Friday, December 11, 2015

Good Choice: Faraday Nixes California, Will Put $1B Manufacturing Plant in Nevada

The Los Angeles Times headline said, "Electric car startup Faraday Future picks Nevada over California to build plant." I'll go further and say that the electric-car maker made an excellent decision to locate its new manufacturing facility in the Silver State.

Faraday Future Factory Design
It's been fairly well known that Faraday Future had been searching for a location for its first U.S. factory. It was natural to consider California considering that the company is headquartered in the state, a number of California-based Tesla employees were lured to the company, and some shipping will probably occur through the Ports of Los Angeles and Long Beach.

However, after Faraday Future also considered Nevada, Louisiana and Georgia, the company selected a site in North Las Vegas for the $1 billion facility.

The venture is backed by Jia Yueting, a Chinese billionaire, entrepreneur, and founder and CEO of Beijing-based holding company LeTV.

The company and its products have been called "mysterious." In an unusual take on the story, Matthew DeBord, Business Insider's transportation editor, wrote, "Faraday Future could be building ... anything. An electric car. An infotainment system. A self-driving electric car. A self-driving electric car with an infotainment system. Or ... not even a car! Maybe a self-driving-electric-car-sharing service!" See more at Everything about Tesla competitor Faraday Future is strange and confusing.

A company news release states:
We plan to construct something more than an ordinary 'assembly line’ – we’re creating a 3 million square foot workshop for passionate creators and diligent visionaries, where new concepts will be refined and implemented; where new discoveries will be conjured and crafted; and where new possibilities can be made, well, possible. After we get this manufacturing plant up and running, we will be directly staffing it with 4,500 new jobs. These positions will include a wide variety of professional and manufacturing employment opportunities, offering competitive pay and benefits.
Yes, that is a bit confusing. In any event, for several reasons I believe this was an excellent decision.
  • A California manufacturer can save between 20% and 35% in operating costs, depending upon which state it relocates to and what products it makes.
  • From a workforce standpoint, any challenge in recruitment should be eased by several factors. First, military people have excellent work habits, and nearby Nellis Air Force base offers a steady stream of potential employees as people leave the military. Also, workers can afford to buy homes in the Las Vegas area that on an equivalent basis would be far costlier in California, so potential home ownership is a lure for those willing to relocate. Finally, to the degree training is needed for Nevada residents, Gov. Brian Sandoval will ask lawmakers to develop a new job-training program through the Department of Employment, Training and Rehabilitation.
  • Airline service out of Las Vegas is outstanding in number of destinations served, frequency of flights and extent of non-stop services.
  • For shipping purposes, being near I-15 and the planned new Interstate highway, I-11, and the extension of a Union Pacific Railroad line – as well as proximity to that well-served airport – all offer logistics advantages.
  • Finally, the company hopes to leverage Las Vegas tourism to offer tours of its plant, which seems like a smart marketing move.
The Wall Street Journal reported that "Faraday’s plan is to break ground on the plant in early 2016 and begin production sometime in 2017. It is considering a rebuild of an existing factory or building a new plant from the ground up."

According to the Las Vegas Review-Journal, Faraday has been described as an international team with employees in 40 countries, a facility in suburban Los Angeles and other offices in Beijing and Dusseldorf, Germany.

When it comes to evaluating and deciding on a location for a new factory, somebody at Faraday Future knows what they're doing.
One focus of this blog has been to address California’s hostility toward business, as addressed in our study, Businesses Continue to Leave California – A Seven-Year Review, issued in November 2015.

Joseph Vranich is known as The Business Relocation Coach while the formal name of his business is Spectrum Location Solutions. Joe helps companies find great locations in which to grow. He offers an introductory consultation at no cost to help company leaders understand the Site Selection process and to explore whether a project makes sense. See a summary of the process under "The Three Phases of a Location Project" at Why Get Help.

Joe also is a keynote speaker on the benefits of businesses relocating out of high-tax, high-cost, over-regulated states to friendlier business environments. More information is available at Biography and Speaking Availability. On Twitter, Joe is known as @LocationConsultant.