RALEIGH -- Mayor Nancy McFarlane formally welcomed Red Hat to downtown, saying Friday that the software company's presence will help Raleigh become a national hub for open-source technology.
With its planned move to the Progress Energy tower, Red Hat will act as a "cornerstone that attracts and fosters other companies and small businesses," McFarlane said at a news conference in her City Hall office.
City Council members, Chamber of Commerce executives and downtown advocates cheered when Red Hat CEO Jim Whitehurst made official what he admitted was the worst-kept secret in Raleigh.
The company, which currently is based at N.C. State University's Centennial Campus, plans to transfer more than 750 workers downtown and is eligible to receive more than $15 million in state incentives if it adds 540 workers over nine years.
Whitehurst said Friday that he expects the company's local employee count to top 1,000 over the next several years.
Red Hat will move into a 19-story office tower at 100 E. Davie St. vacated by Progress as part of the utility's proposed merger with Charlotte-based Duke Energy.
"I'm thrilled that we finally reached this day," said Whitehurst, adding that the company began renovations this week to one floor of its new building.
Red Hat's arrival is particularly good news for downtown Raleigh, which expects to lose two corporate headquarters as a result of the Duke-Progress merger and PNC Financial Service Group's acquisition of RBC Bank.
On hand for the announcement was former Mayor Charles Meeker, who helped recruit Red Hat to downtown and brokered an incentives package offered by the city.
Raleigh officials kicked in $1 million to offset parking fees, with the money spread over the next 10 years if job targets are met.
A hub for open source
Red Hat's arrival in downtown can boost Raleigh's credentials as an open-source community and attract other tech companies to locate nearby, McFarlane said.
Whitehurst said he has already recruited a software development company to open a 12-person office in Raleigh, but he declined to provide details.
Open-source means that customers have access to the computer code behind the software and can tweak it as needed. Facebook, Google and Twitter rely on the technology.
Red Hat's open-source Linux software is free. The company makes money by charging customers for maintenance and support, and for services such as training and consulting.
Red Hat's sales were robust throughout the recession and have remained strong as the economy slowly recovers. The company is on track to generate more than $1 billion in annual revenue for the first time this fiscal year.
The Convention & Visitors Bureau plans to promote the city as a host for open-source meetings and conferences, while the Greater Raleigh Chamber of Commerce will target companies that use open-source technology.
Although his 10-year run as mayor ended in December, Meeker couldn't resist weighing in on the topic of future incentives during Friday's news conference. He said as Raleigh's recruiting effort unfolds, City Hall would consider more incentives to help close potential deals.
"The city is certainly willing to talk to any company ... as long as they're realistic based on the investment and the contribution the city would be making," Meeker said.
In the past, the city has done little to promote itself as a place where innovation can flourish, some local government and business leaders complain.
A summit later this month will let entrepreneurs share ideas on how to change that perception - and talk about what types of startup industries to pursue.
Staff writer David Ranii contributed to this report.
