but they have fished out Silicon Valley pretty much entirely. For Apple to find more talent, they have to reach out further afield.”

Austin, Kay said, is the right place to mine for talent.

“Thanks to Dell, AMD, NXP and Samsung, all that very specific talent that Apple needs resides in Austin,” he said. “It’s an ideal fit.”

Texas continues growth into auto industry powerhouse

This story was written by Claudia Grisales and appeared in the Austin American-Statesman.

Texas continues growth into auto industry powerhouse

Toyota’s major operations helping drive thousands of auto industry jobs in the state.

The plant came to Texas when the state’s major auto industry operations were mostly limited to a General Motors plant in Arlington. That’s changed dramatically since.

In addition to growth at its San Antonio plant, Toyota is now centralizing its North American headquarters and other operations in Plano. The news came on the heels of a GM announcement last year it would infuse its Arlington plant with a $1.4 billion expansion.

Put it all together, economics experts say, and Texas is a becoming a key player in the auto industry.

“During what has been a very challenging period overall for the auto industry, Texas has fared pretty well,” said Austin economist Brian Kelsey, founder and principal at economic research firm Civic Analytics. “The industry’s future here appears to be bright.”

The state’s manufacturing sector is seeing a nice bump from the growth of Texas auto industry operations as the tally of related executive jobs grow, experts say.

Austin economist Angelos Angelou, who says the Toyota plant’s economic impact has been “phenomenal,” estimates that the automaker’s manufacturing facility and its new Texas headquarters could generate more than $3 billion to $4 billion in personal income totals for the state.

Angelou predicts more job growth in the North Texas area such as the Dallas-Forth Worth metroplex or somewhere along the Interstate 35 corridor between North and Central Texas.

At this rate, “I think the state could possibly attract another (auto) manufacturer,” said Angelou, founder and principal executive officer of Angelou Economics. “It will be more on the way I would say.”

Texas currently has about 38,000 jobs in motor vehicles and parts manufacturing, Kelsey said. That ranks seventh among all states for such jobs, up from 10th in 2003, Kelsey said.

As of 2014, the auto industry added an estimated $4.8 billion to state gross domestic product, he said. While that figure is dwarfed by larger sectors such as energy, it is becoming an increasingly viable source for jobs.

Only two states have fared better when it comes to adding jobs in the sector since 2003.

“We’re still a relatively small player in the market compared to the industrial Midwest, but, among southern states, only Tennessee and Alabama have added more jobs than Texas in motor vehicles and parts manufacturing since the Toyota announcement in 2003,” Kelsey said.

In terms of states with a larger share of auto industry jobs, only Alabama has seen a faster job growth rate than Texas, Kelsey said.

Since 2003, “only Alabama has grown faster” than Texas in terms of states with at least 25,000 such jobs, he said.

‘An auto-producing state’

By next year, Toyota could bring the combined number of Texas workers at its San Antonio plant and workers for its new North American headquarters in Plano to more than 11,000.

Of that, the Toyota Texas plant has about 7,000 workers, which includes 3,200 direct Toyota employees. The rest are employees who work for 23 on-site suppliers located on the campus, said Mario Lozoya, Toyota director of government relations and external affairs.

“Texas sells a lot of trucks, so it was the right decision to build trucks in Texas,” Lozoya said reflecting on the plan during a recent media tour of the plant.

Angelou estimates Toyota has created as many as 15,000 to 20,000 direct and indirect jobs jobs in Texas.

“They have basically solidified Texas as an auto-producing state,” he said. “Toyota has been a savior of the auto industry in Texas and single-handedly transformed the state as a place for auto manufacturing.”

When Toyota made its 2003 announcement it would build a truck plant in San Antonio, the automaker said it had plans to employ 2,000. In November 2006, its first Toyota Tundra rolled off the line, followed by the Toyota Tacoma in 2010.

The plant’s progress in Texas has not been without its setbacks.

The 2008 recession forced the plant to shut down for three months. The Japanese earthquake and subsequent tsunami in 2011 triggered new challenges for operations.

And a storm in May blew a hole larger than a football field in the plant’s roof that required significant repairs.

Still, the facility is on track to make up for that lost production and bulking up on worker hours to boost output. The plant, which is capable of cranking out 200,000 trucks or more, added a third shift of workers and is now on track to produce 250,000 trucks this year, said David Crouch, vice president of administration and production control for the facility.

“Basically the parking lot empties and then the parking lot starts to fill back up,” he said of the plant’s employee lots now. “And actually we’ve had to build a new parking lot on the east side of the plant because we ran out of parking space.”

‘Doing very well right now’

Toyota is also in the midst of moving 4,000 workers to its new North American headquarters to Plano by the first quarter of 2017 — consolidating workers from at least four U.S. cities. Those who decide not to relocate will be replaced by newly hired workers, Lozoya said.

“The philosophy is we will be able to work together in a better way,” he said of the new headquarters.

Angelou said the state has also navigated many challenges in its pursuit of the auto industry, such as when GM has entertained a closure of their Texas facility. But economic development efforts, in the end, appear to be paying off, he said.

“With the GM facility in Arlington, there were times when they were thinking of closing it,” he said. “We’re not Alabama or Indiana, but you know it’s a huge industry. It’s doing very well right now. And I think we have two of the greatest auto manufacturers in GM and Toyota.”

