Auto/Aero Supplement to the Q3 2022 Issue of Area Development

2022

SPECIAL INDUSTRY REPORT

Massive Need for New Auto Production Facilities Dramatic Transformation of the EV Supply Chain The Dawn of the TrillionDollar Space Economy Location Factors in the EV Industry Manufacturing’s Last “KISS”

A Special Supplement to

AREADEVELOPMENT CoverAutoAeroV2.indd 1

8/29/22 2:45 PM

T:8"

DA N I E L L E B R OW N Chief Information Officer, Whirlpool Corporation

T:10.875"

“ MICHIGAN I S A STAT E FO R INNOVATO R S BECAU S E T HE WOR L D I S O P E N TO YO U HE R E .”

Dreaming. Innovating. Growing. It's how Michigan talent is making an impact on the world in key industries. From tech to mobility to advanced manufacturing, there's a different kind of hustle here.

Expand your business in Michigan and get access to support, camaraderie and new opportunities.

Make the move at michiganbusiness.org/pure-opportunity

1

16624_MEDC_ADQ4_Dani_8x10.875.indd

Saved at

8-9-2022 12:57 PM

Job info Job Client Media Type Live Trim Bleed Pubs

from

by

C02CG479MD6T

Approvals 16624 MEDC Print 7" x 10" 8" x 10.875" 8.25" x 11.375" None

Printed At

Eric Whitaker / studio360

Fonts & Images Art Director Copywriter Account Mgr Studio Artist Proofreader

C Weinkauf E Whitaker None

Fonts Minion Pro (Regular), Gotham (Black, Book, Bold) Images 21MED0026.tif (RGB; 538 ppi; 55.69%)

Notes None

Inks Cyan,

Magenta,

Yellow,

Black

None

Table of Contents

Editor’s Note According to industry experts, the production and sales of gasoline-powered vehicles will begin a steady decline in 2023, as automakers switch their focus and investment to electric models. This will create a huge need for new auto production facilities and battery plants. Rapid advances in the power, longevity, and efficiency of battery technology are making EVs more affordable and offering consumers longer-term cost savings.

Locating new battery and auto-supplier and production facilities requires an understanding of both quantitative (costs, labor, proximity to suppliers/customers, real estate, etc.) and qualitative considerations (regulatory environment, community fit, etc.). The long-term success of any project involves tradeoffs to balance opportunities and risks.

When it comes to suppliers, however, is the industry ready for EVs/batteries? Currently, almost all battery cells in EVs come from Asia. And despite the fact that OEMs are investing billions in new battery plants in the U.S., the materials and components used in the lithium-ion batteries will still come from Asia as well. There’s a major push to build more domestic production of these materials domestically.

And if adapting to EVs wasn’t forward-thinking enough, the advent of space tourism is stirring the imaginations and yearnings of consumers, albeit with deep pockets. The trillion-dollar space economy is transforming aerospace into a dynamic and powerful industry that includes the building and servicing of rockets and satellites and other space-based assets, as well as the security of satellite data.

Space exploration actually supports innovation on earth by stimulating advances in science and technology. With all technological advancements, the speed of change is accelerating, as those companies in the automotive and aerospace sectors are well aware.

editor

4

EV

Revolution Creates Massive Need for New Auto Production Facilities

Automakers are vying to rule the industry’s EV era — and they need factories to do it!

8

EVs

to Bring About a Dramatic Transformation of the Automotive Supply Chain

Electric Vehicles are here…but how ready is the supply chain?

13

The

Dawn of the Trillion-Dollar Space Economy

The building and servicing of rockets and satellites, security of satellite data, space tourism, and more provide the potential for massive industry expansion.

16

Location

Factors in the EV Industry — “Mission Critical” or “Nice to Have”?

Understanding the impact of both quantitative and qualitative factors is critically important to the operational efficiency and long-term success of your EV-related project.

19

22

Sponsors

Manufacturing’s Last KISS

Although those in the aerospace and other industries once believed that the simplest solution to a production problem was undoubtedly the optimal one, it often creates inefficiency in design and production that makes for a competitive disadvantage in today’s global marketplace.

PUBLISHED BY

©2022 30 Jericho Executive Plaza –­ Ste 400W, Jericho, NY 11753 516-338-0900 • Fax: 516-338-0100 • www.areadevelopment.com

~ 2022 3

EditNoteContents2022.indd 3

8/29/22 2:47 PM

EV REVOLUTION CREATES MASSIVE NEED FOR NEW AUTO PRODUCTION FACILITIES Automakers are vying to rule the industry’s EV era — and they need factories to do it!

THE RACE IS ON to lead the auto industry’s electric vehicle (EV) transformation. Today, Tesla holds a sizable lead in production capability, technology, and market share, but legacy manufacturers like Ford, Volkswagen, and General Motors are gaining ground with aggressive efforts to prepare for mass production of new EV models.

According to the International Energy Agency,1 global EV sales could reach 200 million by 2030, up from just 10 million a decade earlier. The future of the industry is being decided now, and stakeholders everywhere are

investing accordingly, from manufacturers and their suppliers to government agencies and environmental organizations.

“This is our moment — our biggest investment ever — to help build a better future for America,” says Jim Farley, Ford president and CEO, of current landmark EV projects that will annually produce 129 gigawatt hours of battery power.2 “The world is changing very, very fast,” says Volkswagen CEO Herbert Diess. “Eighty-plus years’ success in auto manufacturing and design is not sufficient for the future.”3

By Brian Jones, President and CEO, Gray Construction

Ford is investing $11.4 billion into two EV projects comprising a production complex in Tennessee — BlueOval City — and two battery plants in Kentucky — BlueOval SK.

~ 2022 4

EVRevolution.indd 4

8/29/22 2:48 PM

Top Talent.

Top Companies.

Arizona tops the list.

In Arizona, you’ll find the perfect balance of business opportunity and high-quality lifestyle that makes it a top state to live and work. Businesses benefit from pro-innovation policies and business stability. Residents enjoy a reasonable cost of living and beautiful scenery, all while taxes remain low for everyone. With a highly skilled talent pool and a commitment to future-forward industries like semiconductors, electric and automated vehicles and battery manufacturing, we’re maximizing our potential for generations to come.

azcommerce.com

22-ACA-1345 Top Talent R01.indd 1

8/22/22 1:04 PM

Building for the Future This seismic shift in auto manufacturing requires an equally massive change in the industry’s production facilities. The processes and technologies that drive manufacturing for electric vehicles differ vastly from those for vehicles powered by fossil fuels. Assembly lines fine-tuned to mass produce components such as internal combustion engines, exhaust manifolds, and fuel pumps must be completely reinvented in the face of this change. As such, manufacturers all over the world are investing billions in state-of-the-art facilities equipped with new processes and production equipment that can power the new wave of automobile manufacturing.

“It has never been more crucial for automotive manufacturers to find a trusted partner with the experience to deliver the facilities and speed to market they need to maintain a competitive advantage,” says Marcus Taylor,

How Silicon Valley-based KLA Corporation Found Success in Michigan

vice president of business development at Gray, a fully integrated service provider specializing in engineering, design, construction, digital, equipment manufacturing, and real estate services, and a known automotive industry partner for half a century.

