Google gives offer a small town can’t refuse

Posted by Jim Stroud

July 18, 2007

Hmmm… reminds me of WalMart in some ways, not sure why.

Lenoir at first seems an unlikely place for a high-tech outpost of the hottest brand on the Web. Nestled beneath the Blue Ridge Mountains of western North Carolina and a two-hour drive from the nearest commercial airport, the quiet town and its neighboring communities have reeled from the closure of seven furniture factories and the loss of more than 2,100 jobs in the past three years. But down-on-its-luck Lenoir has just about everything mighty Google Inc. wants.

The digital titan, based in Mountain View, Calif., has been hunting for places to plant new server farms: vast, immaculate warehouses filled with row upon row of computers that allow Google to offer faster online searches and advertisements. Lenoir (pronounced like the woman’s name Lenore) boasts resources at the top of Google’s list: cheap, abundant electricity; excess water capacity to keep the computers cool; and lots of inexpensive land.

Just as Google has pushed the boundaries of its Internet business, it plays the real estate game aggressively. Beginning with an anonymous approach in late 2005, the company elicited a stream of promises from local and state officials in North Carolina, all frantic to lure a major tech company, even before they knew which one. During months of negotiations over Google’s shifting requirements, the company never failed to remind those officials that it could go elsewhere. In the end, the North Carolinians agreed to a package of tax breaks, infrastructure upgrades, and other goodies valued at $212 million over 30 years, or more than $1million for each of the 210 jobs Google said it eventually hoped to create in Lenoir.

Some felt bullied. “It’s simply unconscionable from an ethics standpoint for this company to go in from this very unfair bargaining position,” says Robert F. Orr, a former North Carolina Supreme Court justice running for governor. “These are business decisions by the smartest businesspeople in the world, and it’s just exploiting a desperate town.”

But that’s not the majority view in Lenoir. Most see Google’s arrival as a vital morale booster, if not a full replacement for the lost furniture factories. “I would have voted for a 100% tax incentive if that’s what it would have taken to land them,” says Herbert H. Greene, a commissioner of Caldwell County, of which Lenoir is the seat.

READ: The High Cost Of Wooing Google