Here’s Why It Seems Like Everyone You Meet in Austin Is from Out-of-State

This story was written by Mose Buchele and appeared on kut.org.

Here’s Why It Seems Like Everyone You Meet in Austin Is from Out-of-State

If it seems like most of the people you meet in Austin just moved here from some other state, it turns out, many of them have.

The numbers – analyzed by Brian Kelsey of the Austin-based economic research firm Civic Analytics – come from the IRS, which tracks where people file their tax returns from year-to-year.

Kelsey says Travis County ranked third among U.S. counties receiving the most new residents from other states – about 265,000 people came from out-of-state between 2011 to 2014.

Obviously, this isn’t something unique to Travis County – other big Texas counties get plenty of out-of-town transplants – but, he says, it feels more noticeable here.

“The interesting thing about Travis County is that newcomers coming from other states make up a larger share of the total population here,” he says. “Part of that [difference] is because Travis County is a smaller county than, say, Dallas County or Harris County. Given a hundred people you run into off the street, you’re more likely to run into somebody from another state than some of those other places.”

What’s more, only about a third of Travis County newcomers from 2011 to 2014 were from Texas – compared to 60 percent in Dallas and a near-50-50 split in both Bexar and Harris counties. Kelsey says that’s a relatively new trend.

“If you go back 10 years – even five or six years – the majority of people moving into Travis County were from other parts of Texas…based on this new data that’s actually now flipped,” he says.

Like last year’s analysis, which only examined 2012-2013 data, Florida tops the list of states other than Texas that sent the most citizens to the Austin area, followed by California, Georgia, New York and Illinois.

You can read Kelsey’s full analysis here.

The Importance of Manufacturing in Austin and Other Tech Markets

This article was written by Josh Wright at Emsi.

The Importance of Manufacturing in Austin and Other Tech Markets

Austin, Texas, is a tech-driven metro. There’s no getting around that fact. Of the major tech markets in the US, only San Jose has a higher share of tech jobs than Austin. But as our friend Brian Kelsey showed in new research, manufacturing is also a huge player in the central Texas economy.

Really, though, it’s tech-driven manufacturing that’s leading the way in Austin … and in other prominent tech economies.

Austin Manufacturing Infographic

Kelsey’s study, commissioned by the Austin Regional Manufacturing Association, used Emsi data to show that manufacturing is the largest contributor to regional GDP in Austin among non-government industries, comprising 10.3% of total regional gross domestic product. And productivity—as measured by value-added per worker—is more than $193,000 in manufacturing, 73% higher than productivity across all industries in Austin.

Austin Manufacturing OverviewBut here’s the kicker: Nearly 60% of manufacturing’s contribution to regional GDP in Austin comes from the information technology and analytical instruments cluster. The large sub-industry groups in this cluster are semiconductors ($3.1B), computers/peripherals ($2.1B), and electronic components ($721M).

So, yes, Austin is a mecca for tech-centered manufacturing. But we were curious if the same thing was true for other big tech markets, so we looked at our regional GDP numbers by detailed industry to check.

Manufacturing GRP for Large Tech Metros

Regional gross domestic product (or GRP) looks at the value-add a particularly industry brings. It includes earnings, profits generated, and tax revenue generated. And it’s a great metric to assess when analyzing basic industries (i.e., those that export products and services and thereby generate income from outside the region).

Manufacturing is a classic example of a basic industry, and for a sampling of well-known tech markets—the same nine metro areas used by Kelsey in his Austin tech talent study—the sector (mostly) plays a critical role.

While manufacturing is important to Austin’s economy, five of these top metros get a higher share of value-added from the sector. Manufacturing accounts for 27% of San Jose’s GRP and 25% of Durham-Chapel Hill’s.

(Note: We used 2014 GRP data while Kelsey’s report used 2013 data.)

San Jose’s Largest Contributors to Value-Added

San Jose is the center of Silicon Valley, so that large of a contribution from manufacturing might surprise you. However, like Austin, the bulk of value-added from manufacturing is tech-focused. Below is the top five detailed industries (6-digit NAICS) based on their share of San Jose’s total 2014 GRP.

  • Internet publishing and broadcasting and web search portals (10.1% of total GRP)
  • Electronic computer manufacturing (8.9%)
  • Semiconductor and related computer manufacturing (7.4%)
  • Software publishers (4.5%)
  • Custom computer programming services (3.7%)

Only two of five largest GRP-contributing industries in San Jose–electronic computer and semiconductor and related–are in the manufacturing sector. But when paired with semiconductor machinery manufacturing, they make up 17.6% of San Jose’s gross regional product.

Durham-Chapel Hill vs. Raleigh

Just 24 miles separate Durham from Raleigh. They form a core part of the Research Triangle and share a lot of the same industry traits, but Durham-Chapel Hill is far more reliant on manufacturing.

While manufacturing jobs in Durham-Chapel Hill declined 16% from 2009-2015, the sector still employs about 10% of the metro area’s workforce and contributes a quarter of regional GDP. By comparison, manufacturing only makes up 5% of employment and 10% of GRP in Raleigh.

