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Old Feb 10, 2014, 10:05 AM   #1
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Arizona Won Apple's Sapphire Plant with Tax Breaks, Energy Infrastructure, and Responsiveness




A new report from Bloomberg takes a look at how Mesa, Arizona was able to secure its deal with Apple to bring the company's new sapphire manufacturing plant to the city. That facility is set to begin operation this month with production at a scale massive enough to support a shift to sapphire display covers for the next-generation iPhone.

Former First Solar manufacturing facility purchased by Apple for new sapphire plant (Source: Business Wire)
The report notes that Mesa and the State of Arizona moved aggressively to reach a deal with Apple and its partner, GT Advanced Technologies, learning from previous negotiations that saw Arizona lose out to Austin, Texas for an expansion of Apple's operations facilities. As a result, Mesa and Arizona officials made every effort to offer specific incentives, expedite permitting approvals, and even build out power infrastructure to meet Apple's demands.
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Time was of the essence since Arizona had lost out on the previous Apple facility to Texas less than two years earlier and was nervous others might trump its bid. Officials typically had just a few days to respond to Apple's questions, [Mesa mayor Scott] Smith said.

One sticking point: power. Apple wanted the facility to use 100 percent renewable energy and negotiated with the state and local power company, Salt River Project, about how to make that happen. New solar and geothermal projects are being built because of the project. Apple also got officials to agree to construct a new power substation for the plant.
Other benefits for Apple include a $10 million grant from the state to support building improvements and hiring efforts, as well as a special designation for the property that will cut Apple's property taxes by over 70 percent.

Mesa and Arizona are already seeking to leverage Apple's arrival to create a new technology corridor in the area where Apple's facility is located, with a number of companies having already contacted officials to express interest in locating near Apple.

Article Link: Arizona Won Apple's Sapphire Plant with Tax Breaks, Energy Infrastructure, and Responsiveness
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Old Feb 10, 2014, 10:07 AM   #2
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Each state fights for the few jobs coming to the US.
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Old Feb 10, 2014, 10:12 AM   #3
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In before:

TAX BREAKS!? APPLE SHOULD BE PAYING MORE IN TAXES! LEAVE IT TO APPLE TO TAKE ADVANTAGE OF BLAH BLAH BLAH...

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Old Feb 10, 2014, 10:14 AM   #4
iMerik
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It must be nice to have the power to receive special tax breaks.
Anyway, good for Apple, good for Arizona, and good for the US.
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Old Feb 10, 2014, 11:13 AM   #5
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I can't wait for iPad Air with Sapphire Glass. Go
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Old Feb 10, 2014, 11:29 AM   #6
johncrab
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I don't fault Apple or any other company ONE BIT for playing one state off against another. History has shown that states will give away the farm to get a plum company to move in. South Carolina did it for BMW and Alabama did it for Mercedes and that pork was way more than Apple got from Arizona. In fact, Mercedes got $570k for every job they created in Alabama.

To be fair, Arizona has had (and still has) a big semiconductor industry and many of the skills needed at this sapphire plant are already here in the form of trained Intel, Motorola and Sumitomo people.

As for renewable energy, SRP doesn't have much. They will most likely be buying power from APS's Solana solar-thermal plant. SRP is not even really a player in renewables, choosing to expand natural gas plants instead.
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Old Feb 10, 2014, 11:51 AM   #7
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I like the way Apple is demanding renewable energy.
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Old Feb 10, 2014, 12:03 PM   #8
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Originally Posted by johncrab View Post
I don't fault Apple or any other company ONE BIT for playing one state off against another.
If you don't live in one of the states that is "giving away the farm", then you probably wouldn't care. But taxpayers who do live in those states probably deserve better, both from their representatives as well as the business leaders who already take advantage of government provided corporate status. That's a good one to remember: the ability to incorporate your business and all of the advantages and protections it provides comes directly from the government and the people of the country. Treating the government and it's citizens like dupes is probably not a good idea in the long run.
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Old Feb 10, 2014, 12:23 PM   #9
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More subsidies...really?

I wouldn't necessarily blame a company for accepting the 'bribes' given to 'move jobs to my state.' But I certainly do blame the states for taking tax money and using it to subsidize the bottom lines of these for-profit companies. This goes for stadiums, factories, call centers, solar cells manufacturers, sapphire plants, and any other facility where states/counties/municipalities try this nonsense.

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Old Feb 10, 2014, 12:36 PM   #10
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Ahhh...Government bureaucracy.

See, part of it is having the big company name in your state. It helps attract similar businesses to your state. Then there are the jobs it creates...some temporary for building but others are more full-time. Everybody loves to say they helped create X jobs in the state (county, city, etc). Bigger companies fly in people, that creates more money from travel, hotel, restaurants. Over the years, the taxes the company pays will be a benefit...if they don’t leave before the initial tax-holiday wears off, or the company will just say they’ll leave and then get a new tax-holiday. For a company like Amazon, it helps leverage new taxes from online purchases/sales made in-state.
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Old Feb 10, 2014, 12:57 PM   #11
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Former First Solar manufacturing facility purchased by Apple for new sapphire plant
First Solar received $3.5 billion (that's with a 'B') in loan guarantees from the US Dept. of Energy, in part because First Solar promised to build this factory in Mesa. It never opened, and they have been looking for a tenant since October, 2012.
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Old Feb 10, 2014, 01:01 PM   #12
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Originally Posted by gnipgnop View Post
If you don't live in one of the states that is "giving away the farm", then you probably wouldn't care. But taxpayers who do live in those states probably deserve better, both from their representatives as well as the business leaders who already take advantage of government provided corporate status. That's a good one to remember: the ability to incorporate your business and all of the advantages and protections it provides comes directly from the government and the people of the country. Treating the government and it's citizens like dupes is probably not a good idea in the long run.
if you've ever compared the prices at two stores and opted for the one that had a lower price even though they pay their employees less, you are doing the EXACT SAME THING.
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Old Feb 10, 2014, 01:25 PM   #13
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Originally Posted by cfountain72 View Post
I wouldn't necessarily blame a company for accepting the 'bribes' given to 'move jobs to my state.' But I certainly do blame the states for taking tax money and using it to subsidize the bottom lines of these for-profit companies. This goes for stadiums, factories, call centers, solar cells manufacturers, sapphire plants, and any other facility where states/counties/municipalities try this nonsense.

