Got invited to a breakfast reception at the Capitol yesterday with guest of honor Paul Otellini, President and CEO of Intel. Interesting guy. We had a chance to meet and visit with him briefly, then he made some remarks on Intel and their priorities. They are a $38 billion company, with 100,000 employees in 48 countries. They are the world’s largest manufacturer of semiconductors. He talked about some of their efforts with teachers to help them integrate technology into their instruction through their Teach to the Future campaign. He applauded the President’s American Competitiveness Initiative (announced in the State of the Union speech) for its much-needed emphasis on math and science education, and investment in basic research — polices that, in his view, will encourage employers to stay here in the US. He talked about Intel’s focus on WiMAX, the next step up from Wi-Fi.
He talked about the process of deciding where to locate their plants. They build 2-3 plants a year, each costing about $3 – $5 billion to build with a life of about 5 years. Over that time, it costs about $7 billion to run. Over the life of the plant, it costs an additional $1 billion to build the plants in the US — and these are non-labor costs. We are doing nothing, in his view, to encourage these industries that will take us well into the 21st Century. To locate a plant in Arizona, the state offered them about $20 million in incentives. By comparison, the government of Israel offered them some $700 million in incentives. For that, they will get a plant that employees between 4,000 and 5,000 people. Intel is the largest exporter in Israel.
As for why they go into certain markets, he said they look at access to engineering skills and to the market. “Access to talent and costs”, he cited later as twin factors that drive companies off shore. Both of these facts, he noted, have a root cause in competitiveness, which is why he applauds the American Competitiveness Initiative.
On China, he called them “a powerhouse, but still fragile”, noting that they still had many internal issues to face, like the environment and the rural poor, and cautioning too heavy a hand in dealing with China.
He is a thoughtful guy, on the leading edge of technology and of manufacturing. He understands that we are in a global competition for jobs and for capital and understands what it takes to compete on that field.
All in all, it was a very interesting session.
[Update]: Here’s a link to a Feb. 11 Washington Post story about Paul Otellini.
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