Durham-Chapel Hill’s five leading GRP industries give a good glimpse on what’s driving its economy:

  • Pharmaceutical preparation manufacturing (10% of total GRP)
  • General medical and surgical hospitals (5.6%)
  • Computer terminal and other computer peripheral equipment manufacturing (5%)
  • Biological product (except diagnostic) manufacturing (5%)
  • Colleges, universities, and professional schools (state government) (4.4%)

Durham-Chapel Hill, home to Duke University and University of North Carolina, has a heavy biotech focus, with pharmaceutical preparation manufacturing and biological product manufacturing in the top five. Large biopharma companies in Durham-Chapel Hill include GlaxoSmithKline and Merck.

Computer and semiconductor manufacturing have a presence in Durham-Chapel Hill, but not nearly as much as in San Jose or Austin.

Raleigh, on the other hand, has some biotech (biological product manufacturing is in the top 10 in GRP), but it’s driven more by software publishers, wholesale trade, and wired telecommunications carriers.

Manufacturing’s Role in Workforce Development

Austin Manufacturing Occupations

Manufacturing not only makes an big dent in regional GDP, it also plays a significant role in regional workforce development. Kelsey’s report concludes with the key occupations that staff manufacturing firms in Austin and a nice section on regional workforce strategies that is applicable to almost every community and region.

With the rising cost of housing in Austin, providing as many living-wage employment opportunities as possible to local residents is an important goal for economic and workforce development, especially in areas of the region where educational attainment rates are lower compared to the population as a whole. Manufacturing should be viewed as a critical piece of the solution to many of the challenges—economic segregation and educational attainment inequality—facing Austin, and ARMA can play a pivotal role in driving public-private partnerships to address those challenges.

Which tech jobs pay the most in Austin?

This article was written by Lilly Rockwell and appeared in 512 Tech at the Austin American-Statesman.

Which tech jobs pay the most in Austin?

We’ve obtained a fresh batch of data on tech salary wages in Austin, thanks to the helpful folks at Idaho-based Economic Modeling Specialists International.

Their data looks at all the tech-based industry job codes in Austin. This is different from breaking jobs out by title — for instance, managers versus engineers — and it can include non-tech jobs, such as marketing.

In the 10 highest-paid tech industries, the average annual wages exceed six figures.

The highest-paying industry, on average, is classified as “computer storage device manufacturing.” That industry pays an average annual salary of $216,470, and with benefits included it rises to $252,783.

But the people who work in that field are fairly specialized – there are only 96 people within this industry in the Austin area, according to EMSI.

Other highly-paid tech industries in Austin fall under the chip or computer manufacturing and “software publishers.” The most common tech industry in Austin – software programming, which employs more than 20,000 people  – pays an annual average of $102,035 or $116,644 with benefits included.

Some of the lowest-paid industries include tech manufacturing, such as “electronic circuit manufacturing,” which basically means manufacturing electronic cables.

These employers pay an average salary of $41,623, which rises to $48,583 with benefits included.

EMSI compiled this salary information from sources such as the U.S. Bureau of Labor Statistics, American Community Survey and the U.S. Bureau of Economic Analysis.

The industry categories included in this data were culled as part of a study done by Austin economist Brian Kelsey last year for the Austin Technology Council.

Below is the full list of tech wages compiled by EMSI, excluding industries that had no workers or “insufficient data.”

Industry Description Number of Positions in Austin Average Current Wages & Salaries Average Current Total Earnings (Including Benefits)
Computer Storage Device Manufacturing 96 $216,470 $252,783
Telephone Apparatus Manufacturing 428 $185,364 $216,371
Electronic Computer Manufacturing 8,697 $172,727 $201,702
Semiconductor and Related Device Manufacturing 9,723 $135,057 $157,665
Software Publishers 5,306 $125,847 $150,009
Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing 383 $123,380 $143,988
Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing 36 $117,952 $135,519
Semiconductor Machinery Manufacturing 330 $109,148 $128,544
Satellite Telecommunications 17 $104,350 $125,849
Audio and Video Equipment Manufacturing 36 $108,069 $125,603
Instruments and Related Products Manufacturing for Measuring, Displaying, and Controlling Industrial Process Variables 502 $107,298 $125,179
Data Processing, Hosting, and Related Services 4,415 $103,141 $124,321
Computer Systems Design Services 13,049 $104,912 $119,918
Other Communications Equipment Manufacturing 336 $100,544 $117,374
Engineering Services 10,550 $102,309 $117,056
Custom Computer Programming Services 20,722 $102,035 $116,644
Other Electronic Component Manufacturing 730 $98,529 $114,891
Computer Terminal and Other Computer Peripheral Equipment Manufacturing 2,503 $96,524 $112,715
Other Computer Related Services 1,291 $94,620 $107,964
All Other Miscellaneous Electrical Equipment and Component Manufacturing 247 $80,448 $107,464
Research and Development in Biotechnology 990 $93,743 $107,234
Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology) 2,637 $93,476 $106,673
Analytical Laboratory Instrument Manufacturing 86 $91,900 $106,631
Optical Instrument and Lens Manufacturing 219 $90,389 $106,604
Computer and Computer Peripheral Equipment and Software Merchant Wholesalers 18,976 $89,464 $102,160
Bare Printed Circuit Board Manufacturing 42 $87,222 $99,904
Wired Telecommunications Carriers 5,530 $80,418 $98,116
Instrument Manufacturing for Measuring and Testing Electricity and Electrical Signals 892 $83,679 $97,583
Computer Training 211 $77,352 $93,677
Wireless Telecommunications Carriers (except Satellite) 1,389 $75,671 $92,142
All Other Telecommunications 160 $74,398 $89,212
Telecommunications Resellers 580 $70,387 $85,730
Testing Laboratories 781 $74,585 $85,473
Computer Facilities Management Services 268 $76,302 $85,421
Internet Publishing and Broadcasting and Web Search Portals 1,851 $73,484 $82,594
Electromedical and Electrotherapeutic Apparatus Manufacturing 20 $71,049 $79,053
Totalizing Fluid Meter and Counting Device Manufacturing 369 $66,720 $77,802
Other Measuring and Controlling Device Manufacturing 164 $60,374 $69,788
Printed Circuit Assembly (Electronic Assembly) Manufacturing 2,560 $54,070 $63,106
Electronic Connector Manufacturing 467 $41,623 $48,583