The need to build new facilities extends to suppliers as well, particularly battery producers. The lithium-ion batteries that EVs require are primarily sourced from China and a handful of other countries. Western markets worry that an overreliance on China for the supply of critical materials will throttle economic growth by straining companies’ ability to meet demand.

In response, American automakers are increasingly looking to partner with or acquire companies that can integrate with operations at their newly planned stateside facilities. As the battery market continues to grow at a record pace, the integration of co-located suppliers and manufacturers will be vital to companies’ strategies to quickly scale production.

In 2018, Silicon Valley-based KLA Corporation started searching for a location to establish its second U.S. headquarters. This would be more than just building space — it needed an environment with robust business resources, access to advanced engineering research, a high-quality talent pipeline, and exceptional quality of life.

Out of hundreds of potential locations, KLA chose Ann Arbor, Michigan. Over the next few years, they would build their 230,000-square-foot campus and begin their campaign to recruit talent. Nearly four years after the plans to build a second location were announced, how effectively have KLA’s expansion goals panned out? The answer is one of success, via a combination of public-private partnerships and Michigan’s growing emphasis on semiconductors.

Key considerations for KLA were resources and incentives, and Michigan made a strong pitch. Through support from the state’s Michigan Strategic Fund, KLA secured $2.5 million in performance-based grants, which would help bolster the state’s position in semiconductor R&D and manufacturing. Building on that is the recently passed CHIPS and Science Act, bipartisan federal legislation that will support Michigan’s supply chain, auto industry, and high-tech companies.

By the time KLA’s headquarters opened in November 2021, the team already had local leadership in place alongside a 300-person-strong workforce. Currently exceeding 500 employees with plans to add another 100 positions in Michigan by the end of 2022, this growth is achievable thanks to a pipeline of university talent, the Michigan business community, and an ever-growing semiconductor ecosystem.

“Our partnership with the MEDC has been instrumental in enabling KLA to serve our global customer base from the new headquarters and benefit from the engineering talent and business culture that Michigan offers,” said Rick Wallace, president and CEO of KLA. “As we continue our journey at the forefront of semiconductor technology, we’re thrilled that Ann Arbor and the state of Michigan are now part of our story.”

KLA’s ribbon cutting in Ann Arbor, Michigan, represented an important milestone in the company’s growth.

Copy supplied by the Michigan Economic Development Corporation

6

AutoAeroSiteGuide

EVRevolution.indd 6

for free site information, visit us online at www.areadevelopment.com

8/29/22 2:49 PM

ACCORDING

Paving the Way for an EV Nation The EV boom is in part driven by new government standards and regulations that call for greater investment in sustainable transportation methods. Foreign initiatives such as the European Green Deal and South Korea’s pledge to offer subsidies and lower EV costs for consumers represent a more progressive approach, but the U.S. is now taking steps to adapt industry and infrastructure in response to economic challenges, supply chain disruptions and overreliance, and a looming climate crisis. The Biden administration’s $1 trillion infrastructure plan earmarks $174 billion for EVs, calling for a range of changes: ≥≥≥≥ N ew infrastructure, such as a nationwide network of 500,000 charging stations ≥≥≥≥ T arget share of “50 percent electric” for all new vehicle sales

TO THE INTERNATIONAL ENERGY AGENCY, GLOBAL EV SALES COULD REACH 200 MILLION BY 2030, UP FROM JUST

≥≥≥≥ H onda looks to surpass production of 2 million EVs by 2030, with 750,000–800,000 units each for North America and China and 400,000–500,000 for Japan and other markets. ≥≥≥≥ T oyota announced it will invest $70 billion to manufacture 3.5 million EVs per year by 2030. ≥≥≥≥ G M plans to increase annual EV sales from 25,000 in 2021 to more than one million by 2026.

10 MILLION A DECADE EARLIER.

≥≥≥≥ C onsumer incentives including a tax credit of up to $7,500 for the purchase of a new EV It’s not just newer, all-electric companies like Tesla and Rivian that are keen to lead the EV charge. One after another, legacy automakers are announcing their visions for the future — one that puts electric vehicles front and center and leaves fossil fuels and the internal combustion engine in the dust.

To get there, they’re committing record-setting resources to build the facilities that will turn technology’s promises into tangible products.

Preparing for a Surge in Demand The electric vehicle as a concept is nothing new, but as battery technology makes rapid advances in power, longevity, and efficiency, EVs are increasingly affordable and offer longer-term cost savings — especially in the face of recordhigh prices at the pump. Historically in America, one of the main arguments against buying an EV was that the country’s relatively low cost of gas did not produce sufficient long-term savings to justify an EV’s high upfront costs. Ironically, it is the cost of fuel that is now causing many to reconsider going electric.

Though EVs only made up roughly 9 percent of global auto sales in 2021,4 new EV sales have nearly doubled each of the last two years, a rate that far exceeds the growth of gas and diesel vehicle sales. Auto manufacturers are building their long-term forecasts and product offerings accordingly: ≥≥≥≥ H yundai aims to produce 1.87 million EVs annually and own a 7 percent market share by 2030.

The Industry Goes All-In

Legacy makers acknowledge that a failure to update their business models would spell disaster. Volkswagen has committed to invest a staggering $100 billion in the development and production of EV technology through 2025, a clear-eyed appraisal that the company’s future hinges on becoming a leader in the EV market.

Among the recent leaders in turning EV ambitions into full-scale reality is Ford, which is investing $11.4 billion into two EV projects that will bring nearly 11,000 jobs to America’s heartland. The joint venture with SK Innovation, a South Korean electronics company and the world’s No. 6 battery-maker, will bring an integrated production complex to Stanton, Tenn., and co-located battery plants to Glendale, Ky. The projects, dubbed BlueOval City and BlueOval SK, respectively, are currently in development and represent the largest investment in the company’s 118-year history.

Walbridge will build the integrated battery plant and vehicle assembly factory in Tennessee, while a partnership between Barton Malow and Gray will build twin battery plants at the Kentucky location. Both locations will begin production in 2025.

“This once-in-a-generation investment will create thousands of high-quality jobs and support America’s transition to electric vehicles,” says Lisa Drake, Ford North America chief operating officer.5 Other major players in the industry are busy with their own landmark projects: Recently, the Hyundai Motor Group announced plans to build a $5.5 billion EV manufacturing facility near Savannah, Ga., that will begin production in 2025 and supply 300,000 vehicles per year. This comes on the heels of the state offering $1.5 billion in tax incentives to win Rivian’s commitment to build a $5 billion production plant Continued on page 22

~ 2022 7

EVRevolution.indd 7

8/29/22 2:49 PM

EVS TO BRING ABOUT A DRAMATIC TRANSFORMATION OF THE AUTOMOTIVE SUPPLY CHAIN Electric Vehicles are here…but how ready is the supply chain?

AFTER YEARS OF RIDICULE BY the traditional automotive industry, the electric vehicle (EV) has finally arrived.

Capital investment by auto OEMs has almost completely shifted to EVs going forward. This year will be as good as it gets for the internal combustion engine.

After a century of dominance, gasolinepowered vehicles will see peak production and sales in 2022 and then go into steady decline over the coming decades, as automakers switch their focus and investment to electric models.

Technology has consistently created

these inflection points in every industry.

