Exploring the domino effect of Google Cloud’s planned hub in Durham

North Carolina

RALEIGH, N.C. (WNCN) — Google Cloud’s planned opening of an engineering hub in the Triangle could lead to a domino effect that could extend well beyond the tech industry, according to a study and a local professor.

“What I’m really excited about is what I call the spillover effects,” said Dr. Arvind Malhotra, a professor at the University of North Carolina’s Kenan-Flagler Business School.

The tech giant said Thursday that it picked Durham, projecting up to 1,000 jobs in the coming years and proclaiming that it will grow into one of the company’s five top engineering hubs in the country as part of its $7 billion investment across the country.

But what could it mean to those who don’t work in technology?

Plenty, perhaps.

A 2018 study from Oxford Economics found that opening a Google data center “has a significant benefit on the local economy,” saying it found “measurable local spillover effects” within three years of its opening. It cites overall employment gains and an increase in the college-educated work force as examples of spillover effects.

“Having a major chunk of Google’s business being run out of here not only is great for those jobs that will come over time, as you scale up to the number they’re talking, but … it fosters a culture of innovation and fosters a culture of entrepreneurship companies that can work with Google, serve Google or work on top of Google data centers,” Malhotra said. “That’s  always an exciting possibility that a big company does bring jobs for region, but it also brings an entrepreneurial climate that comes with a second order effect.”

Google opened a data center in Lenoir in 2007, two years after opening its office in Chapel Hill.

The study found the Lenoir center, which supports 1,024 jobs throughout the state, comes with a jobs multiplier of 4.1. In other words, for every job at the center, another 3.1 were created outside of it.

“There is a lot of potential there,” said John Quinterno, a visiting professor at the Sanford School of Public Policy at Duke University. “But it also depends on exactly the composition, the makeup, who gets hired into what jobs, all of those sorts of things.”

But Quinterno says there is also reason to view the announcement with caution. He says it’s unknown whether the work force will be primarily local — groomed by the universities in the area — or come in from elsewhere.

He wonders if bringing that many people at a high wage will “wind up turbocharging the issues around displacement and gentrification and housing affordability” that already affects Durham.

And there’s the question of whether Google will ask for any public subsidies.

“There’s a lot of detail that needs to be thought about, and that will determine who sort of wins and loses from a deal like this,” Quinterno said.

Malhotra called it a “revalidation of us as an area” and says attracting Google could lead other companies to follow suit.

“If Google comes here, attracts other big players in that ecosystem, and creates this mobility of workforce in general, it’s great for the area to become not only a place where they have a data center, but a place where we produce this high skilled labor,” he said. “That’s pretty attractive, too. And it has both effects for large companies, as well as small companies that are just starting out, or those people go out and start their own company. … These are the rising boats that can happen together with Google.”

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