August 5, 2007

Google-ing small towns
Internet icon is changing small-town dynamics

By KATHY GRAY
of The Chronicle

     At first glance, The Dalles, Oregon, and Lenoir, North Carolina, don’t seem to have much in common.
     Separated by a continent, Lenoir’s economic roots are in the furniture manufacturing industry, while The Dalles grew up around agriculture and aluminum. Lenoir nestles in the foothills of the Appalachian Mountains, while The Dalles sits at the mouth of the scenic Columbia River Gorge.
     But in other respects, the two cities are soul sisters.
     Both are small and relatively rural. Lenoir has about 17,000 people, The Dalles about 15,000. Both have recently undergone manufacturing slowdowns that left large numbers of workers unemployed. Both have taken initiatives designed to make their towns more attractive to new industry. And both have succeeded in drawing one notably high-profile resident.
     Google.
     It’s a growing sisterhood.
     Google is headquartered in the Silicon Valley city of Mountain View, Calif., and represented in some of the nation’s largest cities including New York, Dallas and Atlanta. But the Internet mainstay is also spreading out across America’s heartland with data centers not only in The Dalles and Lenoir, but also soon to be in Council Bluffs, Iowa; Pryor, Oklahoma; and Goose Creek, South Carolina.
     As it pursues the goal of ever-improving connectivity in communities with the resources it needs to reach that objective, Google is changing the community dynamic in these small towns.
     It’s also focused the media lens on these cities — and sometimes in a less than positive way.
     A July article in Business Week examined “The High Cost of Wooing Google” in Lenoir. The article wrote critically about the bargain Google made with Lenoir, including a package of state and local tax incentives and infrastructure valued at $212 million over 30 years.
     One North Carolina politician suggested in the article that the deal transcends ethics and was “exploiting a desperate town.” Even regional media in nearby Ashville and Charlotte have jumped on the bandwagon to criticize the bargain struck between the technology giant and the small town.
     Lenoir officials bristle at the suggestion that they got the worst of the deal.
“Google has elevated our mood and changed our spirit, which is what has to happen first when you’ve been in an economic funk,” said Herb Green, a Caldwell County commissioner whose negotiations helped bring Google to Lenoir. “We needed something to change our atmosphere and mood and direction. We don’t understand why it is somebody thinks they have to protect us and make us look even worse than we are.”
     In fact, Lenoir, like The Dalles, has been working to establish groundwork in the community designed to attract companies like Google.
     About 100 years ago, the furniture and textile industries moved into Caldwell County from New England in search of more affordable labor. Labor costs stayed low and the county had one of the lowest per capita incomes in North Carolina — which historically ranked 47th out of the 50 states in per capita income. Then increasing unionization forced companies to increase their compensation, Green said.
     “Companies started paying a little bit more and a little bit more and a little bit more, to the point where all of a sudden the cost of doing business couldn’t be maintained, particularly when NAFTA passed.”
     Green blames the North American Free Trade Act for pushing many of Lenoir’s furniture jobs across the border into Mexico.
     “Since that time, even Mexico’s feeling the pinch,” Green said. Many of those same furniture manufacturing jobs have moved to China.
     Then the Sept. 11, 2001, terrorist attacks brought the economy to a standstill from which has not recovered.
     “You could almost hear the sucking sound of those folks leaving, because they had been headng in that general direction probably since the latter part of the 1990s,” Green said.
     Four fiber-optic cable companies, which all once manufactured within a four-county area around Lenoir, also moved to China.
     “We lost, almost overnight, about 25,000 jobs,” Green said.
     But community leaders didn’t sit back and bemoan their fate. They looked at what needed to happen to modernize their largely manufacturing-based labor force.
     “We knew our education delivery system was not what it should be, and had not been for a number of years, because it didn’t have to be,” Green said.
     As a way to improve its educational system, the region embraced a state initiative providing more community college education for high school students.      The program is called Early College and started with 75 high school students located on the campus of Caldwell Community College and Technical Institute.