Examples are all around us of leadingedge technologies being replaced. For example, more power exists in today’s laptops than was available in the old mainframe computers. Other highprofile examples could include flat panel televisions and smart phones. The speed of technology change is growing ever more rapid. In the case of automobiles, the transition from internal combustion engines is being led by climate change regulations and incentives from both the federal and state governments (mainly

North American Vehicle Production EV Maturity in 2040s

Today

EV EV Growth

2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050

Early EVs

ICE

By Daron Gifford, Automotive Industry Leader, Plante Moran 8

AutoAeroSiteGuide

EVsToBringAbout.indd 8

ICE Decline Peak ICE

Source: Plante Moran Mobility Intelligence Center for free site information, visit us online at www.areadevelopment.com

8/29/22 12:24 PM

LEADING THE WAY TO AN ELECTRIC FUTURE

KENTUCKY At the center of EVerything With recent investments from Ford & SK On and Envision AESC,

Kentucky is charged and ready for the industry of tomorrow ced.ky.gov

@cedkygov

California) to reduce fossil fuel consumption. But EV technology is improving swiftly due to lower costs and better performance, driving growing consumer interest and adoption, as well as businesses looking to reduce costs and pursue sustainability targets.

The impact is driving the $1 trillion global automotive supplier industry into a crisis. On the one hand, automakers will still be demanding traditional vehicle components for the next decade, and the aftermarket for service parts will continue even longer, as gasoline vehicles remain on the roads. On the other hand, internal combustion engine parts are clearly not a growth market as electric models take up a growing share of automaker production schedules.

Based on research from the Plante Moran Mobility Intelligence Center, the dramatic transformation in North American production of vehicle volumes is illustrated by

Louisiana Gains Foothold in EV Battery Supply Chain

projected EV growth and ICE decline in the accompanying graphic. Over the next decade, 74 percent of the projected 247 new vehicle programs to be launched will be partial or full EVs. Not only will it include smaller cars, but trucks, SUVs, and other large vehicles are encompassed in automaker plans.

GM appears to be the most aggressive, with the announced target of switching 100 percent of its production to electric by 2035; but other OEMs are following suit, with targets generally aiming for completely closing down new ICE programs by the 2035–2040 time frame.

The Supply Chain Challenge Electrification creates a new technology for propulsion of the vehicle. Nearly all powertrain components used in today’s world — such as engines, transmissions, turbochargers, air

China currently accounts for 70 percent of the world’s graphite production, but ready access to Louisiana-sourced active anode material (AAM) could change that, enabling auto manufacturers to scale up production and accelerate U.S. adoption of electronic vehicles.

Australia-based Syrah Technologies will play a leading role in that transition from its Vidalia, La., plant, where a deal signed with Tesla in late 2021 will see 80 percent of its graphite production shipped to the EV maker for four years. With that agreement in place, a $176 million upgrade to the facility was announced in February and a second expansion is already in the planning stages, further securing Louisiana’s place in the expanding market for EV components produced in the U.S. Louisiana Advantages Louisiana’s competitive incentives and location advantages played key roles in securing the company’s future in the state.

Syrah is adding 180,000 square feet of building and processing space to its existing 50,000-square-foot Central Louisiana facility, enough to install equipment and systems for processing natural graphite into AAM used in lithium-ion batteries.

The plant’s strategic location includes access to key utilities, options to expand, and direct barge and port access to the Mississippi River, providing a gateway to America’s heartland and worldwide markets through the Gulf of Mexico. Louisiana also boasts six interstate highways, six Class I railroads, and six deep-draft ports.

Offering manufacturers locating or expanding in Louisiana a temporary, partial reduction of property taxes, the Industrial Tax Exemption Program is one of several incentives Syrah plans to utilize. ITEP-qualified companies can receive as much as an 80 percent break on property taxes for up to 10 years.

Courtesy of Syrah Technologies

“Louisiana has all the right elements for the development of new technology in the manufacturing sector, including a vision for sustainable development that aligns well with Syrah’s values,” Syrah Resources CEO Shaun Verner said.

“Vidalia is a great community that has access to technology centers and benefits from excellent supply chain logistics optionality for this and potentially future expansions.”

Syrah’s Louisiana project site has all the key requirements for large-scale AAM production including access to key utilities, direct barge/port access to the Mississippi River, access to key consumables, and a capable workforce.

Syrah also plans to use Louisiana’s Quality Jobs program, which offers up to a 6 percent rebate on annual payroll expenses for up to 10 years and either a state sales/use tax rebate on capital expenses or a 1.5 percent investment rebate for qualifying expenses. It also will have access to the services of LED FastStart, annually ranked among the best state workforce development programs in the country.

Copy Supplied by Louisiana Economic Development

10

AutoAeroSiteGuide

EVsToBringAbout.indd 10

for free site information, visit us online at www.areadevelopment.com

8/29/22 12:25 PM

intake systems, fuel systems, and exhaust systems — will be obsolete. In their place will be battery packs, cells and materials, DC/DC converters, inverters, traction motors, gearboxes, and onboard charging modules. In effect, an electrochemical reaction from the battery causes propulsion to occur in EVs. The implication for suppliers is dramatic; either make the transition to electric or risk continuing to produce lowering ICE volumes until elimination.

The lithium-ion battery supply chain is a startling example of the risk to today’s suppliers. While the battery is the critical element in electrification, the existing supplier base in the U.S. is nearly nonexistent. Almost all of the battery cells in EVs come from Asia, either China, Japan or Korea. Even with the billions being invested by the OEMs in new lithium-ion battery plants in the U.S., almost all of the materials and components to be assembled in these battery cells will come from Asia as well. This crisis is behind the major push to build more domestic production of battery materials, cells, and packs in the U.S. It can also be viewed as an opportunity for suppliers looking to diversify from ICE components to components in the electric drivetrain.

At the same time, the existing auto supply chain continues to reel from the effects of semiconductor shortages, raw material price escalation, scheduling fluctuations by the OEMs, and transportation headaches. Much of these disruptions have been caused by the over-reliance on an Asian supply base, which has jeopardized U.S. capabilities to supply key technologies. In order to survive and thrive in the new EV world, traditional thinking will not suffice. Suppliers need to take some dramatic actions toward transforming their organizations to be competitive in EVs, including: ≥≥≥≥ E valuate and restructure your product portfolio.

Understanding how EV technologies could replace your current products will be critical to meeting your customers future requirements. While difficult, meeting with your customers to better learn about their product plans and how you can fit in the future will be an important step.

Then adapt the core competencies of your organization to align with the new product technologies. Both suppliers and OEMS will need more product alternatives and technology support from outside their organizations. ≥≥≥≥ Be willing to take more risk in your capital Investment decisions. Unless your products and manufacturing capabilities can be easily transitioned to electric products, longer term approaches to analyzing investment returns, while not popular, will be needed to make such a significant transformation. New equipment for more efficiency and precision will be required in future vehicle architectures. Factors driving product demand and volumes may need to be evaluated over 5, 10, and 20 year time frames, while not overemphasizing fast returns on investment

≥≥≥≥ Invest more in your people, along with technology.

Offshoring engineering and manufacturing to lowcost countries has contributed to the current supply crisis. Even in the midst of the current labor shortage, developing the strategy for upskilling the work force through more education and training will be crucial.

Engineering will require more technology skills and virtual competencies in areas such as electronics, software, simulation, and artificial intelligence.

