North America Holdings' $166 million data center project will likely
bring more technology companies and jobs to Western New York to support
it, officials said Wednesday.
The parent of HSBC Bank USA,
together with Gov. George Pataki and other national, state, and local
political leaders, formally confirmed before a sea of television
cameras that it will spend $69 million to build a new
275,000-square-foot facility in Niagara County. The exact location has
yet to be decided, but Pendleton is in the lead among at least four
possible rural sites.
The bank will spend another $70 million
on technology for the new building, and $27 million to upgrade a
smaller facility on Park Club Lane in Amherst that was constructed in
2001. And it will spend more than $100 million a year for 15 years -
over $1.5 billion in all - to keep the technology updated.
That technology capacity, in turn, will require enormous tech support
from computer equipment makers and vendors, such as Sun Microsystems,
IBM Corp., and others, bank officials said during the press conference
at the Amherst Chamber of Commerce.
Those firms will likely
set up field offices here, in surrounding buildings, to service HSBC's
needs, creating new technology jobs locally and moving installation,
maintenance, repair and other technicians from other parts of the
Once here, they can also work for other companies.
And as other businesses outside the region learn of the concentrated
capabilities that will be present locally, they will look at Buffalo as
a place to locate their own back-office technology centers.
"This project reinforces the fact that we see this region, with its
large, highly skilled, dedicated work force, as a great place for
technology investment," said Martin Glynn, president and CEO of HSBC
Bank USA, which is the U.S. banking unit of London-based HSBC Holdings
Plc. "We believe it will serve as a catalyst for investment by other
corporations as well."
Such technology-heavy data centers are
the fastest-growing sector in the corporate site selection business
today, according to industry consultant John Boyd, president of The
Boyd Co. in Princeton, N.J. In fact, his firm currently has a backlog
of such advisory work for clients.
Many projects are in
financial services and health care, because of federal laws mandating
how financial and health care institutions collect, store and transmit
personal data. The USA Patriot Act has also contributed, as has the
growth of identity theft. Boyd estimated that data security spending by
the banking industry alone will grow by 17 percent this year, reaching
$2 billion a year.
"These facilities are not only coveted in
and of themselves, but they can generate additional corporate
investment from suppliers and vendors," Boyd said.
companies that want a presence in the Northeast, Western New York is
ideal for a host of reasons, Boyd said. Buffalo has a long history of
financial services and well-established skill sets, but at lower labor
costs than other areas. And it's far enough away from high-profile
terrorist targets in New York City and Boston, but close enough to be
Land and electric power also are much cheaper in
Buffalo than in the major financial centers like New York City, Boston
and Long Island. Data centers require a lot of land, including buffer
zones around the buildings, and they use significant amounts of power,
Finally, Buffalo is less prone to major natural
disasters than other parts of the country, especially the Southeast and
Gulf Coast, which are repeatedly hammered by devastating hurricanes
that could flood buildings, knock out power and disrupt the work force.
"You're insulated from natural disasters by and large," Boyd
said. "You do have a lot of snow, but the work force is used to it and
the city has the equipment to move the snow. It's not like Atlanta,
where there's an ice storm and the city literally shuts down."
Indeed, Glynn said, the local labor and resources played a role in the
decision for HSBC. The two Western New York data centers will handle
all bank transactions for HSBC in the United States and Canada. A
separate pair of data centers - one existing, and one more to be built,
both in suburban Chicago - handle non-bank transactions for HSBC's
credit cards, consumer finance and auto finance businesses.
The proposed new data center will create 78 new jobs, on top of 5,830
HSBC has now in Western New York - including 850 in technology and
But unlike basic processing work, these new jobs are
highly skilled engineering positions paying an average salary of
$75,000 to maintain, operate and program the computers.