     “If they spend five years here, at the end of their fifth year, when they receive their high school diploma, they will have accumulated enough hours to also receive an associate’s degree,” explained Dr. Ken Boham, college president.
     That’s at no out-of-pocket cost to the student’s family.
     “We have two high schools located on campus, one vocational-technical high school and the other is early college,” Boham noted. The college is even building a new 46,000-square-foot building for the high school students. This year, the number of students will go up to 150. Eventually, the total is expected to rise to 400.
     Green added, “We’ve had people begging and knocking on doors to get their children on at the early college. Their associate’s degree is free if they go this route.”
     The college is also working directly with Google to develop an integrated technology institute.
     “It’s a joint effort by Google and the college,” Boham said. “We went to Mountain View and they’ve been here and we’ve had teleconferences, and we now have four sections of a 109-hour training program for people in the community who want to be prepared to go through the [Google] hiring process. So local individuals can ben hired by Google and Google can feel confident they’ve got the skills, knowledge and ability.”
     The program is concentrated so that workers can be ready when Google’s data center begins to operate.
     In their second rural data center development (after The Dalles), Google has also learned to make a concerted effort to be part of the community from the beginning.
     “One thing we did right away, when they named the site executive, we held a small community reception for him with just a small group of about 25 or so people, people with kids his age who could talk about schools, and average business professional people from the community, said David Barlow, chairman of the Caldwell County Chamber of Commerce.
     Google has established its own Lenoir page, entitled “Hello Lenoir!” where residents can get information on frequently asked questions, data center details, opportunities and contacts.
     Boham also sees the value of Google’s presence in the community.
     “You cannot put a dollar figure on hope and it has created hope and a euphoristic atmosphere that’s so uplifting,” Boham said.
     It’s also created quite a bit of action. Construction work on the Google data center has involved 11 businesses and 240 workers.
     “Six or seven thousand home sites are now approved in the foothills of our little county,” Green added.
     And Lenoir doesn’t plan to be content with Google’s 210 jobs alone.
     “Google has brought us into the 21st century and on the West Coast we’re going to be looking for more of the same,” Green said. Lenoir officials will be in California with Google’s assistance, trying to recruit other high tech companies to the area.
     “Duke Energy (which operates the area’s nuclear and coal power plants) is going to California with us,” Green said. “We’ll be talking to developers and companies. We have water and energy readily available and we have land.”
     Through the transition process, Green has heard plenty of concerns from local residents about the changes taking place, but he is taking those in stride. Change, while it is happening, always generates unease, Green said.
     “As long as you know what you’re doing is long-term right, you do it in spite of what you get,” he said. “As Helen Keller says, ‘No human is more pathetic than one who has sight, but no vision.’”
     ***
     The story is not much different in the other small communities where Google has begun building data centers.
     Council Bluffs, Iowa, isn’t considered a rural community. It’s part of the greater Omaha metropolitan area of about 800,000 people. But at a population of about 62,000, Council Bluffs gone through many of the same economic experiences as The Dalles and Lenoir.
     “Council Bluffs is a town that through its history has had boom and bust cycles,” said Don Gross, director of the city’s community development department.
     Formed as an outfitting center for the westward migration, Council Bluffs became a focal point for the railroad industry. It is the eastern terminus of the Union Pacific Railroad and at one time had 18 operating railroads, historically making it one of the world’s five largest rail centers.
     “There’s been a lot of consolidation in the industry and with construction of the interstate system and introduction of diesel locomotives, employees is not like what it used to be,” Gross said.
     The town has evolved to become largely a bedroom community for Omaha, with about 40 percent of residents crossing the bridge to work in Omaho.
     The town saw a resurgence of local employment in the 1990s, when three casinos located there, which annually draw 11 to 12 million people.
     “Those are, quite frankly, the largest employers,” Gross said.
     So Council Bluffs was excited about the prospect of bringing a large high-tech employer with the high-profile Google name. They put together an incentive      package that will play out over a period of 20 years.