Manufacturing workers will need to adapt many of these same competencies, as the adoption of new Industry 4.0 technologies begins to blend the white- and blue-collar work forces. Skilled, capable technical expertise may cost more, but will be a critical asset for tomorrow’s manufacturer. ≥≥≥≥ Build stronger relationships with customers, suppliers, and partners. OEMs and tier suppliers will need lots of help beyond their existing pools of expertise, whether for new product development, engineering, or production. Formal alliances, through joint-venture partnerships, can provide new capabilities and skills for transitioning. However, potential acquisitions may need to be considered to rapidly build your organization’s capabilities to address future technology challenges.

A Changing Ecosystem In addition, the entire ecosystem for transportation is changing with the growth of EVs. Charging station infrastructure will need to increase substantially, to well over a million charging points in order to accommodate needed service levels for EVs on the road. Power generation to support the increased electrical requirements will transition from fossil based to renewable sources, especially solar. Energy storage systems (ESS) utilizing millions of lithium-ion batteries in modular units are just starting to be implemented to provide added energy capacity to the grid and localized applications, such as buildings, homes, and charging stations. Planning to be a “fast follower” and reacting to future changes resulting from technologies will be a high risk. Suppliers who plan strategically for the future will be able to move faster than those who wait to follow.

The challenges are daunting, even for the most successful companies. Automotive suppliers face a massive transition in their revenue streams, product portfolios, cost structures, and customer base. By challenging traditional thinking, strategic suppliers can create their own future in the rapidly growing EV-based automotive industry. However, the EV will not be the only dramatic change brought on by technology in the next few years. Right on the heels of widespread EV adoption will be automated driving assistance systems (ADAS) and autonomous vehicles, introducing another round of challenges and opportunities for the auto supply chain. <>

~ 2022 1 1

EVsToBringAbout.indd 11

8/29/22 12:26 PM

strong

The Magnolia State has been a key player in the automobile manufacturing industry since Nissan established its 3.5 millionsquare-foot assembly plant in Canton in 2003. Since then, Toyota and PACCAR have also established plants in Mississippi.

Additionally, Mississippi is home to three of the nation’s largest tire makers, Continental, Yokohama Tire and Cooper Tire.

SEE WHERE MIGHTY MISSISSIPPI CAN TAKE YOU. Visit MISSISSIPPI.ORG/automotive to learn more.

22-0400 AREA DEV INSERTION FP4C AD.indd 1

8/26/22 1:02 PM

THE DAWN OF THE TRILLION-DOLLAR SPACE ECONOMY The building and servicing of rockets and satellites, security of satellite data, space tourism, and more provide the potential for massive industry expansion.

THE BIRTH OF THE AEROSPACE industry dates back to 1903, when the Wright Brothers achieved the first powered and controlled airplane flight.

Today, America’s aerospace sector is the largest on the planet, supplying products and services to civilian and military customers throughout the world. It directly employs over 500,000 workers, and in 2018 alone added $151 billion of export sales to the U.S. economy, according to the Aerospace Industries Association.1 Generally speaking, aerospace serves five key markets: military aircraft, commercial airliners, general aviation,

Courtesy rawpixel.com/SpaceX

missiles — and space. While innovation and new ideas are continually pushing the entire industry’s growth, these days it’s clearly the young space sector transforming aerospace into an even more dynamic, diverse, and economically powerful industry.

No offense to the Wright boys, but the space economy has its own origin narratives, which, frankly, are much more adrenaline-driven. They include riveting historical stories about early satellite and rocket launches, the moon landing, and everything NASA. Since its early years, even science fiction films and books have influenced the

By Lisa A. Bastian

SpaceX’s launching of the Falcon 9 in 2010 helped the space industry lower its launch costs to a level 30 times below NASA’s space shuttle costs.

~ 2022 1 3

TheDawnOf.indd 13

8/29/22 11:19 AM

development of applications to research, explore, and utilize “space” for humans. We even have a new military branch, the United States Space Force (USSF), with its own need for state-of-the-art space tech and workers.

Amazing Space: a Trillion-Dollar Sector?

Perhaps one of the most extensive yet easy-to-digest analyst reports about the space sector and its future was published in May 2022 by Citi GPS: Global Perspectives & Solutions, a business of Citigroup. Titled “Space: The Dawn of a New Age,”2 the authors predict the space industry will reach a jaw-dropping $1 trillion in annual sales by 2040. Already the global space economy was valued at $424 billion after expanding 70 percent since 2010, according to research from the Space Foundation.

The satellite market, which currently comprises more than 70 percent of the today’s space industry, will continue to lead, but demand is expected to drop in the days ahead. “Traditional applications such as video broadcasting will cede to newer applications such as consumer broadband and spaceas-a-service,” according to Citi. “Satellite imagery and better analysis tools for large amounts of data could be crucial in helping nations and companies address many [sustainability goals], particularly monitoring greenhouse gas emissions, deforestation, and biodiversity.”

Revenue from manufacturing, launch services, and ground equipment will make up the majority of the sales growth in the satellite sector. “However, the fastest growth rate is expected to come from new space applications and industries, with revenue forecast to rise from zero to $101 billion over the period,” notes the report.

More robust growth could come from innovative space applications and industries — like space-based solar power, moon/asteroid mining, space logistics/cargo, space tourism, intercity rocket travel, etc. — that are forecast to bring in about $100 billion in annual sales by 2040. A major reason behind this revenue bonanza is the fact current expensive launch costs are predicted to drop by 95 percent in the next two decades. In turn, this will create greater opportunities for a wide variety of large and small space businesses waiting for lower entry costs into the game.

“The launch industry is seeing a secular shift from being largely cost-plus pricing-based to being value-based in order to open up new markets and maximize profitability,” says the report. Specifically, when SpaceX business launched the Falcon 9 in 2010, that helped the space industry lower its launch costs to a level 30 times below NASA’s space shuttle costs.

“NewSpace” Players Shake Things Up As of 2019, the world’s largest aerospace companies ranked in terms of total revenue were Boeing, Lockheed Martin, and

14

AutoAeroSiteGuide

TheDawnOf.indd 14

Northrop Grumman, Airbus, and United Technologies, which merged with Raytheon in 2020 to become Raytheon Technologies Corporation.

However, these goliaths aren’t the only entities trailblazing new space products and applications. These days fascinating breakthroughs are coming from commercial newcomers collectively called the “NewSpace” firms, says Jim Bell, Ph.D., director of the NewSpace Initiative and professor at Arizona State University’s School of Earth and Space Exploration.

They’re “usually the smaller, nimbler, more entrepreneurial kinds of companies” like SpaceX, Virgin Galactic, Planetary Resources, and Deep Space Industries.

For example, look at the sexy sub-sector of space tourism.

In July 2022, Virgin Galactic (thought to be the world’s first commercial space line) announced the leasing of a manufacturing facility in Phoenix for its next-generation Delta-class spaceships. They are designed to fly weekly in late 2025 and start private astronaut flights in 2026. Then, in August, Virgin announced it soon will build an astronaut campus in New Mexico for the training of astronaut customers.

Competitor Blue Origin, founded by billionaire Jeff Bezos, launched its sixth New Shepard passenger flight in August. It safely took six space tourists to the edge of space, 66 miles above Texas, and back. The company also is developing commercial projects, including a moon lander to carry astronauts to the lunar surface in 2024 via NASA.

