Google Inc. plans to open a new facility in downtown Ann Arbor, Mich., the hometown of the University of Michigan, where Larry Page, one of Google’s founders, earned his undergraduate degree in engineering.
The plan, which could be a significant boost to Michigan’s lagging economy, was announced by Gov. Jennifer M. Granholm at a news conference at the state Capitol in Lansing.
"Michigan has been Googled," Granholm said. "These are jobs that will keep our young people in Michigan."
Google will employ 1,000 people within five years to handle advertising generated by the search engine, Granholm and company officials said in a statement.
Mr. Page, a Michigan native, has maintained close ties with the university; his company is in the midst of a project to digitize all seven million volumes in the university’s libraries.
Google’s project involves opening an office for its AdWords unit, which handles "pay-per-click" advertising to users of Google’s Internet search engine, officials said. Google already has a small sales office in Southfield.
The location made sense for Mountain View, Calif.-based Google because of the talent pool in the area, said David Fischer, director of online sales and operations. He defended the decision to build in the heart of the Rust Belt.
"We do not get caught up in the conventional wisdom, and try to look at things with fresh eyes," he said at the news conference.
Google has been scouting the city for up to 240,000 square feet of office space, according to a report last year in The Ann Arbor Business Review. Ann Arbor was among a handful of potential cities chosen from an initial list of 50, the report said.
Most of the space would be used for a technology and call center, with about 40,000 square feet needed to house the library digitization project, which has been hindered by court challenges over copyrights.
Job opportunities with Google’s Ann Arbor-area facility were expected to open quickly, officials said. They said the project is expected to generate 1,000 direct jobs within five years, as well as 1,200 indirect jobs.
The state offered Google $38 million in tax breaks over 20 years, should its employment reach 2,000. The Michigan Economic Growth Authority lately met and approved the incentives.
The investment is a much-needed boost for Ms. Granholm, the state’s Democratic governor, who is in a tough re-election race. She was criticized last month when Michigan did not actively compete for a Honda plant that will be built in Indiana.
She has also been lobbying hard to have a Toyota engine plant opened in the state, but a decision on that factory may not come until after the November election, people participating in the discussions on that factory said.
Michigan has lost nearly 300,000 jobs since 2000, and its jobless rate has been higher than the national average for 57 consecutive months. Southeast Michigan, where numerous auto plants have closed, is trying to shed its Rust Belt image and market itself as a technology hub in an effort to make up for some job losses.
Democrat Granholm is being challenged for re-election by Republican Dick DeVos. She has been criticized for not attracting high-tech jobs to the state.
Michigan’s seasonally adjusted unemployment rate was 6.0 percent in May, compared with a national rate of 4.6 percent that month. Economists have said they expect the state jobless rate to climb until 2008.
Ann Arbor is a city of 113,271 people about 35 miles west of Detroit. It is home of the University of Michigan and of a number of high-tech businesses.
A Google spokesman did not return calls seeking comment. A spokeswoman for the governor declined to comment.
Google, based in Mountain View, Calif., has been on an investment spree. It is spending $1.5 billion this year on operations centers and on custom technology.