All wage data is from 2016.

Austin tech industry debates next moves after Prop 1 vote

This article was written by Lilly Rockwell and Lori Hawkins and appeared in 512 Tech, Austin American-Statesman.

Austin tech industry debates next moves after Prop 1 vote

Could vote have long-term impact on Austin’s reputation as a tech industry leader?

The Proposition 1 vote on ride-hailing regulations was emotionally charged and divisive for the Austin tech community, with some contending that a vote against it put Austin’s reputation as an innovation hub at risk.

Now that Austin voters have officially rejected the ballot proposition, and Uber and Lyft have kept their promise and left the city, many tech investors and entrepreneurs are surveying the damage – if any – to Austin’s status as a technology center.

Joshua Baer, founder of Capital Factory, the downtown technology incubator, has been a critic of the proposed regulations. He said he believes the vote sent signals that Austin is hostile to startups.

“Losing Uber and Lyft is a major setback to our reputation as an innovative city and technology hub that is already impacting decisions made by venture capitalists and Fortune 500 executives,” Baer said Monday. “It’s critical that the tech community and City Council come together… before our reputation is damaged further.”

But others scoffed at the notion that the Prop 1 vote could do any long-term damage to Austin’s entrepreneurial reputation. Austin economist Brian Kelsey said the vote is unlikely to have negative ripple effects on startups.

“Prop. 1 may be a setback in how the outside world views our seriousness in local policy making, but branding Austin as ‘anti-innovation” is ludicrous,’ ” Kelsey said. ” If the existence of two ride-sharing companies locally has an impact on your business model, then I’d say Prop. 1 should probably be the least of your concerns.”

Saturday’s vote, with 56 percent voting against Proposition 1, means the Austin City Council-approved ride-hailing regulations are in effect. These rules, opposed by Uber and Lyft, require fingerprint-based background checks and vehicles to have an identifying “trade dress,” among other regulations.

Though Uber and Lyft have until April 2017 to fully comply, both made the decision to leave the Austin market entirely, effective Monday morning.

Initially, many tech workers and entrepreneurs said they thought the vote would get industry support because of general opposition to more regulation of emerging technology business models.

But they now say Uber and Lyft’s aggressive marketing tactics derailed the discussion.

“I think it backfired in the tech community,” said Austin entrepreneur Richard Bagdonas, who supported the proposition. “I have talked to many people who said ‘I’m pro-Uber and pro-Lyft, but the number of flyers, calls and texts I received pushed me over the edge.’ “

Political consultant Mark Littlefield, who advised the anti-Prop 1 group “Our City, Our Safety, Our Choice,” said the amount of money pumped into this race – more than $9 million – from Uber and Lyft had a backlash effect.

“The narrative started to change” by the end of April, said Littlefield, who was doing polling throughout the campaign. “It became less and less about the policy and more and more about the personalities.

Some tech leaders, worried about whether the tech community would vote at all, mobilized to try and get out the vote. Baer, for example, participated in a news conference last month to encourage participation in the process.

“I must admit, I don’t think this is a slam dunk,” he said at the event with former Mayor Lee Leffingwell. “I’m worried about it. I think it’s going to be hard to get the tech community to realize it and vote. They’re quick to like things on Facebook or tweet about things. But it’s hard to get people out at the polls.”

Baer’s hunch was correct.

Turnout for Prop 1 was dominated by “traditional” voters who reliably show up to vote in state and local elections, Littlefield said.  Early voting data showed that 70 percent of the Prop 1 voters were these traditional voters, he said.

“I’ve seen it time and time again,” he said. “There are people who will vote in May elections and there are people that no matter how vitally important the results of the May election are to their own personal interests, they simply do not vote.”

Political experts said Uber and Lyft underestimated whether support for their service translated into votes.

Take David Goss. He’s a 40-year-old systems engineer for EMC Corp. in Austin. He regularly uses Uber when he’s going downtown for drinks and needs a sober ride home. On paper, Goss sounds like he would be for Prop 1.

But Goss said he voted against the measure. “I do love Uber, I use it all the time,” Goss said. But he said he wasn’t in favor with just letting Uber and Lyft write their own regulations.

“I definitely felt that there was some middle ground, we needed to find a way to ensure the rides were safe and make sure the employees were treated fairly,” he said.

Austin marketing veteran and entrepreneur Josh Jones-Dilworth, who opposed the proposition, said he watched as the discussion — and tech workers’ opinions — morphed.