Private Financiers Ramp Up Space Investments In 2021, space infrastructure companies were awarded $14.5 billion of private investment. This is a new annual record representing a 50 percent increase from 2020, according to a report released January 2022 by New York-based Space Capital.3 “As we look ahead, we see tremendous opportunities to scale mass adoption of the existing infrastructure as we look for radically new approaches to build and operate spacebased assets,” wrote Chad Anderson, founder and managing partner. This seed-stage venture capital firm not only invests in the space economy — specifically GPS, geospatial intelligence and communications — but also tracks about 1,700 companies that have raised $258 billion in cumulative global equity investments since 2012. In Q2/2022 alone, 92 companies Space Capital tracks received $6.1 billion in investment monies. The company’s quarterly reports divide investment in the industry into three technology categories: infrastructure, distribution, and application. Infrastructure includes what would be commonly considered as space companies, such as firms that build rockets and satellites.

The Space Capital leader thinks the majority of space companies are counter-cyclical and resilient to otherwise unfavorable economic trends. “We do not believe that the space economy is at existential risk,” said Anderson in his firm’s July 2022 Space IQ webinar.4 “In fact, we believe that

for free site information, visit us online at www.areadevelopment.com

8/29/22 11:20 AM

the majority of space companies are countercyclical and resilient to macro market conditions. That’s because space technology is our next-generation digital infrastructure.

They’re the invisible backbone that powers our global economy. Satellite technology…geospatial intelligence and satellite communications already play a critical role in most major industries, and enterprises and governments see these space technologies as critical infrastructure.”

Changes Ahead for the Space Economy Debra Facktor, head of U.S. Space Systems for Airbus U.S. Space & Defense, is one of the highest-ranking female executives in the aerospace sector. She foresees a space economy and workforce that will look a lot different than what exists today.

By 2030, Facktor predicts there will be major advances in human space flight. “In planning your 2030 vacation, you might be able to choose between a quick trip to Florida or taking a quick trip to space,” she says. Also, since thousands more satellites will be orbiting the Earth by then, “a new opportunity in space may be the on-orbit servicing [or repairing] of satellites.”

In fact, overcrowding in space is one of the greatest threats to the continued growth of space activity, she believes. “With all the [increased number of] satellites and the human space flight missions going on, there’s more debris and a greater likelihood of things hitting each other.”

Another future space concern is the protection of information and cybersecurity, she notes. To protect the physical assets and the way satellite data is delivered securely, one solution may be to use the “promising technology of laser communication,” she says. “When data is communicated by laser, it’s less easily intercepted or jammed.”

By 2030, Facktor thinks the space ecosystem will still be a mix of government and military industry players, but they’ll play different roles. “Government will take risks where industry is not able to, and continue to provide a reliable infrastructure, common regulatory regime, and a predictable contractual and legal business environment. All that is important for commercial [aerospace] companies to succeed.” However, commercial companies are expected to continue to innovate by “coming up with new applications for existing technologies — including [those] we don’t even know we need,” she adds.

Regarding tomorrow’s space workforce, Facktor loves that young people are excited about space, and many children want to become astronauts. “One of the most important things we can do is to continue to invest in talent and encourage young people…to go into fields like aerospace,” she says. “I really want to see space companies and agencies have equal representation of women and minorities.” <> 1

https://www.defensenews.com/industry/2019/06/10/how-did-the-aerospace-and-defense-industryperform-in-2018/ https://icg.citi.com/icghome/what-we-think/citigps/insights/space_20220509 3 https://www.spacecapital.com/insights 4 https://www.spacecapital.com/media/space-iq-q2-2022 2

POWERING

GROWTH

With resources like low-cost, reliable power, creative incentive packages and a wide-ranging property portfolio, Santee Cooper helps South Carolina shatter the standard for business growth.

In fact, since 1988, Santee Cooper has worked with the state’s electric cooperatives and other economic development entities to generate more than $17.2 billion in capital investment and helped bring more than 85,000 new jobs to our state. It’s how we’re driving Brighter Tomorrows, Today.

POWERING

SOUTH CAROLINA

www.poweringSC.com

~ 2022 1 5

TheDawnOf.indd 15

8/29/22 11:20 AM

LOCATION FACTORS IN THE EV INDUSTRY — “MISSION CRITICAL” OR “NICE TO HAVE”?

Understanding the impact of both quantitative and qualitative factors is critically important to the operational efficiency and long-term success of your EV-related project.

SHIFTING POLICIES and regulations, increased consumer spending, significant investments by leading automotive original equipment manufacturers (OEMs), continued environmental concerns, high gas costs, decreasing battery prices, and charging system technology advancements are among the many components contributing to electric vehicles (EVs) record-setting sales in the second quarter of 2022.1 By 2030, automakers are anticipated to invest over $500 billion, globally, in EVs and associated components, forging ahead with plans to predominantly shift to production of EV platforms by the end of the decade2 — if not sooner — as EV utilization has already seen mass adoption in Europe and Asia and is

reaching a tipping point in the U.S.3 As a result, there is currently a global race by automotive companies and suppliers to identify adequate greenfield development sites and/or transform existing operations to align with EV production needs. In response, governments, economic development organizations, utilities, and others have been aggressively readying sites and communities, as the full EV value chain pursues market share and searches for critical locations that can successfully support new project investment.

“Mission Critical” Factors The successful siting of any new facility is a complex process that coalesces around

By Joseph Gioino and Alan Reeves, Senior Managing Directors, Newmark Global Corporate Services 16

AutoAeroSiteGuide

LocationFactors.indd 16

for free site information, visit us online at www.areadevelopment.com

8/29/22 11:57 AM

combinations of quantitative and qualitative factors, gallons of process water per day. While acreage and often with several tradeoffs. When considering the utility requirements are typically the primary limiting BY 2030, expanded needs of the many EV-related projects factors, other factors such as proximity to workforce, AUTOMAKERS seen globally today, the tension between “nicecommunity receptivity, compatible land uses, minimal ARE ANTICIPATED natural hazard risk, multimodal transportation to-have” and “mission critical” is brought into focus as the quantity of truly investment-ready sites access, and development approval processes must be TO INVEST OVER continues to decrease in an increasingly competitive considered and optimized. $500 BILLION, environment. While there are often standard Given the multiple, demanding requirements of GLOBALLY, IN industry needs, understanding unique operational EV-related projects, it is unlikely that a “perfect” requirements and corporate success factors — and site with all necessary attributes can be identified; EVS AND how they interact with each other — at the outset however, communities that have invested in siteASSOCIATED of any new site selection analysis is a vital step that readiness initiatives typically have an advantage COMPONENTS, requires input from multiple business segments to and are better positioned to facilitate appropriate identify measurable criteria (critical location factors) paths forward for development. Development FORGING AHEAD and relative importance for informed, and efficient, timelines for EV projects are longer than most WITH PLANS TO decisions to be made. general manufacturing projects so senior and PREDOMINANTLY Though every project is unique to a specific local governments that have clear processes and company’s needs with variety among key expedited timetables for development approvals SHIFT TO requirements, common themes considered for a and infrastructure upgrades will be preferred.

