Silicon Valley disk drive makers Seagate and Maxtor are saving by laying off hundreds of employees in recent months, but not all companies in the field are suffering. In May 2004, Hitachi Global Storage Technologies (HGST) announced it would invest more than $250 million to move both its international headquarters and R&D operations to a new site in San Jose, while retaining manufacturing, support and services at the 332-acre (134-hectare) campus in another part of the city that the company acquired when Tokyo-based Hitachi merged its global storage business with IBM's in 2003.
      Steve McLaughlin, vice president of real estate and site operations for the $4.2-billion disk-drive maker, says the company looked all around the Bay Area before finding the right fit of properties and vision in San Jose. The 10-year upgrade will include reconstruction of several older buildings housing some of the approximately 3.6 million sq. ft. (334,440 sq. m.) of industrial and office space now at the former IBM property, as well as road and other infrastructure improvements.
      The new facility, a 377,000-sq.-ft. (35,023-sq.-m.) building previously occupied by Syntex, will house 100 researchers and 500 HQ staff. The company has signed a lease with an option to buy on that property, including 21 surrounding acres (8.5 hectares). The undisclosed purchase price would be over and above the announced investment amount.
      One unique aspect of the project seeks to give whole new meaning to employee quality of life, as well as to the oft-scorned "California commute." A memorandum of understanding (MOU) between HGST and the City of San Jose would allow some 145 acres (59 hectares) on the periphery of the former IBM property, on Cottle Rd., to be rezoned and opened up for residential and retail development. An equal amount of land will still be devoted to industrial end uses, and the property will still be home to some 2,200 Hitachi GST employees.
      The MOU was approved by the San Jose City Council on May 18, four days after the project announcement. A company statement read in part, "The MOU provides Hitachi GST with a reasonable degree of certainty as the company begins to make major expenditures to implement a new workplace plan."
      The Cottle Rd. property, adjacent to three freeways and multiple light rail options, was first established by IBM in 1955. HGST conducts an Alternative Commute Program for its employees, and in August 2003 was accepted into the EPA's Best Workplaces for Commuters program.
      "The current configuration of the site cannot efficiently support modern office, research, development or manufacturing uses that are so important in the City of San Jose," reads the company plan. "The property is also extremely underutilized, particularly given the substantial public infrastructure investment in close proximity to the site."
      A month after the San Jose announcement, HGST announced another $500 million would be invested in a "mega-manufacturing" campus in Shenzhen, China, which will start producing disk drives as early as the first quarter of 2005 in a 376,750-sq.-ft. (35,000-sq.-m.) facility. The overall project will employ 7,000 when complete; the company currently employs 4,500 at its two existing Shenzhen facilities.
      The company's total real estate portfolio now sits at about 5 million sq. ft. (464,500 sq. m.), with nearly 25,000 employees, and manufacturing operations in China, Thailand, the Philippines, Singapore, Guadalajara, Japan and San Jose. Four R&D facilities reside in Rochester, Minn.; San Jose, and in Odawara and Fujisawa, Japan. And logistics centers are located in the U.S., Taiwan, the Netherlands and Thailand.
      In an interview, McLaughlin, a 32-year IBM veteran, says it was immediately apparent the newly merged entity did not need all of the space at the acquired IBM property in San Jose, in operation since 1956. So the idea was to consolidate into the property's core, and then start looking at the alternatives if the surrounding property were rezoned.
      "My premise from the get-go was it was a unique opportunity to engage our community not just for our needs, but a win-win proposition," he says.
      Helping such a scenario along was the existing happy convergence of freeways, light rail and other transportation options, combined with an already significant population of urban residents. Hitachi and consultants from Santa Clara-based Commercial Property Services and San Francisco urban planning firm Ken Kay & Associates came up with a visionary mixed-use plan. In fact, the choice of those partners was key.
      "When I started this, they asked me at the RDA [San Jose Redevelopment Agency] who I was considering for these roles, and the glee over acquiring people like Ken Kay was surprising to me," says McLaughlin. "The overwhelming response has been positive from the action groups in the community, because of Ken Kay and some of the first-pass renderings and concepts. They really look at us as guys who aren't just selling dirt and leaving the area."
      Most importantly, McLaughlin says, the plan keeps Hitachi in San Jose, a "very important part for the city to understand." Like Abbott to the north, HGST's M.O. has been up front and public, which has helped things along on the path toward a final anticipated approval in December 2005.
      "If you have a plan and keep it inside and keep internalizing it, and hope the city goes along with you, at the end of the term, you can [encounter] things that can push out the decision-making," he observes. "We're doing it up front."
      In the past, McLaughlin has served on a statewide utility focus panel. Asked to assess his level of concern about regional power availability, reliability and cost, he is non-plussed, at least for now.
      "We have a 50-megawatt generator on the site for emergency standby," he explains. "With the power crisis, perceived or real, three years ago, we were asked by the CPUC [California Public Utilities Commission] and our providers to run our generators to help feed the grid. I haven't had any of that concern over the last couple of years. It depends on the hydro levels, and what we're doing to maintain the generation facilities. So we're in pretty good shape from a supply standpoint. Cost? Right now I'm paying almost twice what I paid for power seven years ago."
      Chuck Foltz with Abbott echoes that sentiment, especially when it comes to the increasing challenge presented by workers' comp costs.
      "I've monitored our costs for Workers Comp expenditures over the years per employee, and it's pretty clear that expenses per employee on staff have continued to rise," says Foltz. "So you equate that to the policies in place. The work that Governor Schwarzenegger is doing along those lines is greatly appreciated in terms of reducing some of the expenses associated with those issues. We've done our best to educate our employees on some of the limitations of the policy. Oftentimes employees look at it as an entitlement. And when they find out some of the restrictions associated with it, they realize it's not a pure entitlement and there is a price to pay if you don't use it appropriately."
      Asked if the much-criticized business climate in California gave HGST pause about going forward with its investment, McLaughlin says, "What I see now is a strengthening of resolve throughout the entire community to make sure we have a business base. I'd like to see more quicker -- anything that the state can do to help us with operating costs and efficiencies, we're more than happy to welcome."