“It started as a safety issue, and then it became an innovation issue, and then evolved into a corporate bullying issue,” Jones-Dilworth said. “It’s a complex issue, and there was never a consensus. I know a lot of people who changed their mind. And I know a lot of people who stayed on the sidelines because they thought this was a no-win situation.”

David Broockman, a business professor at Stanford University and an Austin native, said startups like Uber and Lyft view themselves as the underdog taking on an established industry: taxis.

“In Silicon Valley there is a tendency to view startups as David against Goliath,” he said, but that doesn’t always translate outside the Bay area, he said, where they are viewed instead as the Goliaths.

Bagdonas, the entrepreneur, agreed with Baer that Austin’s rejection sent a message to the tech industry outside of Texas.

“We have now created an environment that scares investors. New companies are probably going to have a tougher time raising money in Austin if they’re doing something that the City Council can get their hands on,” he said.

Rather than a set back, Jones-Dilworth said he believes the discussion and vote got a productive conversation going.

“I don’t think that one hyper-political issue with no clear mandate is going to set us back much at all,” he said.

Chip Rosenthal, an engineer and former chair of civic hacking group Open Austin, also said he believes Austin will come out ahead in the ride-hailing debates by developing an innovative compromise that will be emulated in other cities.

City leaders might already be working on one.

Mayor Steve Adler’s office put out a statement Monday detailing the steps he and the rest of the Austin City Council will take to ensure Austinites will be able to continue using ride-hailing services.

Some of his next steps include “talking with Uber and Lyft,” though a spokesman for the mayor’s office wouldn’t confirm whether talks are ongoing. It also mentions the possibility of creating a TNC nonprofit.

Adler’s statement also said he is creating an ad hoc committee made up of members of the tech community, including Baer, Jones-Dilworth and Eugene Sepulveda, CEO of the Entrepreneurs Foundation.

“I hope the speed at which the mayor, this council and community leaders address issues impacting riders and drivers signals to the rest of the world that Austin is absolutely open for business, that we value innovation and entrepreneurship, and that these things don’t have to be in conflict with local control,” Sepulveda said.

What the tech industry’s slowdown means for Austin

This article was written by Lilly Rockwell and appeared in 512 Tech in the Austin American-Statesman.

What the tech industry’s slowdown means for Austin

Recently I wrote about the dreary headlines dominating the tech world these days.

Companies like Intel are announcing major layoffs, while other large tech employers, like Apple and Microsoft, are watching their stock prices plummet.

So what does this all mean for Austin? Could the tech industry downturn lead to layoffs here?

Over the past week I interviewed several local tech industry experts to try to answer this question. As expected, their reactions were mostly incredulous. The Austin tech industry prides itself on its exceptionalism.

I was reminded that the Austin tech ecosystem is fairly diverse. No longer does Dell Inc. and the semiconductor industry dictate the health of the local tech economy, though they certainly have a significant impact.

People like Barbary Brunner, head of the Austin Technology Council, said Intel’s layoffs  – the company announced last month it was eliminating 12,000 jobs – were mostly just a reflection of poor management.

She warned against taking the example of Intel and applying it to other tech firms. That’s a fair point, though local chipmakers have also struggled in recent months, reporting falling sales and profits not in line with analyst expectations.

Brunner distinguishes between what’s going on with the bigger, legacy tech firms and the startups and medium-sized companies such as HomeAway or Indeed that populate Austin’s tech landscape.

Even so, Brunner acknowledges that hiring data recently has revealed a detectable tech industry slowdown.

“What we’re seeing happen in Austin right now is that companies are absorbing all the hiring they have done over the last five years,” Brunner said. Translation: Hiring in the local tech sector has slowed down.

Local economic development expert Brian Kelsey said employment growth has cooled off from the “torrid pace of the economic recovery.” Last year, tech job growth in Austin was about 4 percent compared to 3 percent nationally.

The latest forecasts are predicting a 2.4 percent tech job growth in 2016 compared to 1.6 percent nationally.

“As of right now, there are still segments within tech that are expected to see relatively strong employment growth this year,” Kelsey said. And certain areas, like custom computer programming and systems design, are still expected to have job growth in the range of 4 percent to 6 percent in 2016.

“There were nearly 9,000 job postings advertised for core tech related positions in the Austin region as of March, which was only about 8 percent off the pace from a year ago,” Kelsey said.

Brunner echoed those comments, saying tech workers in Austin shouldn’t be worried about losing their jobs, though, interestingly, she made the caveat that people who work for larger employers like Dell should be more concerned.

She might be right about that. Some of Austin’s biggest tech employers could be shedding additional jobs this year, or they have already done so in recent months. For instance, both Dell and Advanced Micro Devices downsized their workforce last year. Dell eliminated 10,000 jobs and AMD said it would cut 500.

“If I wanted a job in tech, Austin is one of the best places I would come,” Bruner said. “We have an incredibly fertile environment here. Particularly if you want to be in early-to-mid-stage companies.”

Documents: Apple has created over 2,000 Austin jobs since 2012

This article was written by Lori Hawkins and appeared in the Austin American-Statesman.

Documents: Apple has created over 2,000 Austin jobs since 2012

Tech giant is on pace to meet hiring goals it promised in exchange for millions of dollars in incentives.

Technology giant Apple Inc. has created more than 2,000 new jobs in Austin since 2012 and remains on track to meet the Central Texas hiring goals it promised in exchange for millions of dollars in public incentives, according to documents filed with the city of Austin.