PRODUCTION successful site selection analysis include logistics, Assuming all site and infrastructure factors are OF EV real estate, utilities, workforce, costs, and operating met, any potential EV investment location must also conditions. Logistics are typically the tip of the be able to support the deployment of thousands of PLATFORMS iceberg for large, capital-intensive projects within construction workers and the hiring of thousands

BY THE END OF the EV sector, with the general understanding of new permanent employees with aligned skillsets THE DECADE — that manufactured goods have both inbound and ranging from advanced electronics technicians to outbound requirements that must be met and quality and chemical engineers. Tight labor markets IF NOT SOONER. the recognition that supply chain service levels, — exacerbated by pandemic-related factors — will reliability, and costs can significantly alter the impact the search region with complex and shifting viability of a manufacturer’s product. Proximity workforce dynamics. Commuting tolerance within a to suppliers and customers, type of material and site’s “true labor shed” is a salient discussion point mode of transportation (e.g., truck, rail, intermodal, when considering urban, suburban, exurban, and etc.) frequency, performance, and cost must all be rural submarket optimization factors. considered in a dynamic and fast-changing supply An area’s ability to satisfy both the initial hiring chain environment that has seen uncommon shipping demands and provide the necessary talent pipeline for disruptions and cost variability over the last several years. While future needs is critical as a project’s intended scale and planned a detailed transportation analysis is required during the course of functions can significantly alter the equation of a location a major project, upfront probability models and center of gravity decision. Like infrastructure needs, markets likely will not possess analyses help to identify preferred geographic regions that can a workforce with the “perfect” initial skillset. Rather, while there satisfy primary transportation needs. must be sufficient initial capacity, the more critical component is a location’s ability to satisfy long-term needs through appropriate training resources and upskilling programs.

Projects Going Mega Once an appropriate geographic region has been identified, the focus begins to shift to real estate and core utility (e.g., electricity, natural gas, water, sewer) requirements. Project needs vary, but generally, even routine EV projects are trending into “mega” project territory and demanding sites in excess of 500 acres that have the ability to access massive utility requirements such as electric capacity exceeding 100 megawatts, 100 percent renewable power generation, and more than two million

Attractive Cost Structures Though operational and workforce requirements must be met, cost is still a significant driver with considerable bearing in decision-making, as small deviations can create billion-dollar differentials in terms of the total life of an investment. Many jurisdictions have structural cost advantages in place such as lower wages, taxes, utility rates and personal property tax

~ 2022 1 7

LocationFactors.indd 17

8/29/22 11:58 AM

exemptions or reductions that are beneficial to capital- and utility-intensive projects. Other states and provinces, even those already seeing success in attracting large EV projects, continue to modify legislation to make their cost structures more attractive.

Take, for example, Arizona, where in March 2022 the state passed HB2822, which sets the full cash value of business and agricultural personal property in certain property tax classes initially classified during or after tax year 2022 to 2.5 percent of the property’s acquisition cost.4 In 2021, the Michigan Public Service Commission provided approval that enables electric utility providers to offer special reduced rates to highvolume users, and Illinois passed the Reimagining Electric Vehicles (REV) Program specifically for the EV industry with financial assistance related to tax credits and tax exemptions.5 And in Ontario and Quebec, federal, provincial, and local governments are collaborating with new economic incentives and utility cost reduction programs to appeal specifically to large industrial projects. Programs such as these continue to place North American locations in more competitive positions to attract future multi-billion dollar EV opportunities.

Santee Cooper: Powering the Auto Industry In South Carolina

Tradeoffs will always be a critical component of any successful location decision. Understanding the quantitative and qualitative factors that impact a site’s and location’s suitability remains a nuanced process that sits somewhere between an art and a science. Ultimately, the final question that must be answered is how geography can create or sustain a competitive advantage by understanding long-term opportunities and risks. Both “hard” factors — site availability, utility adequacy, labor supply and cost — and “soft” factors — political considerations, regulatory environment, continuity and scalability, and community fit — impact operational efficiency and are critically important to the long-term success of a project. The site selection team must employ an appropriate level of due diligence and strategic guidance that creates optionality and identifies an executable solution that produces an optimal combination of cost, quality, and risk.<> 1

https://www.coxautoinc.com/market-insights/ev-sales-hit-new-record-in-q2-2022/ https://www.forbes.com/wheels/news/automaker-ev-plans/ https://www.bloomberg.com/news/articles/2022-07-09/us-electric-car-sales-reach-key-milestone 4 https://www.azleg.gov/legtext/55leg/2R/summary/H.HB2822_032322_SENATEENGROSSED.DOCX. htm https://www.gpec.org/hb2822/ 5 https://www2.illinois.gov/dceo/businesshelp/REV/Pages/default.aspx 2 3

After the announcement of a $7.7 billion investment from the state, the auto industry is primed for big things in South Carolina. But the financial commitment isn’t the only thing driving growth in the area.

South Carolina is centrally located for 67 percent of the country’s population, has a low-cost of living, a robust exporting industry, and the 10th-fastest growing labor force in the nation — making it an ideal place for auto industry development.

As a result, the industry is continuing to grow in South Carolina every day. Volvo’s Camp Hall plant in Ridgeville, S.C., is set to start producing a new crossover SUV IN 2025, reportedly called Embla. The new, all-electric SUV will be the third Volvo vehicle produced at the plant. Camp Hall is also set to start production on the Polestar 3 this fall. The Polestar 3 is the latest all-electric SUV from Volvo’s high-performance sister company, Polestar. It features a dual-motor drivetrain and a large battery with a fully charged range of 372 miles. Volvo said in June that it will invest $118 million in upgrades to the Berkeley County plant to accommodate production of the Polestar EV. Santee Cooper has been helping fuel auto industry growth in South Carolina for years. Its representatives even played a pivotal role in bringing Volvo to South Carolina in May 2015. They saw an opportunity and stepped up to help make it happen. When South Carolina needed a plant site to try and entice Volvo to open its first U.S. automobile manufacturing plant there, Santee Cooper showed up in a big way. Working with the local Department of Commerce and a number of other collectives, Santee Cooper purchased a nearly 7,000-acre tract of land in Berkeley County, helped facilitate a successful wetlands mitigation plan in collaboration with the state’s environmental groups, and offered a number of economic development incentives, including grants and loans that helped solidify the deal.

Santee Cooper continues to support the plant daily by delivering clean, safe water to the site from its Lake Moultrie water treatment plant, which is currently expanding to better serve the Volvo site. Santee Cooper’s low-cost, reliable electricity supports economic development on other areas within Camp Hall and beyond. With that experience, dedication, and expertise, Santee Cooper can continue driving growth in the auto industry in South Carolina for years to come.

Copy supplied by Santee Cooper

18

AutoAeroSiteGuide

LocationFactors.indd 18

for free site information, visit us online at www.areadevelopment.com

8/29/22 11:59 AM

MANUFACTURING’S LAST “KISS” Although those in the aerospace and other industries once believed that the simplest solution to a production problem was undoubtedly the optimal one, it often creates inefficiency in design and production that makes for a competitive disadvantage in today’s global marketplace.

IF YOU’VE BEEN IN the business world for a while, especially in manufacturing or engineering, you’ve probably encountered the concept of “KISS” solutions. As a young employee who just joined the production floor for Lockheed Martin back in the early 1980s, I had no idea what a program manager was asking for, when he told me, “I just want the KISS solution” for a production problem.