     Gross said interaction with the firm has been professional.
     “I think they know what they’re doing, like many industries today,” Gross said. “They have choices of where they can go, and we understand that.”
     Siting in Council Bluffs has raised the town’s hopes and expectations, he added.
     “I think it will also lead us to other positive industrial development activities, just by their name recognition,” he said.
     Mark Norman, who works for the Council Bluffs Chamber of Commerce, helped negotiate the deal with Google as part of the Council Bluffs Industrial Foundation. The nonprofit organization was established for just that purpose, to broker economic development deals.
     He says Council Bluffs has avoided the types of controversies that Lenoir and The Dalles experienced from finding themselves thrust into the public eye.
     “I think people are very excited and proud that Google has chosen Council Bluffs for this development,” Norman said. “I think it puts Council Bluffs on a national level.”
     Norman said there have been other industrial inquiries since the Google announcement.
     “I can’t speculate and say this is the result of the Google announcement, but we feel pretty strongly that there is a corrolation there, because they are technology related.”
     ***
     Abundant water, electricity and land are some of the key drawing points of Pryor, Okla, population 9,000. Google recently announced purchase of 800 acres for a data center there. Coincidentally, Gatorade also announced plans for a big facility just outside Pryor around the same time.
     “We’ve welcomed them with open arms,” said Mayor Jimmy Tramel. What the town hasn’t done is provide a lot of economic incentives. The affordable resources they bring to the table are enough, suggests Tramel, a lifelong Pryor resident with management experience with American Airlines.
     “It will be tough for us to ever run out of water or electricity,” he said.
     Besides creating more awareness about Pryor, however, Tramel doesn see Google making a big impact on his home town. The industrial park is located outside the city, so Pryor won’t get the property taxes and the housing market hasn’t seen a big change, as it did in The Dalles.
     “The executives that come in here don’t want to live in rural America,” Tramel said. “Most want to live in Tulsa, which is 40 miles away.”
     Even so, Tramel said, “We’ve welcomed them with open arms. But right now it’s business as usual. We haven’t seen a whole lot of difference.”
     ***
     That’s not the assessment of some community leaders in The Dalles.
     “I can’t say enough about what I think the impact of Google has been on the community’s psyche and jobs,” said Dwayne Francis, administrator of Mid-Columbia Medical Center.
     As the largest community employer, economic development is vital to the wellbeing of MCMC, Francis said, and Google’s arrival is spurring economic growth.
     “We’re seeing significant additional investment,” Francis said, “not simply from the speculative standpoint. We’re seeing new businesses, revibrancy.      Google has certainly had a direct impact on all that.”
     Francis points to the Icon West multi-use development planned for the Lone Pine area, which will include both commercial and residential development. He also talks about the work going on now toward redevelopment of the Northwest Aluminum site, which the owners are doing themselves, instead of with government aid.
     “I’m pretty well schooled in business tactics,” Francis said. “When you have owners of the facility say ‘We’ll do that ourselves,’ they’re doing it because they think it will pay dividends.”
     Andrea Klaas, the long-silent executive director of the Port of The Dalles due to a nondisclosure agreement, agrees that Google is benefitting the community.
     “Many families are now moving here, shopping in local stores, buying real estate in the local community,” Klaas said.
     Inflated expectations about what having a Google facility would bring to the community have settled down now, she suggested, and speculation is turning into action.
     “OK, there was speculation, but projects are going in anyway,” Klaas said.      “People probably speculated they’d have the land a year, then build an office building for Google-related businesses. Now they’re building the office building instead for some other kind of company. The development is still taking place.”
     And Klaas thinks Google’s early experience with clamping down on communication in The Dalles during their first rural development has resulted in changes with the way they are dealing with later communities where data      centers are being built.
     “I think they’ve found when you go into a small, rural community, you need to be much more open about what you’re doing and what’s going on, because people are going to make things up.”