Apple, which disappointed investors last week with troubling financial information, is set to receive $35 million in tax incentives over the next several years from the city of Austin, Travis County and the state of Texas for an expansion of its operations in Central Texas.

The expansion is expected to generate a $304 million capital investment in the Northwest Austin campus, which will include seven new office buildings with 1 million or more square feet of space.

Under the terms of the incentives package, which was signed in March 2012, Apple agreed to create more than 3,600 new full-time jobs in Austin in 10 years while retaining at least 3,100 existing full-time jobs year over year. The average wage for those new jobs is to be $54,000 a year in the first year of the expansion and will stretch to $73,500 in the 10th year, according to the incentives agreement.

In 2012, the Austin City Council approved $8.6 million in tax breaks for Apple in exchange for establishing its Americas Operations Center here. Apple also is in line for between $5 million and $6 million from Travis County.

Apple, the world’s largest consumer electronics company, said last year that it was well ahead of hiring projections. A more recent report — filed March 10 by Terry Ryan, Apple’s senior tax manager — indicates that the company continues to outpace the requirements.

As of Dec. 31, the total number of full-time Apple jobs in Austin was 5,102, according to the company’s report. That includes 2,089 new jobs that been created since 2012, according to the report — an average of more than 550 a year. (The agreement calls for Apple to create 300 new jobs by the end of 2016.)

In addition, there were 904 contract employees as of the last day of 2015, the report said.

If Apple ultimately reaches its hiring goals, it will become the second-largest technology employer in Central Texas, behind only Dell Inc.

In a written statement, Apple said: “We’re incredibly proud that Apple’s innovation supports tens of thousands of jobs across a wide range of industries in Texas. Apple started in Austin 24 years ago and we’ve grown to support over 6,000 employees in a variety of roles from sales, operations and finance to our online store, engineering and the best customer support organization in the world. We also partner with a number of companies in Texas to source materials and components for our products, including the manufacturing and assembly of Mac Pro just down the road. Austin is a special community and we look forward to continuing to grow and invest here.”

Apple’s new Austin campus, at West Palmer Lane and Delcour Drive, is responsible for running the company’s business operations for the entire Western Hemisphere. In addition to the limestone-and-glass office buildings, the 38-acre site includes restaurants; smoothie and coffee bars; a full-scale gym with saunas and a wellness center with services including medical, dental and eye care along with acupuncture and massage.

The campus, which is scheduled to be completed this year, employs workers in finance, human resources, corporate sales, customer support, information systems, accounting and other administrative roles.

The new campus is just part of Apple’s growth plan in Austin. Last year, the company bought the nearby Riata Crossing complex, which has four buildings with 350,000 square feet of space, which the company had been leasing.

It also signed a lease for the entire 216,000-square-foot Capital Ridge office building under construction in Southwest Austin. The company isn’t saying what work will be done at the various locations.

Apple already has accepted two sizable payments from the Texas Enterprise Fund, which was created in 2003 to attract new jobs and investment to the state. The state gave the company $5.25 million in September 2012 and another payment of the same amount in December 2015. The total award from the Texas Enterprise Fund will reach $21 million over a decade.

Jon Hockenyos, an Austin economist, said the types of jobs Apple is creating at the campus are a key component to the region’s economy.

“These are the equivalent of manufacturing jobs in the old days — they’re jobs that pay a solid wage,” he said. “They provide solid middle-class incomes that sustain families. They’re the kind of jobs any city wants to see being created.”

Hockenyos said Apple’s recent woes — the company last week posted its first quarterly revenue decline in 13 years — are unlikely to affect its Austin operations.

“They’re facing some challenges, but a lot of what Apple does here is core to its business — things they have to do to continue to stay in business,” he said. “Because of that, the issues they face probably won’t be felt here as much as they might in other places.”

In fact, Austin economist Brian Kelsey said, Apple could provide stability to Austin’s economy if the technology industry were to experience a downturn.

“We’re in the longest streak of economic expansion since the late 1990s, but Austin is still primarily a startup town,” Kelsey said. “That’s important to keep in mind because entrepreneurship can be a shaky foundation for economic development when the business cycle starts to turn.”

Large players operating like Apple aren’t immune to a global slowdown, Kelsey said. “But they can provide some stability, making Austin more resilient to changing conditions,” he said.

Government officials shouldn’t be too concerned with Apple’s recent earnings report, said Patrick Moorhead, president and principal analyst at Moor Insights and Strategy.

Apple might have frustrated investors, but it’s “way too early to be concerned” in Austin, Moorhead said.

“Apple, unlike other companies, didn’t invest too far forward related to its commitments in Austin. In fact, given their profitability and revenue base, they may not have enough space for everything they need to do,” Moorhead said.

If profits are most important, Moorhead said, then “Apple should consider moving even more functions to Austin from expensive California.”

For med school’s backers, big dreams meet mundane details

This article was written by Dan Zehr and appeared in the Austin American-Statesman.

For med school’s backers, big dreams meet mundane details

Sit down at the round, glass-topped table in state Sen. Kirk Watson’s office, and you can never quite be sure where the conversation will take you.

But that’s kind of the point when you’re discussing the dreams and designs for the Dell Medical School, an innovation district built around it and the impact those entities could have on the health and economic wellbeing of Central Texas.

