June 01, 2010 GlobalFoundries plans expansion before completion The Post-Star - By Drew Kerr
MALTA -- One of the largest construction projects in North America is about to get even bigger.
GlobalFoundries officials announced late on Monday they are moving ahead with a planned 90,000-square-foot expansion of their under-construction computer chip factory at the Luther Forest Technology Campus.
The $75 million project, which will require another 500,000 work hours, is intended to add more manufacturing space as demand for computer chips continues to grow, company officials said.
Plans for the expansion were first disclosed in late March, when it was revealed that GlobalFoundries officials were speaking with state leaders about seeking taxpayer funds for the effort.
Officials said Tuesday the state will provide up to $15.8 million in direct reimbursements for the work, in addition to the $665 million in cash approved in the run-up to the factory's groundbreaking almost a year ago.
GlobalFoundries will also have access to up to $475 million in additional tax breaks through the state's Empire Zone program, officials said. The company already has access to as much as $635 million in tax incentives.
The new tax breaks will only be granted if and when the company invests in the tools and equipment needed to fill the additional manufacturing space being built at the facility, known as Fab 8.
Outfitting the extra space could cost up to $2 billion, and Bullard said the company will also continue to speak with state leaders about whether more cash reimbursements could be provided.
"As we continue to invest, we will continue to have conversations with the state to see what makes sense in terms of their investment," he said.
A decision on how and when to outfit the space will likely be made in the next 18 months, when customer needs and available technologies are more certain, company officials said.
Because the equipment and manufacturing needs are unknown, the company is not estimating how many more jobs could be created because of the additional manufacturing space.
Travis Bullard, a GlobalFoundries spokesman, said "several hundred" new jobs could ultimately be added, however. The company already plans to hire about 1,400 people in the run-up to the plant's opening in 2012.
"We don't know enough to guess how many jobs will be created at this point," Bullard said. "The market will dictate that, and we'll just have to figure that out when we get there."
The expansion efforts are also not expected to change the number of construction workers that will be hired to work at the site, which will top out at about 1,500 a day.
Those workers will be asked to commit another 500,000 work hours, however, bringing the total number of work hours to be invested in the project to 5.5 million.
Larry Bulman, president of South Glens Falls-based Local 773, said even if no additional workers are hired, the union's members who are on site now will enjoy the extra work.
About 100 of the union's employees are working at the construction site every day now, and as many as 500 will be needed within the next six months as the construction schedule accelerates, he said.
"I travel all over the country, and we are the envy right now of the construction world," Bulman said. "For our workers, even if it's just a few extra weeks, it's a job, and it allows them to put food on the table when they go home at the end of the day."
Dennis Brobston, executive director of the Saratoga Economic Development Corp., said he is not concerned that the company isn't providing specific estimates on the number of permanent jobs that could be created by the expansion.
The state can expect to see a return on its investment in three to five years, he said, and should be commended for maintaining its commitment to the project and investing in economic development despite the difficult budget year.
"I think the state is being very prudent," Brobston said. "If you do not commit to growing jobs, especially manufacturing jobs, in this economy, then they're not doing their work. They have to look to the future."
The expansion is an indication that the industry is vibrant, and it could also help the region attract suppliers that do business with the computer chip-maker, Brobston said.
"I never thought an expansion would happen this quickly, but I think it's indicative of what they see and what we see in this market, and that's that things are moving forward and fast," he said.
The global market for computer chips is growing rapidly.
The Semiconductor Industry Association reported Tuesday that worldwide semiconductor sales had increased more than 54 percent during the first quarter of the year, compared with 2009 numbers. Total sales reached $92.6 billion, according to the trade group.
GlobalFoundries, now the world's third-largest computer chip manufacturer, is investing aggressively to capitalize on the growth and gain market share.
With the expansion, the New York plant will have 300,000 square feet of clean room space - roughly the size of six soccer fields - and a total of 1.3 million square feet of building space.
The plant will be able to produce up to 60,000 computer chips a month with the extra space, up from 40,000 previously.
The expansion in Malta is being matched by investments at GlobalFoundries operations in Dresden, Singapore and Abu Dhabi. The company plans to spend about $9 billion on its plants in total.
"The good news is that we've got more and more customers and that those customers are needing additional manufacturing capacity from us," Bullard said.
