Cree expects to hire 244 over next two years

DURHAM -- Cree, the Durham LED maker whose rapid growth has made it a darling of politicians, is expanding for the second time in a year.

After flirting with China and Malaysia, Cree executives said Monday that the company plans a $135 million expansion that would create an estimated 244 local jobs over the next two years.

The company will receive more than $4 million in state and local incentives if it meets hiring and investment goals.

State politicians, including Gov. Bev Perdue and U.S. Sens. Richard Burr and Kay Hagan, basked in the company's success at an event held Monday at Cree's Research Triangle Park facilities.

"The sweetest words I've heard all day, actually all month, is for Chuck [Cree CEO Chuck Swoboda] to stand up here and say how good it is for us to be making this announcement, not in China, or not in another state, but right here in Durham, North Carolina," Perdue said.

In March, Vice President Joe Biden and Secretary of Energy Steven Chu made a similar pilgrimage to Cree.

The company's popularity with politicians is obvious: Cree has added more than 600 workers in Durham since early 2009 and has done so by ramping up manufacturing of a high-tech product that is energy efficient.

Cree has also received $39 million in federal tax credits under a stimulus program for green energy manufacturers, making it the only North Carolina company out of 183 nationwide to receive some of the $2.3 billion allotted.

NCSU technology

Making Cree's story even more attractive is the fact that the company's technology was developed by researchers at N.C. State University.

Cree's explosive growth is being driven by surging demand for energy efficient lighting. LEDs currently make up less than 1 percent of the $120 billion market for overhead lighting.

When Cree announced in October that it would add 575 workers in Durham it made a point of noting that it did not seek state incentives. The company had already received more than $5 million in incentives in 2004 when it was also considering putting operations in China.

One condition of state incentives is that a company must be considering other sites.

Swoboda, Cree's CEO, said Monday that the company needed to move quickly in October to meet orders for light models for Chinese streetlights and other uses.

This latest expansion, Swoboda said, involves a significant increase in the company's manufacturing footprint and led Cree to explore several different possible locations.

"I think incentives are a reality in making these decisions today," Swoboda said, noting that Cree also received economic incentives at its China facilities. "They're part of the equation. They're not the only factor, but they are a factor."

The 244 jobs announced Monday will pay average annual salaries of $42,726, below the Durham County average of $57,772.

The expansion will help Cree produce the next generation of LEDs, tiny light-emitting chips that are used in lighting, signs, wireless devices and other products. The new facility will allow Cree to increase the number of LEDs it can produce from individual silicon carbide wafers.

Few others announce

Although many of Cree's competitors have been expanding their manufacturing capability over the last 18 months, few have announced plans to move to these larger wafers, said Daniel Amir, an analyst with Lazard Capital Markets.

"You've had others exploring it but you haven't had many announcements," he said.

Amir said many LED companies have chosen to keep certain manufacturing in the United States in order to protect their intellectual property. "In terms of R&D knowledge it probably exists more in Durham than in China," he said.

Cree's shares, which are up 39 percent in the past year, fell 60 cents Monday to $50.60.