Wednesday, January 29, 2020
Jan. 29, 2020

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Amid takeover talk, HP Inc. betting big on Vancouver, 3D printing

Company's expansion plans in east Vancouver come amid financial headwinds, layoffs and a takeover bid by Xerox

By , Columbian business reporter
Published:

HP Inc.’s potential new corporate campus in Vancouver would mark a major investment from the company at a time when the printer and PC maker has been dogged by headlines chronicling lagging financial results, staff layoffs and a potential hostile takeover by competitor Xerox.

However, the development would be consistent with two patterns the company has displayed in the past few years: expanding its Vancouver operations and making big bets on the future of 3D printing.

The city of Vancouver announced Wednesday that HP plans to purchase 68 acres of land at Section 30, the site of the former English Pit mine, and build a new corporate campus, eventually moving operations over from its current pair of offices in the nearby Columbia Tech Center.

The company would initially spend a minimum of $50 million to $80 million to develop two office buildings with 330,000 square feet of space on about 28 acres of the property, leaving 40 acres for future development.

The deal includes an option for HP to purchase another 30 acres for an additional expansion, according to Vancouver Economic Development Director Chad Eiken, which would bring the company’s total campus area to 98 acres.

Future investment in the site could reach into the hundreds of millions of dollars, according to the city, with plans to eventually expand the company’s footprint to 1.5 million square feet with space for offices, research and development and manufacturing.

HP itself has been fairly tight-lipped about the news.

“HP has a long history in Vancouver and are committed to our local business,” the company said in a statement when asked about the plans. “We are exploring opportunities that support our long-term presence in Vancouver but have no immediate plans to change our existing real estate footprint.”

Local incentives

The proposed deal features a number of perks for HP including $10 million worth of city-funded infrastructure improvements, a potential reduction in transportation impact fees and an agreement to review the first phase of the project using a Type II administrative process rather than the full Master Plan process.

The city would also lock in the current $10 million building permit valuation cap for calculating permit fees for all phases of the project, and amend the Business License Surcharge Ordinance to provide a five-year waiver of the per employee annual fee to a business that relocates at least 700 employees and meets certain salary thresholds.

The city’s contribution to building out the streets and other public infrastructure in the Section 30 area would start with $3.5 million for the first phase of the project and ultimately top out at about $10 million. Most of the area sits well below grade due to its former use as a mining site, Eiken said, so a pumping station would be required to connect with Vancouver’s existing sewer system.

The $10 million city investment compares with about $70 million the city spent to jump-start The Waterfront Vancouver area, Eiken said.

Eiken said the city expects to recoup its own investment through new tax revenue in about 20 years — or less, if additional businesses move into the 553-acre Section 30 area.

The city’s long-term vision is for the area to become a new office and light industrial space, but Eiken said the city needed a big business such as HP to commit to the site before it could spend the money to put in the necessary infrastructure.

“Without a major user in there, it would be hard for us to justify,” he said.

Vancouver city staff outlined details about the new campus in a packet for a workshop scheduled during next week’s city council meeting. The workshop would be followed by a public hearing Dec. 16 and additional workshops in subsequent months to finalize the details of a development agreement with the city.

HP in Vancouver

The Hewlett-Packard Co., HP Inc.’s corporate predecessor, began operating in Vancouver in 1979. The local arm of the company at one time employed thousands of workers before the company outsourced its printer manufacturing. It remains one of Clark County’s largest employers today, with about 700 workers and another 400 full-time contractors, according to estimates from city staff.

HP’s local operations are currently based out of two office buildings at the Columbia Tech Center — a main office building which it shares with PeaceHealth and a 58,000-square-foot expansion office which it opened in 2016.

That same year, the company ramped up its 3D printing efforts with the introduction of the Multi-Jet Fusion line of industrial 3D printers, its first major foray into the 3D printing market segment.

HP is headquartered in Palo Alto, Calif., and has offices throughout the world, but its Vancouver facility is one of several offices that are at the heart of the company’s 3D printing division, where much of its research and development takes place.

HP has continued to describe 3D as a major future growth area for the company. Last year, it announced that it would expand its lineup with a Metal Jet printer that can print steel parts.

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The focus on the 3D market comes as HP has grappled with falling revenues amid slowing sales of its legacy PC and 2D printing products. Recent headlines have highlighted some of the company’s struggles.

In early October, HP announced that it planned to eliminate between 7,000 and 9,000 jobs as part of a restructuring plan, about 16 percent of its total workforce.

In November, fellow printer manufacturer Xerox made a $33.5 billion takeover offer following a breakdown of merger talks over the summer. HP rejected the offer, arguing that the proposed deal undervalued the company.

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