The gentleman, a retired attack submarine commander, had a divine organizational chart on his wall showing God above Christ and the Holy Spirit, with Fast-Attack Submarine Commander drawn in as an intervening authority

between the Creator and the rest of the Holy Trinity. He was clearly a Theory-X manager in today’s vernacular, but we all loved him regardless. The Vietnam era guys wore their emotions on their sleeves, but no one ever had your back more than an ex-military program manager. However, any correlation between him and “KISS,” other than as part of the occasional expletive phrase, seemed utterly non-cohesive.

When I didn’t respond immediately and looked a bit confused, he turned his attention up from his production scheduling manifest and smiled. Mr. Troan, he said, “There are two answers to this question, one is yes, the other is

By Jeff Troan, Director, Site Selection and Business Incentives, Ryan

~ 2022 1 9

ManufacturingLast.indd 19

8/29/22 11:22 AM

no; one is right, the other wrong...and you have 30 seconds to make up your mind.” When I still failed to respond, it was he who looked a bit confused, asking, “What’s wrong Mr. Troan?” I replied, “Sir, yes sir, nothing…with due respect, by my watch I still have 25 seconds left to figure this out.”

the Lockheed Constellation, and the U2 and SR-71 Reconnaissance Aircraft among other PROGRAM significant design challenges, and finished his MANAGERS career with the conceptual work on the first OFTEN SEE stealth fighter, the F-117 Nighthawk.

Wikipedia cites Kelly Johnson as the K.I.S.S. AS A original purveyor of the KISS principal, and he JUSTIFICATION also references the term and concept in his TO ELIMINATE autobiography published in 1989, so we can The “Keep It Simple Stupid” Solution reasonably attribute the acronym to Johnson. The Kidding aside, later an old ME explained to me COMPLEXITY IN problem is that Johnson never designed anything that the Captain was looking for the K.I.S.S., or DECISIONthat was in any way simple or utilized simplistic Keep It Simple Stupid solution to the problem, MAKING, design. Take, for example, his design for a highunder the assumption that the simplest solution speed, long-range fighter in World War II, the to his production problem was undoubtedly the USUALLY TO P-38 Lightning versus North American Aviation’s optimal one. The term and concept have their CONCENTRATE P-51 Mustang. origins in the aerospace industry, in particular, SOLELY ON The P-38 uses two engines on twin booms in the person of Kelly Johnson. Johnson was a with a third fuselage for the pilot, a twin rudder vaunted aerospace designer in the 1930s–1960s, FINISHING A tail configuration, and tricycle landing gear. The recognized as the honorary fifth father to DESIGN OR P-51 uses a standard configuration with a tail Lockheed Martin Corporation, behind the ACCELERATING wheel and a “big-assed” high-output Rolls Royce Loughead Brothers (Alan, Malcolm, and Victor Merlin engine to match/exceed the range and — pronounced Lockheed) and Glenn L. Martin.

PRODUCTION speed of the P-38. Granted Johnson started his His story is a familiar one. He was one of nine READINESS. design ahead of North American, but there is children, birthed to a poor Michigan immigrant no way you can justify the P-38 as a KISS design farmer, who worked his way through the versus the P-51.

University of Michigan School of Engineering, The complexity of his aircraft only accelerated only to find himself an unemployed engineering after the P-38, as he dealt with first “air graduate at the onset of the Great Depression. compression” and then “mach sound barrier He longed to design aircraft, and so on a whim, waves” pushing aircraft speeds through mach-1 he and a friend took the train to Los Angeles to up to mach-3+ with the SR-71 Blackbird. Then try and get work in the early aircraft industry that he finished his career exploring the roots of stealth aircraft was growing in Southern California. resulting in the F-117 black jet, which used an origami-like At that time, the Lougheads’ aircraft company had just airframe design to evade radar (pilots nicknamed it “the been bought out of receivership by a group of investors who Wabbly Goblin” because its flight characteristics were so saw promise in some of the 1909 company’s technology and complex). patents. Meanwhile, Glenn Martin was literally living in his production facility (he had an apartment/office in the facility), busy constructing the first of the China Clippers, a project to A Misinterpreted Concept build an airliner that could serve China from San Francisco that Johnson was legendary, and by the 1950s, his KISS Acronym nearly bankrupted Martin Aircraft. was catching on in the military and the aerospace industry After a number of unsuccessful interviews with the owners in general. By 1965, program managers from cereal box of the new Lockheed Aircraft Company, the financiers finally companies to automobile manufacturers were expounding gave in to hiring Kelly as one of the rejuvenated company’s on the value of KISS solutions for engineering and production first design engineers. Kelly made a name for himself quickly. problems, and the popularity of the KISS solution continues to At the ripe old age of 28, he successfully redesigned an the present day. early Lockheed all metal airliner airframe to function as an The problem with implementing KISS concepts in today’s antisubmarine warfare platform and sold 200 of them to the manufacturing environment is two-fold: 1) Johnson’s concept British Ministry of Defense, by accosting their delegation at is often misinterpreted; and 2) the market has changed; it’s the train station and begging them to consider the Lockheed much more competitive. design. Johnson went on to design the P38 Lightning Fighter, When I see a KISS solution being implemented in today’s

20

AutoAeroSiteGuide

ManufacturingLast.indd 20

for free site information, visit us online at www.areadevelopment.com

8/29/22 11:22 AM

manufacturing environment, it is often interpreted by management as a means of simplifying their decision-making by excluding certain secondary and tertiary decision criteria from their solution. For example: “We don’t need to look at tax or workforce pipelining as part of the site selection; we need to get a production line running,” or “Why bother looking at new locations when we have a half-empty plant that’s losing money?”

If we express the optimal solution (OBS(X)) to a business problem as a mathematical equation, the best solution is derived as the sum of the production variables (PV) multiplied by their relative coefficients (C) — OBS(X) = (C1 x PV1) + (C2 x PV2) + (C3 x PV3).

Kelly Johnson’s concept was to eliminate only any C*PV combinations which have a negligible impact on OBS(X). He would never have advocated ignoring production variables that materially impacted product performance, defined by W. Edwards Deming (father of Total Quality Management), as a product that meets the customer’s minimum technical specification at or ahead of schedule at the lowest possible cost.

In popular usage today, we’ve extended the KISS concept to go well beyond negligible items to production variables that have a significant impact on long-term business performance.

Program managers often see KISS as a justification to eliminate complexity in decision-making, usually to concentrate solely on finishing a design or accelerating production readiness. By definition, unless you’re extremely lucky, that creates inefficiency in design and production, and that can mean you never reach an optimal production model.

The Market Has Changed In the United States, in the 1950s and 1960s, you could get away with such a semi-optimized model; today you can’t. The 1950s–1960s was a “happy time” for American manufacturing. The country had just come out of WWII as the only heavily industrialized country not severely damaged by the war. Further, we were operating at full production capacity, with a huge artificial export market created by the Marshal Plan in Europe and Asia. Back then, if you wanted to buy consumer goods anywhere in the world, you were buying them from the United States, at the U.S. firm’s prices and quality levels.