Peace be with you.
According to the article it states it gave $10m to Apple in the form of a grant for building improvements and for hiring. This seems appropriate to me in the sense that the building was empty not generating any income to the state. Now you get construction workers working on the improvement and you get others working in the plant through this grant. And the state probably saves in unemployment benefits and increased personal income tax revenue. I suspect they will get there $10m back in due course. And as for the tax break, I assumed that they looked at it and said 30% taxes of fully operational plant is better than 100% of nothing.

I agree that on the surface it is sometimes difficult to understand why the folks in power (that we somehow put there) do the things they do. But before we pass judgment, I would want to see the numbers. Often times the numbers show that the state benefits over time. Sometimes it shows that we put the wrong folks in office. Without knowing enough about the details, I think one should not automatically assume that this was bad for the state (it may be, but I see nothing in the article that would suggest it).
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Old Feb 10, 2014, 02:05 PM   #14
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Originally Posted by gnipgnop View Post
If you don't live in one of the states that is "giving away the farm", then you probably wouldn't care. But taxpayers who do live in those states probably deserve better, both from their representatives as well as the business leaders who already take advantage of government provided corporate status. That's a good one to remember: the ability to incorporate your business and all of the advantages and protections it provides comes directly from the government and the people of the country. Treating the government and it's citizens like dupes is probably not a good idea in the long run.
Government is too big and provides too many handouts. They have too much red tape and too many regulations. They overextend themselves and as such, they have created this massive machine that has to be fed with your money. Taxation is becoming such a huge burden to citizens and businesses that offering a break in taxes is enough for a company to choose which state they want to do business in.

Don't you see the problem? You think businesses should be thankful for the "opportunity" to run a business? I don't think so. Government should do its best to not be in the way and should strive to be as minimal a burden as possible to businesses and its citizens.

The US government is setting themselves up to be the provider of all, and you will have to belly up to the government table to get or do anything.

This is not going to end well.
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Old Feb 10, 2014, 03:36 PM   #15
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I like the way Apple is demanding renewable energy.
I checked the comments section to make a similar comment, I applaud Apple for pushing renewable energy (and 100% at that). This seems to be the only method in pushing the market into exploring clean, renewable energy. It seems the [now too obvious] implications of climate change aren't enough to wake humanity up. Something, someone, has to do it.

Quote:
One sticking point: power. Apple wanted the facility to use 100 percent renewable energy and negotiated with the state and local power company, Salt River Project, about how to make that happen. New solar and geothermal projects are being built because of the project. Apple also got officials to agree to construct a new power substation for the plant.
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Old Feb 10, 2014, 04:17 PM   #16
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Just thinking out loud but are there any risks to relying too much on renewable energy? Surely these plants will be hooked up to the main grid just in case?
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Old Feb 10, 2014, 07:37 PM   #17
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Apple also got officials to agree to construct a new power substation for the plant.
I don't think there was any choice.

Reportedly there's almost a thousand sapphire furnaces planned for the factory.

I've read that when they're heating up, they need something like 50KW each.

If true, they would need a multi-megawatt substation just for themselves.
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Old Feb 10, 2014, 07:48 PM   #18
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I drive by this building at least 4-5 times a week. They are working on it non stop. It was a solar company before, but they went bankrupt. I like how the articles state how mesa did all this planning for apple-- BS. The neighborhoods around that area were in development far before Apple was attached to the property.
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Old Feb 10, 2014, 08:30 PM   #19
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Originally Posted by phillipduran View Post
Government is too big and provides too many handouts. They have too much red tape and too many regulations. They overextend themselves and as such, they have created this massive machine that has to be fed with your money. Taxation is becoming such a huge burden to citizens and businesses that offering a break in taxes is enough for a company to choose which state they want to do business in.

Don't you see the problem? You think businesses should be thankful for the "opportunity" to run a business? I don't think so. Government should do its best to not be in the way and should strive to be as minimal a burden as possible to businesses and its citizens.

The US government is setting themselves up to be the provider of all, and you will have to belly up to the government table to get or do anything.

This is not going to end well.
Good thing this is all being done by the State of Arizona and not the Federal government.
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Old Feb 11, 2014, 04:30 AM   #20
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Originally Posted by kdarling View Post
I don't think there was any choice.

Reportedly there's almost a thousand sapphire furnaces planned for the factory.

I've read that when they're heating up, they need something like 50KW each.

If true, they would need a multi-megawatt substation just for themselves.
Not sure how that compares to the power requirements of a data centre, but with the price of Arizona land not that expensive, relatively speaking, as well as Arizona having the most sunny days per year of all the states in the union, it would seem an Apple solar farm might be justified to power all those furnaces. I wonder if that's in the planning stages. Or perhaps that's something that would be up to GT Advanced.

IIRC, the twin Maiden solar arrays produce (on sunny days) a maximum of about 20 megawatts each, in addition to a 10Mw fuel cell plant.
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