Apple seems keen on Elk Grove expansion

Apple Inc.’s Elk Grove facility.
Apple Inc.’s Elk Grove facility.

Fueled in part by the popularity of the iPhone, Apple Inc. and a subcontractor have hired hundreds of workers at Apple’s Elk Grove campus in the past few years, and more jobs are apparently coming.

Details are few, but Apple filed paperwork with the city last week to add approximately 1,400 parking spaces at its Elk Grove campus in order “to manage parking demand long term,” said Darrell Doan, the city’s economic development director, in an email.

The project would increase parking capacity by about two-thirds at the Laguna Boulevard site, according to records supplied by the city. Apple Elk Grove opened in 1991 and once served as a major manufacturing facility for the Cupertino technology giant.

City officials said the parking expansion is designed to keep pace with an expanding workforce.

“It appears to be a big deal,” said Elk Grove Mayor Gary Davis. “That many parking places means they’re laying some infrastructure for expansion.” He said he’s been told that the facility’s workforce has grown steadily in the past few months alone.

The ever-secretive company won’t discuss in detail what tasks are currently performed at the campus. A Securities and Exchange Commission filing last October said Elk Grove’s operations include “warehousing and distribution operations and a customer support call center,” but offered no additional information.

However, state records show that Elk Grove has quietly become a major repair site for Apple’s iPhones. A Division of Occupational Safety and Health inspection report, dated in January, showed 781 employees repairing iPhones. The staffers aren’t actually Apple employees but work for Pegatron Technology Services Inc., the U.S. subsidiary of Apple’s Taiwanese manufacturing subcontractor Pegatron Corp.

Sung Han, Pegatron Technology’s vice president for business development, said “I’m not at liberty” to discuss any of Pegatron’s operations.

A spokesman for Apple wasn’t available for comment Tuesday.

Apple’s paperwork didn’t spell out when the parking lot expansion, set for the northeast corner of Apple’s property, would take place. Records furnished by the city say Apple’s campus consists of four buildings covering a total of 780,000 square feet of space.

The expansion comes as Apple, responding in part to political pressures over its outsourcing activities, has stepped up its U.S. hiring the past few years. It has built massive data centers in Reno and Mesa, Ariz., and started assembling its high-end Mac Pro desktop computers two years ago in Austin, Texas. About 600 employees have been hired just in the past year in Austin, pushing employment there past 5,000, according to the Austin American-Statesman.

Despite its heavy overseas presence, Apple “wants to have a big concentration of workers within ... shouting distance of headquarters,” said Tim Bajarin of San Jose tech consultant Creative Strategies Inc. He said Apple is planning two more buildings in north San Jose.

Along similar lines, Apple has been adding staff in Elk Grove for some time in what has become a major turnaround at the Laguna location.

Employment in Elk Grove hovered in the 1,500 range for much of the 1990s. It was a point of civic pride that Elk Grove workers assembled the candy-colored first generation iMacs, the popular desktop computers whose popularity helped Apple pull out of a deep and lengthy slump in the late 1990s.

Apple, though, pulled iMac production out of Elk Grove in 1999. After the company closed its assembly line altogether in 2004, eliminating 235 jobs, total employment on Laguna Boulevard dipped well below 1,000, according to figures provided by Apple.

The company cut 174 sales and customer-support jobs in Elk Grove in 2008, but otherwise employment has grown in recent years. An Apple spokeswoman, Kristin Huguet, told the Sacramento Business Journal that employment grew 50 percent in 2012 alone, to 1,800 workers. The Business Journal, citing data from the city, said employment reached 2,500 last summer, although city spokeswoman Kristyn Nelson said Tuesday she was unable to confirm that figure.

It’s unclear how long Pegatron has been repairing iPhones for Apple in Elk Grove. The Taiwanese company has emerged as a major Apple contractor in the past couple of years. It now makes a significant portion of Apple’s iPhones, taking business away from another Taiwan company, Foxconn. Pegatron reported profit of $322 million in the first six months of this year, a 77 percent increase from a year earlier. Revenue grew 14 percent to $15.9 billion.

Apple’s relationship with Pegatron has been controversial at times. A New York nonprofit called China Labor Watch in 2013 issued a report saying Pegatron’s factories in China used under-age labor, offered insufficient wages and had numerous other problems. Pegatron replied by issuing a statement saying it would correct any violations of Chinese labor laws and “our own code of conduct.” The “Supplier Responsibility” section of Apple’s website says the company is committed to eliminating unethical labor practices.

Dale Kasler: 916-321-1066, @dakasler