According to a new analysis from The Wall Street Journal, states in the Southwest added more than 100,000 manufacturing jobs from January 2017 to January 2020. That’s a 30% increase, and triple the rate of the rest of America. Ben Foldy and Austen Hufford report in the WSJ:
Executives say the region’s growing population makes for plenty of available labor, and its lower cost of living is a draw for new talent.
“I was surprised how straightforward a choice it was,” said Peter Rawlinson, chief executive for Lucid Motors Inc., an electric-vehicle startup that plans to open a $700 million vehicle factory this year in Arizona, where state officials rolled out the red carpet. “There was only one logical conclusion.”
The company had looked at more than 60 sites in 13 states before settling on the 590-acre site in Pinal County, Ariz., a rural area dotted with dairy and cotton farms. The company’s roughly 1 million-square-foot plant will be the state’s first auto-assembly operation.
Manufacturers in the Southwest have been relatively insulated from pandemic shutdowns and layoffs, and job growth there is expected to continue. More than a year of global supply chain disruptions are nudging more manufacturers to reshore or expand U.S. production, likely benefiting Southwest states the most, said Eric Stavriotis, the head of location incentives for CBRE Group, a Dallas-based real-estate company.
“If they are going to locate another facility, where does it need to be?” Mr. Stavriotis said. “The Southwest has won a lot of those analyses.”
Chip maker Taiwan Semiconductor Manufacturing Co. last year selected Arizona for a new 1,600-worker factory near Phoenix, a $12 billion facility that ranked as the single largest capital investment announced in the U.S. last year.
A hiring website for the company seeks to lure workers by promoting the area’s affordable housing as well as rock climbing, river rafting and other outdoor recreation. “It doesn’t hurt that Phoenix enjoys an average of 299 sunny days each year,” the website said.
Intel Corp. said in March it would invest $20 billion to expand its manufacturing in Arizona and pledged to add 3,000 high-tech jobs. The company said last month it would spend another $3.5 billion to expand its manufacturing operations in New Mexico, adding 700 jobs.
Tesla Inc. is opening a new assembly plant and battery factory in Texas, more than 1,400 miles from its headquarters in Palo Alto, Calif.
New factories create fewer jobs than they did in the postwar boom, with automation and other technologies helping produce more output with less labor. But many new plants pay higher wages. Semiconductor factories are among those that require more engineers and trained technicians than traditional assembly line workers.
Manufacturing helps diversify economies, such as those in Arizona and Nevada, that have depended on real estate, tourism and other cyclical industries.
“There’s cranes everywhere,” said Robert Hess, a vice chairman of the Newmark Group Inc., after a visit to the Southwest with a client this year.
Arizona politicians and economic development officials hustled to attract Lucid’s electric-vehicle plant, company executives and local officials said.
Arizona Gov. Doug Ducey and other state officials visited Lucid’s Bay Area headquarters to pitch tax incentives and other benefits. The city of Casa Grande, Ariz.—where the plant is being readied to open—purchased and annexed plots of land that it zoned for industrial use.
A trade school opened a training center nearby this year, working with Lucid to craft a curriculum to train new hires, company executives and local officials said. The company hopes to draw local workers, as well as those from Phoenix and Tucson. The town is within a day’s drive of the Mexican state of Sonora, a center for auto-parts suppliers, Mr. Rawlinson said.
The factory will build the Lucid Air, a luxury electric sedan starting around $70,000. It will employ around 750 people when it opens and expand to more than 2,000 workers, the company said.
Mr. Rawlinson said California was the company’s first choice for a factory, in a spot close to Lucid’s designers and engineers. But Arizona proved more favorable, current and former company executives said.
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