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The ready-to-go shell at Richmond
notwithstanding, the expansion could have happened elsewhere. LeFort
says Infineon looked globally, including sites in Asia, which he describes
as the logical place for chip manufacturing.
"We still did a business analysis for putting new investment anywhere in the world, but in the final analysis, Richmond won out," LeFort says.
Infineon thinks globally regarding manufacturing, LeFort says, adding that the company will eventually need more capacity. That could come in the form of additional joint ventures or by outsourcing, which the company already does through a manufacturer in China.
"There are multiple ways to increase capacity," LeFort says. Acknowledging he would never say "never," he doesn't believe Infineon will build additional capacity in the U.S., barring some unforeseen strategic reason to do it.
"However, we are always developing strong relationships
with customers around the world," he says. "We have a technology agreement
with IBM in East Fishkill, N.Y. It might make sense to do something
there. It also might make sense to partner with other companies. The
big thing is the cost of doing business. My managing director tells
me that the day operating costs become greater than building somewhere
else, he becomes vulnerable. Being competitive is paramount. You have
to consider all the elements that make you competitive: the investment
required, subsidies, a trained work force. Certainly, having a facility
near a major customer is very convenient, but our customers will not
pay an extra penny for that privilege. While it's nice, it's not something
we can charge for."
LeFort says that while incentives are helpful and highly appreciated, other variables in the equation are more important for the arithmetic to work.
"If we get the maximum of everything promised in Richmond, it would be $60 million," he says. "In that ratio, it's something that if a plant were not competitive, it would not have been enough. Incentives are something that's still new to most local governments. Everybody talks about it a lot and some programs are better than others. At least now, everyone is willing to talk, but states haven't reached maturity on how to set up programs."
In addition to Virginia, LeFort cites Infineon's experience in North Carolina as a good example of how incentives can work. Infineon's $8-million investment in a new administrative and research facility in Cary last year was the first recipient of North Carolina's Job Development Investment Grant (JDIG) program. JDIG grants are only awarded to projects whose benefits exceed their costs to the state and which would not locate in North Carolina otherwise.
"We were the pioneer for JDIG and that's a very proactive incentive," LeFort says.
Infineon is also expanding other types of facilities around the world. The company is spending 230 million euros ($286 million) to expand its memory chip assembly and test facility in Porto, Portugal. The facility opened in June and will reach capacity in mid-2006, adding 500 jobs in the process.
"We still did a business analysis for putting new investment anywhere in the world, but in the final analysis, Richmond won out," LeFort says.
Infineon thinks globally regarding manufacturing, LeFort says, adding that the company will eventually need more capacity. That could come in the form of additional joint ventures or by outsourcing, which the company already does through a manufacturer in China.
"There are multiple ways to increase capacity," LeFort says. Acknowledging he would never say "never," he doesn't believe Infineon will build additional capacity in the U.S., barring some unforeseen strategic reason to do it.
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| Robert LeFort, president, Infineon Technologies North America |
LeFort says that while incentives are helpful and highly appreciated, other variables in the equation are more important for the arithmetic to work.
"If we get the maximum of everything promised in Richmond, it would be $60 million," he says. "In that ratio, it's something that if a plant were not competitive, it would not have been enough. Incentives are something that's still new to most local governments. Everybody talks about it a lot and some programs are better than others. At least now, everyone is willing to talk, but states haven't reached maturity on how to set up programs."
In addition to Virginia, LeFort cites Infineon's experience in North Carolina as a good example of how incentives can work. Infineon's $8-million investment in a new administrative and research facility in Cary last year was the first recipient of North Carolina's Job Development Investment Grant (JDIG) program. JDIG grants are only awarded to projects whose benefits exceed their costs to the state and which would not locate in North Carolina otherwise.
"We were the pioneer for JDIG and that's a very proactive incentive," LeFort says.
Infineon is also expanding other types of facilities around the world. The company is spending 230 million euros ($286 million) to expand its memory chip assembly and test facility in Porto, Portugal. The facility opened in June and will reach capacity in mid-2006, adding 500 jobs in the process.
