Flextronics to manufacture new line of desktop PCs in Austin
Oct 15, 2013 (Menafn - Austin American-Statesman - McClatchy-Tribune Information Services via COMTEX) --Flextronics America, which has ramped up hiring and spent tens of millions of dollars to renovate its Northwest Austin factory over the past two years, will start manufacturing a "next generation desktop computer" at the upgraded plant, according to a presentation it filed Monday with Travis County commissioners.
The document, part of a push by the computer and electronics manufacturer to have its Central Texas facilities designated as a foreign trade zone, suggests the company already created 879 jobs for the project and could add another 815 positions if it hits peak targets.
In the document, the company said it already employs more than 2,500 people in the Austin area.
In its presentation, Flextronics, which builds computers, smartphones and other products for a range of brands, specified only that the foreign trade zone designation would help it move production of a "next generation desktop computer" from China to Austin.
The presentation did little to identify an exact brand. A spokesman for Dell Inc., which at one time produced desktops and laptops in North Austin factories, said it no longer builds them in the U.S.
However, Flextronics' presentation did add fuel to the ongoing rumors that Apple Inc.'s new line of Macintosh desktop computers could be built in Austin. Apple CEO Tim Cook said in May that the company would spend about 100 million to move its Mac production to Texas, but he did not disclose a specific site.
Messages left for Flextronics and Apple spokeswomen were not returned Monday. Both companies have been consistently tight-lipped -- Apple about its plans and Flextronics about its clients.
"They won't say. They won't tell us," said Dave Porter, senior vice president of economic development at the Greater Austin Chamber of Commerce.
"My bet is it's them," he added later. "But I don't know."
Apple's decision to move its production back to the U.S. reflects a broader national trend that has seen a minor renaissance in U.S. manufacturing. In many cases, companies have found that labor-cost advantages overseas no longer outweighed the benefits of having their manufacturing near their design, logistics and research teams.
By placing some or all of its Mac production with Flextronics in Austin, Apple would locate its manufacturing less than a mile from its new Americas operations center. The center, which overseas Apple's marketing, customer support, sales and some other logistics functions for the Americas, already employs 4,000 workers here and could have as many as 7,000 employees over the next decade.
Regardless of whose computers Flextronics plans to build in Austin, public records and hiring websites show the Singapore-based company is already expanding its local operations. In 2012, the company received permits for a range of renovations that were anchored by a 29.7 million "remodel to existing light manufacturing," according to city records.
In January, the company renewed its lease on 1 million square feet along Research Boulevard, easily one of the largest lease deals in Central Texas. And so far this year, the company has filed for building permits covering even more upgrades, including two permits for renovations valued at more than 25 million, city records show.
It has also ramped up hiring. On its website, the company currently lists more than 170 open positions in Austin.
Its Austin expansion builds on Flextronics' significant presence across Texas. In August, the company started full production of Motorola's Moto X, billed as the first smartphone to be designed and built in the U.S. That 450,000-square-foot plant near Fort Worth employs about 2,500 workers, according to news reports.
That factory also resides in a foreign trade zone that's similar to what Flextronics is applying for here -- and similar to those already granted to companies such as Dell and Samsung Austin Semiconductor.
In essence, such a designation creates a zone that lies outside of U.S. trade jurisdiction. Companies in such areas can receive and warehouse parts and not have to pay customs duties, unless it sends its final product into the U.S.
In regions with existing foreign trade zones, including the Austin metro area, the U.S. Department of Commerce typically grants applications when they have the support of the local governments.
Travis County Judge Sam Biscoe said commissioners have historically approved the applications because they typically help create jobs and large investments in construction and equipment.
"Apparently, they plan to open that facility whether they get that designation or not," Biscoe said. "The designation would probably be icing on the cake."
Commissioners expected to hear more about the Flextronics proposal at their meeting Tuesday morning.
While the foreign trade zones deal first and foremost with customs duties, both that designation and a possible state "freeport" exemption would affect local property taxes, said Porter, the chamber's economic development chief.
Porter said he expects the chamber will help Flextronics apply for freeport status once the foreign trade zone status is determined. If granted, the freeport would exempt some of Flextronics inventory from local property taxes. However, Porter said, companies that get these exemptions typically strike deals to offset the potential tax losses school districts might face.
"Texas is one of only five states that has property tax on inventory, so to be competitive we need the freeport," he said. "For the most part, you have school districts that are lukewarm on this ... but there are ways to make them whole to where they won't lose money."
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