Saturday, February 24, 2024

Facebook likes Forest City

Facebook’s $1 billion data-center investment has had an intriguing impact on a small N.C. county.

More than a decade ago, Facebook started building data centers in anticipation of massive traffic growth. The social-networking platform had amassed 350 million users by 2009, but anticipated accelerating growth would require storage capacity for its members’ posts, photos and emails.
After opening its first data center in a small central Oregon town in 2011, the company chose Forest City in Rutherford County for its second site. Facebook committed $450 million in capital expenditures and said it would employ at least 42 full-time workers and contractors.

Nearly a decade after the data center opened in April 2012, Facebook’s growth and impact on its N.C. community have been significant. The company’s 1.3 million-square-foot facility now employs 275 staff and contractors across four buildings. The site represents a $1 billion capital investment, says Birgit Dilgert, Rutherford County’s economic development director. That includes a $200 million expansion in 2015. Data from Facebook and its sister apps, Messenger, Instagram and WhatsApp, is stored, managed and disseminated within the center’s thousands of servers.

Facebook accounts for nearly 17% of the county’s total tax base. That overstates the company’s actual financial contributions, however, because of the incentives agreements negotiated with state and local officials. In the 2020 fiscal year, Rutherford collected $7.82 million from Facebook but sent back $7.27 million, or 93%, because of those agreements, according to the county’s annual report. Reversing those collections back to Facebook, equal to 85% of property taxes and 95% of personal property taxes, will continue through 2040 under the agreements.

Still, attracting such a prize corporation was a huge victory for Forest City and Rutherford County, which had suffered continuous economic blows from the exodus of textiles and manufacturing operations in the previous decade. More than 30,000 people worked in the county in the 1990s, but plant closings and the 2007-09 recession sent that number tumbling to about 22,000 by 2010, Federal Reserve Bank of St. Louis research shows.

In January 2010, the county’s unemployment rate hit a record high of 19.4%. It has declined steadily since then, dipping below 4% in 2019. After a sharp hike when the pandemic hit early last year, the rate is now about 7.5%.

Facebook’s expansion to Forest City created confidence in the area’s economic rebound, Rutherford County Manager Steve Garrison says. “[It] returned a sense of pride and hope to our communities,” he says. “The impact to the county due to the large capital investments they have made to build out their facilities and infrastructure, the jobs they have created internally, the jobs they have created externally [via local businesses, contractors, subcontractors and suppliers that provide services for Facebook and the utility services purchased from the town] are shadowed by their philanthropic presence here.”

The expanded site mirrors Facebook’s incredible growth. When the center opened, Facebook had 845 million active worldwide users. It now has 2.8 billion. The company’s stock market value in mid-March was about $800 billion, making it among the 10 most valuable U.S. public companies. It invested $11.5 billion in 11 data centers sites between 2017-19, according to a study last year by Durham-based nonprofit RTI International. It has added more centers.

With a payroll of 275, the Forest City site hasn’t made substantial gains to the county’s workforce. Dilgert doesn’t know of any suppliers to Facebook that have expanded in the county to be near the plant.

But Facebook has helped stabilize Rutherford’s fortunes and plays a key philanthropic role. Nearly 24,000 people were employed in the county in December, slightly higher than the decadelong average of about 23,000. Population is also flat at about 67,000, barely changing over the past decade, Census Bureau estimates show.

Dilgert ticks off a variety of business expansions and additions over the last decade including Taiwan-based Everest Textile, which opened its first U.S. factory in Forest City; Italy-based Trelleborg Coated Systems in Rutherfordton; and North Canton, Ohio-based Ameridial, which has a call center in Spindale.

A success story is American Zinc Products, which employs as many as 375 at a site 15 miles south of Forest City. The plant, which marked its first year of operation in March, recycles steel mill dust to produce zinc metal used in cars and many other products.

The same benefits that drew Facebook to Forest City attracted other tech giants to western North Carolina’s Foothills region over the last dozen years. The North Carolina Data Center Corridor is home to several major data centers led by Apple’s 400-employee plant in Maiden in Catawba County that opened in 2010. After several expansions, it represents a $5 billion investment by the most valuable U.S. public company.

About 30 miles north in Lenoir, Google has invested about $1.2 billion in a data center that opened in 2008. The site now employs about 250 people.

Facebook site manager Ernest Hill praises Rutherford County’s leadership for its consistent support. “We saw the commitment and vision of the community and leadership in Rutherford County. That investment in long-term planning created the right access to the [town’s] infrastructure and renewable energy, as well as the strong pool of talent in the surrounding area, and that’s why we continue to thrive in Forest City today,” he says.

The Forest City data center was among the first Facebook sites to use an outdoor-air cooling design, relying on fresh air rather than energy-guzzling systems used at peer locations. It’s among the most energy-efficient centers in the world, Hill says. “The Forest City data center supports 100% renewable solar energy, with five contracts with solar entities within North Carolina.”

Facebook has provided $1.1 million-plus in “community action grants” since 2011 to local schools, nonprofit groups and other organizations for equipment and other educational projects focused on science, technology and math. Facebook’s separate community investment fund recently provided a $300,000 grant to Rutherfordton-based KidSenses Children’s Interactive Museum for a tech lab expansion.

In 2020, the company also gave about $780,000 in COVID-19 relief grants to community organizations, providing a lift to beneficiaries including Rutherford County Family Resources, the Community Foundation of Western North Carolina, and school systems in Cleveland, Henderson, McDowell, Polk, and Rutherford counties. It also put $200,000 into a county small-business assistance fund that aided about 100 companies.

“For many of these businesses, this was their only lifeline at the time as they did not qualify for federal COVID relief programs that were being offered,” Dilgert says.

“The roots that Facebook has put down in Forest City stretch all throughout Rutherford County,” she says, noting opportunities for local suppliers, contractors and other businesses. ■

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