Apple to build 2nd campus, hire 20,000 in $350B pledge

SAN FRANCISCO — Apple is planning to build another corporate campus and hire 20,000 workers during the next five years as part of a $350 billion commitment to the U.S. that will be partially financed by an upcoming windfall from the country’s new tax law.

Mayor Rahm Emanuel responded with an enthusiastic and unequivocal “Yes” when asked whether Chicago would enter the heated competition for whatever kind of campus that Apple wants to build to augment its headquarters in Cuppertino, California.

Never mind that the city and state have already offered 10 sites in the Chicago area’s $2.25 billion bid for Amazon’s second North American headquarters.

“You don’t need my answer, but the answer is yes. I don’t even know what it is. But, yes. I’m a middle child. I’m for it. So, let’s go,” the mayor said.

The Apple pledge announced Wednesday comes less than a month after Congress approved a sweeping overhaul of the U.S. tax code championed by President Donald Trump that will increase corporate profits.

Besides dramatically lowering the standard corporate tax rate, the reforms offer a one-time break on cash being held overseas.

Apple plans to take advantage of that provision to bring back about $252 billion in offshore cash, generating a tax bill of roughly $38 billion. It’s something that Apple CEO Tim Cook promised the company would do if it could avoid being taxed at the 35 percent rate that had been in effect under the previous tax law.

About $75 billion of the $350 billion in U.S. investments will be paid from money that had been overseas, Apple estimated.

Companies who bring back money stashed overseas this year will be taxed at a 15.5 percent rate, below the new 21 percent rate for U.S. corporate profits under the new law. As a whole, corporate America has an estimated $2.6 trillion in overseas cash, with most of that concentrated in the technology industry, with Apple sitting at the top of the heap.

Analysts have been predicting that most of the overseas profits coming back to the U.S. would be plowed into paying shareholder dividends and buying back stock, something that happened the last time a one-time break on offshore profits was offered more than a decade ago.

While Apple is likely to return some of its overseas money to its shareholders, Wednesday’s announcement is designed to be a show of faith in the U.S. — the company’s largest market. The public show of support to the U.S. also helps the optics of a company that will still continue to make most of its iPhones, iPads and other gadgets in factories located in China and other faraway countries that offer cheaper labor.

“Apple is a success story that could only have happened in America, and we are proud to build on our long history of support for the U.S. economy,” Cook said.

Apple, which just spent an estimated $5 billion building a Cupertino, California, headquarters that resembles a giant spaceship, plans to announce the location of a second campus devoted to customer support later this year. The company didn’t say how big the second campus will be, or how many of the additional 20,000 workers that it plans to hire will be based there.

One thing is certain: Cities from across the U.S. will likely be offering Apple tax breaks and other incentives in an attempt to persuade the company to build its second campus in their towns.

That was what happened last year after Amazon announced it would build a second headquarters in North America to expand beyond its current Seattle home. The online retailer received 238 proposals from cities and regions in the U.S., Canada and Mexico. Amazon is expected to announce the winning bid later this year.

“I don’t know what Apple is looking for. But whatever it is, we’re gonna go compete and we’re gonna put our best foot forward,” Emanuel said.

Before launching into his familiar talking points about the city’s strengths — talent, transportation, affordable living — the mayor argued that Apple’s “roots in Chicago are deep.”

“They’re opening up across the globe 25 very unique stores. Chicago is No. 1. First store they opened up. Not that any of you want to listen to the `Chicago Stories’ podcast, but [Apple CEO] Tim Cook talked about it when I interviewed him why he picked Chicago first,” the mayor said.

“Chicago Public Schools are one of the No. 1 school [systems] that they invest in for individual learning reports called ‘personalized learning’ and also making sure [the city has] code education for kids. So, the roots are deep.”

Emanuel said there’s a reason why companies like Google, Amazon and Apple are looking to “do different things” away from the West Coast.

“Their employees are getting paid an incredible amount of money. They have to live an hour and 50 minutes away because they can’t afford to live near where they work. And they’re all miserable,” the mayor said.

“So companies that are based there and have everything there are realizing this is unsustainable on a long-term basis. Nobody wants a second headquarters. It has its own challenges. But, companies in those coastal areas [realize] their employees cannot afford to work or live where they are.”

Contributing: Fran Spielman for the Sun-Times