Cree plans to add 575 workers

The LED maker's CEO says the company needs more employees to meet demand. It's not seeking incentives.

Staff WriterOctober 9, 2009 

  • LED technology was discovered more than a century ago, but only in recent years has the quality of light-emitting diodes achieved commercial viability.

    The technology involves a semiconductor chip that lights up when current passes through it. The lights can last several decades and use a fraction of the energy required to run an incandescent light bulb.

    For years, LEDs have been used in low-intensity settings, like cell phones and dashboards. The cold, bluish light was deemed unsuitable for other uses.

    But recently LEDs have been improved to produce a warm, glowing light that resembles a standard light bulb. The main challenge facing LEDs now is cost. A recessed kitchen light using LED chips can cost more than $100.

  • Dell plans to repay much of the incentives money it has received since opening a computer production plant in Winston-Salem four years ago.

    The company shocked state and local officials Wednesday when it announced that it will close the factory in January and lay off the remaining 905 workers.

    Dell was lured to Winston-Salem by the promise of an incentives package worth as much as $280 million. But most of that money hinged on the company meeting hiring goals and keeping the factory open.

    Winston-Salem issued a statement saying that Dell has promised to repay $15.6 million it has received so far from the city. And the company will give back $1.5 million it got from the state for meeting hiring goals in 2006 and 2007, N.C. Commerce Department spokeswoman Katharine Neal said Thursday.

    Dell was eligible for another $1million for meeting 2008 targets but won't get it, Neal said.

    Dell has received about $8.5 million from the state, but some of the money went toward work force training and won't be repaid, Neal said. That money is "an investment that will continue to benefit individuals and employers," she wrote in an e-mail.

    Dell officials also have pledged to provide workers with severance packages and help them find others jobs. About 600 workers will be laid off next month, and the rest will lose their jobs early next year.

    Staff writer Alan M. Wolf

— China's hunger for energy-efficient lights is so intense that Cree is boosting its local payroll by 575 workers, and, in an unusual twist, isn't seeking financial sweeteners from the state.

Cree, maker of tiny chips used in lights and other products, said Thursday that it plans to add 200 of those jobs at its Durham complex over the next couple of months and the rest by the end of 2012.

CEO Chuck Swoboda said his company needed to move quickly to meet orders for light modules for Chinese streetlights and other uses.

"We've already started hiring," Swoboda said. "Incentives are not the drivers of this business decision. This is about meeting demand from the customers."

That's a dramatic about-face from a company that only five years ago considered putting operations in China unless North Carolina offered more than $5 million in incentives to hire here instead. Cree has received nearly $1.6 million in incentives so far for the expansion announced in 2004.

With an unemployment rate above the national average, the state is desperate to attract new business and promote economic development. Incentives are now going to companies that would not likely have qualified in the past.

Just this week a Roxboro manufacturing plant was promised $600,000 in state and local incentives to create 375 jobs. The company, North American Aerodynamics, didn't meet two key criteria usually required: It was not considering any other states for expansion, and the jobs it will create will pay well below the Person County average.

Gov. Beverly Perdue, who attended Cree's announcement in Durham on Thursday, said she had just returned from Washington, D.C., where she talked to industrial prospects about expanding in North Carolina.

"All those conversations are about incentives," she said.

Cree's latest expansion will significantly boost its local staff of 1,500 as the company rides the green energy wave. The company will hire in all categories, including engineers, scientists, accountants and production workers.

But that good news on the jobs front was overshadowed by computer maker Dell's news Wednesday that it will shut down its plant in Winston-Salem and idle 905 workers.

Perdue said she was blindsided by the Dell announcement, but she noted that Dell will repay much of the incentive money it has received so far.

Cree, an outgrowth of an N.C. State University research project, is one of the most successful businesses the Triangle has spawned. Originally, Cree developed early-generation light-emitting diodes for mobile phones, car dashboards and computer monitors.

But rapid advancements in semiconductor technology are pushing LEDs to new applications in lighting for streetlights, offices, homes, hotels and restaurants. Cree's LEDs are perhaps most visible locally in the Raleigh Convention Center's "shimmer wall."

LED replacements for screw-in bulbs are not widely available in this country yet but already being sold in Asia, Swoboda said.

LED lights can last more than two decades. At the same time, LEDs are up to 90 percent more efficient than conventional lights. As the price of LEDs comes down and quality improves, LEDs are increasingly seen as the future of electric lighting that will eventually render incandescent bulbs obsolete.

Raleigh and Chapel Hill are among the cities that are testing LEDs in streetlights and parking decks. Los Angeles recently announced it would switch out 150,000 streetlights to LEDs, using products from Cree and others.

As one of the world's top LED manufacturers, Cree is poised to get a major boost from the transition to efficient lighting.

"Business is very good for Cree, and they're struggling to add capacity," said Harsh Kumar, an analyst who follows the company's stock with Morgan Keegan & Co. "As the federal stimulus money is kicking in, as the population is becoming more green, LED lighting is a very compelling product."

Cree has continued to expand its business during the recession. For the year that ended in June, the company reported revenues of $567.3 million, up 15 percent from the previous year. Its stock has more than doubled in the past year.

Last month, Cree sold nearly $400 million worth of new shares on Wall Street, with about $150 million earmarked for expansion.

"Edison's light bulb has had a good run," Swoboda said. "But we're well on our way to eliminating these energy wasters from our homes and businesses."

john.murawski@newsobserver.com or 919-829-8932

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