When Watson, Central Health, the Seton Healthcare Family and University of Texas officials pitched the whole concept to taxpayers, they sold it as an innovative driver of improved health across the community — but also as a critical missing piece that could help expand the Central Texas economy in ways previously unavailable.

That second part of the plan promised an especially visionary idea: A medical school, supported by a voter-approved property tax increase, would turbocharge the local economy, much like IBM, MCC and Sematech transformed Austin from a university and state government outpost to the tech-driven, knowledge-based metro area it is today.

“I think in 20 years we’ll be looking back at that and saying it’s one of the pivotal moments in the history of Central Texas,” Watson said. “How often can you do something like that? It’s pretty rare.”

Construction continues at the Dell Medical School, which is scheduled to open later this year. Mark Matson for American-Statesman

Watson sees the school, hospital and innovation district as especially promising because they’re rooted in a community-backed effort that capitalizes on Austin’s richest assets — its people, its mind, its brainpower. They provide new outlets for those strengths.

Watson admits believes what emerges from that will have a transformative effect on Central Texas.

“This was a place that was a college town with state government as the dominant part of the economy, so it was all people-oriented,” he said. “That transferred into a focal point in a worldwide smart economy, and now it’s going to go to the next phase of that knowledge economy. Without the medical school I don’t think it would’ve done that.”

Getting to something that remarkable, however, will require what Clay Johnston, the dean of the school, describes as a balance of visionary and pragmatic forces.

On one hand, it requires the ability to dream big, to imagine Austin as the model healthy community. It requires a school and teaching hospital at the vanguard of a major new digital health economy, developing technologies that both fit within and help shape new models of healthcare delivery.

On the other hand, it also requires a sense of perspective — when it comes to life sciences, Central Texas will not become San Francisco, Boston or San Diego, where venture capital, grants and funding resources are measured in the billions of dollars.

As local economic development expert Brian Kelsey noted in a recent report, the Silicon Valley tech economy is roughly the same size as the entire Austin-area economy.

“People love the vision part, and that’s great,” Johnston said in an interview this month. “But we have to put some meat, some proof, around it.”

We’ve started to see bits of meat grow around the bone. The medical school is preparing to roll out a new model of health care delivery that it calls, wonkily enough, “integrated practice units,” or IPUs.

The IPUs are designed to bring together a diversity of caregivers around a particular ailment — the first one targets osteoarthritis and will be launched in a month or so. They collectively coordinate care in a way that’s guided by patient needs rather than by physician specialties.

So instead of a primary doctor referring a patient to a surgeon, who can’t see them until next week, the surgeon can walk the patient down the hall and consult with a physical therapist, a nutritionist or other specialists—including a surgeon—all with expertise in that ailment.

For the next few years, those sorts of health care benefits might provide the most tangible evidence of the medical school’s impact on the community. The school’s support to helping provide safety net care in Travis County should improve community care, especially if the new delivery models prove to be as efficient and effective as school and local health officials hope.

But, absent a big-splash move from a major corporation or funder, the community-wide economic benefits could be more difficult to see — and, in an odd way, the innovation zone might actually have countervailing effect on those efforts.

The notion of “place-making” undergirds innovation districts and much of urban development today. Create the type of place that draws people, industry and activity, and it will start to pull in and generate its own creative energy.

Even much of the place-making terminology – “anchor institutions,” for instance – has a grounded, centered connotation to it. Yet the promise of community-wide benefits means that energy, resources and opportunities will have to generate enough energy to break free of the gravitational pull and radiate into disadvantaged neighborhoods and workers.

In that sense, perhaps the biggest advantages of the innovation zone will stem from the connections it forges with local businesses.

“What you really want to do is build local wealth, to have good jobs locally,” said Christina Gabriel, president of the University Energy Partnership, an energy-technology research collaboration among several mid-Atlantic universities.

In any region, jobs tend to emerge in local clusters, Gabriel said. When the population expands, so does employment at stores, gas stations and restaurants. When an agglomeration of certain industries coalesces, that concentration tends to spur even greater levels of activity.

What’s key for building wealth, Gabriel said, is expanding the traded clusters — the concentrated sets of industries that bring in dollars from outside the region, through exports, venture capital, grants and the like.

But spreading that wealth throughout the community requires “local ownership of the local cluster that serves the traded cluster,” she said.

“Startup companies need to buy a lot of supplies for the products and services they sell,” she said. “The more of that supply chain and service chain that can trade in local businesses … (the more) those jobs are actually better jobs.”

How well Capital City Innovation, the organization overseeing the new district, can build those connections with local businesses remains to be seen. Officials have only announced the formation of the entity. We have yet to see a staff, a budget or any strategic plan.

But back at the Capitol, sitting around the table in Watson’s office, the same themes emerge.

No one could have predicted that the arrival of IBM or Sematech would shape Austin the way they have. Nor can anyone know whether the medical school will become one of those landmarks — an economic and health care engine beneficial enough to pay back the price of the property tax increase that made it a reality.

Even Watson will tell you: “The beauty of the future is I can’t predict it.”

Officials launch nonprofit to oversee new medical school’s innovation zone

This article was written by Dan Zehr and appeared in the Austin American-Statesman.

Officials launch nonprofit to oversee new medical school’s innovation zone

Community leaders today are announcing the formation of a nonprofit organization that will develop and oversee an innovation district anchored by the Dell Medical School.