As the 1960s drew to a close, the U.S. production monopoly was coming to an end with the reemergence of the United Kingdom and West Germany, and the emerging powerhouse of Japan. Western Europe then followed West Germany, and South Korea then followed Japan. The Soviet Union collapsed, and Eastern Europe joined the capitalist fray.

NAFTA then encouraged capacity-building in Mexico and

Canada. Finally, the Chinese and Indians, seeing the writing on the wall, also adopted Total Quality Management (TQM) and capitalist economic principles.

As a result, businesses today compete with companies from over 150 countries on six continents worldwide. The capitalist economic system (more often than not a laissez-faire capitalist economic system) that Britain, France, and the United States sold the world is now universally recognized as not only the premier but also the only feasible economic system on which to found a healthy economy. As Deng Xiaoping so aptly put it concerning the People’s Republic of China, “If we are going to progress as a nation, I guess some of the people are going to have to get richer first.”

The laissez-faire capitalism that the United States has espoused now for nearly two-and-a-half centuries is indeed wonderfully effective at growing an entire commonwealth’s affluence, and so far, it’s proven to be the only viable economic system out there, regardless of its paired political system.

However, capitalism’s wonderful effectiveness is driven by its ruthless efficiency. By definition, a laissez-faire capitalist system will tirelessly relocate all production of a given good or service to those providers, and those locations, able to produce the product to the customer’s specification, at or ahead of schedule, at the lowest possible cost.

Improvements in workforce development and pipelining practices across the globe have greatly increased the number of viable locations where any product, even very technical goods and services, can be produced. The United States no longer holds a monopoly on production capacity and workforce demographics, and the country is in many instances an expensive option for continued production.

In the 1950s and 1960s, a U.S. manufacturer could afford to absorb numerous inefficiencies in quality, the production process, and the underlying business/tax climate. Today, the efficiency of global markets ensures that any inefficiency in production will be exploited by competitors, often turning a sizable production investment into a slow bleed to financial extinction. An investment mistake via a KISS solution may create a competitive disadvantage that can never be overcome.

However, there is no need for despair. Modern analytic site selection and Total Quality Management processes evaluate every production variable from process efficiency to workforce demographics and tax climate to avoid the inherent inefficiencies of a KISS, and economic development business incentives programs can be applied to negate production and business climate inadequacies.

Nevertheless, unfortunately, for those of us who design new products or establish new production lines, I’m afraid we’ve seen our last KISS <>

~ 2022 2 1

ManufacturingLast.indd 21

8/29/22 11:23 AM

SPONSORS

ARIZONA

MICHIGAN

5 ARIZONA COMMERCE AUTHORITY The Arizona Commerce Authority (ACA) is the state’s leading economic development organization with a streamlined mission to grow and strengthen Arizona’s economy. The ACA uses a three-pronged approach to advance the overall economy: attract, expand, create — attract out-of-state companies to establish operations in Arizona; work with existing companies to expand their business in Arizona and beyond; and help entrepreneurs create new Arizona businesses in targeted industries.

C2 MICHIGAN ECONOMIC DEVELOPMENT CORPORATION The MEDC markets Michigan as the place to do business, assists businesses in their growth strategies, and fosters the growth of communities across the state. The mission of the MEDC is to achieve economic prosperity for Michiganders by investing in communities, enabling the job growth, and promoting Michigan’s image worldwide.

Sandra Watson, President & CEO Arizona Commerce Authority 100 N. 7th Ave., Suite 400 Phoenix, AZ 85007 602-845-1200 w w w. a z c o m m e r c e . c o m

Susan Proctor, Director, Strategic Initiatives, Growth and Development Michigan Economic Development Corporation 300 N. Washington Sq. Lansing, MI 48913 517-719-0393 888-522-0103 proctors1@michigan.org MichiganBusiness.org

LOUISIANA

SOUTH CAROLINA

C4 LOUISIANA ECONOMIC DEVELOPMENT Louisiana Economic Development is responsible for strengthening the state’s business environment and creating a more vibrant Louisiana economy. In 2021, LED attracted 64 new economic development projects representing over 18,100 new direct and indirect jobs, 9,700 retained jobs, and more than $20.5 billion in new capital investment. LED cultivates jobs and economic opportunity for the people of Louisiana and promotes business opportunity for employers of all sizes.

15 SANTEE COOPER Santee Cooper supports South Carolina’s business community by providing low-cost, safe, reliable and sustainable power, along with sites and incentives, all designed to improve your bottom line. In addition to residential and commercial customers, Santee Cooper powers 27 large industrial customers, Charleston Air Force Base, and municipalities and electric cooperatives across the state.

Louisiana Economic Development 617 North 3rd Street Baton Rouge, LA 70802 225-342-3000 To l l F r e e : 8 0 0 - 4 5 0 - 8 1 1 5 OpportunityLouisiana.com

Bill McCall Economic Development Specialist Santee Cooper One Riverwood Drive Moncks Corner, SC 29461 843-761-8000 ext. 5381 w m c c a l l @ S a n t e e C o o p e r. c o m w w w. P o w e r i n g S C . c o m

EV Revolution Creates Massive Need for New Auto Production Facilities Continued from page 7 east of Atlanta that will manufacture up to 400,000 vehicles each year. Announced just months apart, each facility was described at the time by Georgia officials as the state’s largest-ever economic development project — a fact which underscores the scale and pace at which industry stakeholders are working to fully leverage the transition to electric vehicles.

In North Carolina, Toyota plans to build a nearly $1.3 billion EV facility that will create 1,750 new jobs. In Michigan, General Motors is investing more than $4 billion to convert its Orion factory to an EV plant. As was the case with GM’s Detroit plant conversion, the Orion factory will be completely retrofitted, with new process equipment, automated guided vehicles (AGVs), and a battery pack assembly line replacing existing process lines.

secure strong partners who are proven to bring large-scale operations online under aggressive schedules.

“A new kind of product demands a new kind of facility,” says Gray’s Taylor. “Contractors, suppliers, and vendors play a key role in developing next-gen manufacturing, and the time to act is now.”

With abundant opportunities and ample investments, auto manufacturing is on the cusp of its EV transformation. Which industry players come out on top and which fade away will be measured not in decades, but by the few short years already on the horizon. <> 1

https://www.iea.org/reports/global-ev-outlook-2022/executive-summary https://media.ford.com/content/fordmedia/fna/us/en/news/2021/09/27/ford-tolead-americas-shift-to-electric-vehicles.html 3 https://fortune.com/2022/01/31/ev-race-vw-diess-tesla-ceo-daily/ 4 https://www.canalys.com/newsroom/global-electric-vehicle-market-2021?ctid= 2627-70a8050e26f41f72baaf6b38e200993a 2

The Time Is Now As companies across the auto industry rush to assemble the resources to boost EV production, it is critical that they

22

AutoAeroSiteGuide

ManufacturingLast.indd 22

for free site information, visit us online at www.areadevelopment.com

8/29/22 3:13 PM

WELCO M E TO G E ORG I A’ S T HR I V I N G EV N ET WO RK

Georgia is proud to welcome OEMs Hyundai Motor Group and Rivian, EV battery manufacturer SK On, and many more EV-related projects that selected Georgia in recent years. With a robust infrastructure and proximity to manufacturers, Georgia will continue to lead the EV revolution with a rapidly growing supplier network. Now more than ever, business wants what Georgia has.

Georgia.org/EV