Red Hat Staying Put In North Carolina - InformationWeek

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1/11/2011
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Red Hat Staying Put In North Carolina

Economic incentives, university partnership led Linux developer to continue hanging its hat in the Raleigh area.

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Top 10 Software Stories Of 2010
Homegrown Linux developer Red Hat will retain its North Carolina roots and remain in Wake County's Centennial Campus, despite attractive offers from three other states vying for the growing company's new headquarters.

"We call this our company," Gov. Bev Perdue said Monday after donning a red fedora for the announcement. "It's kind of like NASCAR: It was born here, it was bred here. We're going to do whatever it's legal to keep it here.

"When this upstart little company came to us 10 years ago, they had a vision of where the future was going," Perdue said in a news conference. "They are successful and will continue to be successful and they could have gone anywhere they wanted. It is a great day in Raleigh."

Today, Red Hat occupies about 188,000 square feet in Raleigh, and has partnered extensively with N.C. State University, Dennis Kekas, vice chancellor at the college of engineering, told Technician Online, the university's newspaper.

"We are very pleased to have [Red Hat] at N.C. State. They have been a very positive factor for growth on Centennial Campus," said Kekas. "They are currently involved in many focused projects on campus, including researching how to make open software more secure, updating the computer science curriculum, and funding the Institute for Next Generation IT Systems - as well as the OSCAR lab."

In 2010, Red Hat started soliciting proposals for a new corporate headquarters of between 300,000 and 400,000 square feet. Atlanta, Austin, Texas, and Boston were up for consideration, but Red Hat finally selected one of several sites within Wake County, said company president and CEO Jim Whitehurst. The rapidly growing company chose N.C. over its competitors because of its extensive university partnerships and the state's $18 million incentive package, Whitehurst said.

"Even in the best of times you have to make important decisions based on economics," Whitehurst said. "We have enjoyed a great 10-year partnership with North Carolina, but without the direct economic incentives we would not have been able to stay."

The state approved two grants: The first, which is worth up to $6.8 million, requires that Red Hat create 240 jobs over the next four years, with average annual salaries of $80,525, according to the (Raleigh) News & Observer. The second grant, worth up to $11.02 million, is tied to the company creating 300 more jobs over a five-year period, starting in 2015, the paper said. About 700 of Red Hat's approximately 3,600 employees are in Raleigh, and the grants require that the developer retain these workers, the News & Observer said.

Red Hat plans a $109 million investment in the county, according to the Associated Press. The company generated net income of $26 million on $236 million in revenue for the quarter ending Nov. 30, AP said.

"North Carolina has been a strategic partner to Red Hat for more than a decade. The talent base we've been able to attract headquartered in this state has been phenomenal," Whitehurst said. "We look forward to future growth and expansion within Wake County and on a global basis. It's an incredibly exciting time for Red Hat and its employees."

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