The nonprofit, called Capital City Innovation Inc., will help bridge Austin’s entrepreneurial community with the health care research and development emerging from the medical school and teaching hospital, officials said of the initiative announced as South by Southwest Interactive began.

“The branding has become ‘rethink everything,’” said state Sen. Kirk Watson, D-Austin. “Well, part of what I see the innovation zone doing is … we get to rethink the future. We get to rethink innovation.”

Austin couldn’t have created this zone without the new medical school, teaching hospital and the 14 acres of downtown real estate held by Central Health, Watson said. Those entities, including Central Health, the Seton Healthcare Family and the University of Texas medical school, will provide the initial funding for Capital City Innovation, officials said.

Each of those will hold one seat on the nonprofit’s board, which was designed to include mostly public-sector representatives. Mayor Steve Adler and Travis County Judge Sarah Eckhardt will serve as advisory members, and four other slots will be held by community representatives.

The public-sector leadership reflects the district’s founding institutions and the project’s commitment to the community, Watson said, but it will have a lot of private-sector input.

“Let’s get this locomotive started, and then we’ll figure out what next steps are,” he said, noting that details about staff and funding will be hammered out in the coming weeks and months.

Officials said they envision the district becoming the primary mechanism for disseminating the medical school’s economic and health care benefits. Seton and Central Health will serve as a primary conduit on the medical side, for example, taking new models and ideas and integrating them into their care.

“Think about all the different venues where we collaborate with partners, service providers and other community partners that would benefit from these activities,” said Patricia Young Brown, CEO of Central Health. “We always played a connector, convener role, and I’d see us extending that into this space.”

While the district’s core will surround Central Health’s downtown property, she said organizers envision multiple zones. They could include Austin Community College facilities, as well as clinics or other entities throughout the region, officials said.

With multiple locations, Young Brown said, “they’re probably a little more embedded in the community. … You have the potential to bring different constituencies into the conversation.”

On the industry-development side, the benefits might be a little less defined. Innovation districts have had a mixed record of success in building centers of commercialization and startup activity, according to national urban development experts.

Kendall Square in Boston gets a lot of attention for its success. But outside Boston, San Francisco and San Diego, many similar efforts in other regions haven’t generated a major increase in funding, startup or commercialization activity.

To some extent, it’s a matter of expectations, said Joe Cortright, economist and head of City Observatory, which studies urban and economic development. If the objective is to create a big medical research institution and bring in grants, create highly paid jobs and provide some medical care, that’s a reasonable goal, he said.

“But if you have the expectation that’s somehow going to lead to commercial activity, especially in the biopharmaceutical space where the big bucks are, that doesn’t tend to happen outside those established places,” Cortright said.

He pointed to the track records at some of the country’s top medical hot spots, including Johns Hopkins University in Baltimore and UT’s MD Anderson Cancer Center in Houston. Both bring in huge amounts of federal and grant funding, but their rates of commercialization, venture capital investments and spinoff activity can’t match the trio of top life-science centers.

Local officials said they don’t expect Capital City Innovation to challenge those hubs, especially in industries they already dominate. But they don’t shy away from bold terms when discussing the region’s potential role in emerging health-related industries.

“We think traditional biotech and pharmaceuticals, there are opportunities there to enhance that, and we want to help,” said Clay Johnston, dean of the medical school. “But we also think that Austin is uniquely situated, especially with the medical school and how we’re approaching our mission, to make advances in the whole digital health arena, so where technology meets health.”

Johnston cited medical devices, health care apps and consumer products, such as Fitbit, as a few examples of how Austin can merge its traditional strengths in information technology, software and semiconductors with health care.

In those fields, he said, Capital City Innovation could create a new “center of gravity” for digital health products and services — especially technologies geared for the emerging models of health care delivery that the school hopes to pioneer.

“We have big and small companies here, a history of tech and a system designed to develop forward-thinking technologies and deliver health to populations,” he said. “That’s not the case in San Francisco and Boston, and that gives us an opportunity to do something unique in an area where it’s feasible for us to compete.”

The target shouldn’t be on the top tech hubs, said Scott Andes, a senior policy analyst at the Brookings Institution, where he studies innovation and place-making. The best innovation districts take what an area does well already, and amplifies that in one place. Successful medical-related districts create a space with amenities that draw people, encourage entrepreneurial activity and forge connections with the surrounding community, Andes said.

Further, he and other experts said, the biggest impacts on regional economies usually extend from the connections built between participants in the innovation district and existing local companies and residents.

“It’s less about envy for Silicon Valley and more about how we can build wealth locally,” said Christina Gabriel, president of the University Energy Partnership, an energy-technology research collaboration among several mid-Atlantic universities.

Efforts to bring locally owned businesses into the supply chain can build wealth across the community, Gabriel said. And developing educational and training programs now could help Austin’s current low-skill workers move into new jobs — many in coveted middle-wage occupations.

Even without specific ties to the community, an innovation district could generate plenty of research, startups and investments, said Brian Kelsey, founder of Civic Analytics. But that probably would occur anyway, without the additional incentives and public investment in a district.

“If this really is about inclusive development, then you must be able to show how the innovation zone is achieving measurable outcomes on inclusion,” Kelsey said. “Otherwise, this is nothing more than a real estate play.”