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St. Pete To Stay Base For Jabil

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By RICHARD MULLINS

The Tampa Tribune

Published: September 13, 2008

Updated: 09/13/2008 12:11 am

ST. PETERSBURG - This city still can call itself home to one of the world's largest electronics makers.
Jabil Circuit executives decided to keep their headquarters in St. Petersburg, add 850 workers in the next four years and expand into a $54 million factory and headquarters that will be built soon on Gandy Boulevard.

Although the company is cutting 120 workers amid a restructuring, Jabil executives said Friday that their defense and aerospace business is growing rapidly, and they would like to consolidate corporate employees who now work in leased facilities in the area. If all goes according to plan, Jabil's employment could grow to about 2,700 people. Average pay for new workers could top $42,000 a year, plus benefits.

"There's always the question of using government money for a private company," said Jabil Chief Executive Officer Timothy Main. "But this is a matter of survival for us," arguing that the company's roughly $250 million in local payroll and other spending each year more than makes up for the incentive package it will receive as a result of the deal.

Jabil makes electronics that bear the brand names Hewlett-Packard, Cisco Systems, Nokia and others. It's one of the largest makers of ultrasound scanners and X-ray machines found in doctors' offices.

Main said he started thinking seriously last year about moving from St. Petersburg as the company faced tougher competition from foreign companies. Cities in Michigan and California offered Jabil incentive packages to move.

Florida made its own offer to help keep Jabil in Florida, about $37.6 million in state, county and city grants, tax incentives and training support. Jabil receives portions of the money as it creates jobs.

David Goodwin, St. Petersburg's economic development director, said the Jabil deal is the largest and most important incentive package he has worked with in the past 10 years, as Jabil is the largest manufacturing employer in the area and in the top five employers.

"We had every reason to believe they were serious and could move out," Goodwin said. "We could not have an outcome where they moved out and us not having done everything we could do within reason to keep them here."

Jabil has had facilities in St. Petersburg since 1983, when it moved from Michigan, where it began by making electronics for the auto industry in the 1960s.

About 10 years ago, Jabil bought a 90 acres at the northwest corner of Gandy Boulevard and Interstate 275 for potential expansion. Since then, the land remained mostly dormant.

More recently, Jabil has benefited immensely from the trend of electronics companies to outsource assembly of their products to specialists such as Jabil. Jabil's revenue has grown from $1.5 billion in 1998 to an estimated $12.8 billion in 2008, and employment has swelled to 75,000 people working in 55 factories in 20 countries across the world.

Employment in the United States nearly doubled, to 7,300, in the past five years, including about 1,800 in the St. Petersburg area.

Competitors, however, have grown as well, Main said. For example, the Apple iPhone is manufactured mostly by Foxconn Technology Co. Ltd. of Taiwan, a company that barely existed five years ago but now has more than $40 billion in revenue.

Main said it's not uncommon for rivals based in Taiwan and China to approach Jabil's clients and offer to do the same work for 10 percent to 15 percent less, partly because they don't have to comply with as many environmental and labor laws.

Within that turmoil, Jabil is carving out more work for defense and aerospace companies - which usually require their products, such as wireless communications and hardened laptop computers - be built in the United States.

Mike Gross, an operations manager at Jabil's local factory, said the company's defense and aerospace team started with a dozen workers a few years ago. Now it has 600.

"We just signed up three new clients who will have work coming in here soon," Gross said. "We did have the unfortunate news of the layoffs this week, but it's encouraging when your company puts a big investment into what you're doing."

With pressure on profit margins, Main approached Gov. Charlie Crist last year. The two had met at events in St. Petersburg and knew each other relatively well. Main told Crist he would like to keep Jabil in Florida, but had to consider other locations. Crist began offering help, and Jabil's executives started negotiating details.

Construction on Jabil's new Gandy facility could start in the next 12 months, and, in addition to already existing positions, the new jobs would be added there gradually, mostly in manufacturing, with some in administration.

The company has not said what its plans are for its current facilities.

JABIL

Headquarters: St. Petersburg

Employees: 75,000 worldwide, 1,880 in St. Petersburg area.

Added jobs: 850 over four years

Facilities: 55 factories in 20 countries in the Americas, Europe and Asia.

Revenue: $12.3 billion in 2007

Reporter Richard Mullins can be reached at (813) 259-7919.

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