American tech companies are getting pretty sick and tired of the rampant theft of intellectual property at their off shore manufacturing facilities. With 6 month product cycle times, these thefts are debilitating to propriety ground breaking technologies. And off shore wages are rising, and shipping logistics remain an issue
And thus “on-shoring” of production of high value electronics. Apple has already announced that they will start building imacs stateside. Robotics have advanced to the point where manufacturing and/or assembling can occur in “dark box” (aka lights out – the lingo is evolving, but robots dont need to “see”) facilities with minimal human (labor) involvement required. There is a significant investment required for a dark box facility, and they look for basically the same infrastructure that data farms do – stable physical environment, cheap power, good logistics. Tax breaks don’t hurt. Apple is up and on line with their first phase of their data center as is NJVC. The massive Rubicon project at TRIC is under construction.
Apple’s data farm at the Reno Technology Park has a receiving component that is/was scheduled to be build at 5th and Evans downtown Reno. The special use permit was approved, the site work permit valued at $250,000 was issued on10/17/2012 but apparently never picked up, a ceremonial earth mover was placed on the site, and then……..doodly squat. No construction permit has been issued, and the earth mover has been removed (less all easily resalable metals). Something has obviously changed to Apple’s plans.
So now we move into blue sky (semi-informed) speculation mode. Maybe Apple has already outgrown the Evans Street facility or it has become redundant? That would make a lot of sense if Apple is planning to go dark box in Reno. The site simply isn’t large enough to accommodate an adult sized manufacturing facility as well as as service center for the data farm.
It’s all about incentives and tax breaks. Apple already has an agreement with the state, county and city for $70M or so in tax abatement for the RTC/Evans project’ as well a s a lease agreement with NNUD. Reno has the most discretionary latitude to grant tax incentives, but the project site scores highest if it is in a redevelopment district and a STAR bond district, which is why the currently proposed facility is located in the Tessera Sistrict.
So positing that Apple is going to build a dark box manufacturing facility here and want to maximize tax breaks, where would it go in the Redevelopment Districts? 2 potential sites stand out. Boomtown has the parcels assembled under a single ownership. Amenities are minimal, public transportation sucks, moderate seismic hazard, but closer to Cupertino than any other site. Zoning would not be an major issue. 5th and Keystone pops up as an upstart contender. The overall parcel is assembled (except Wendy’s), good transportation, decent amenities near by, zoned casino so most anything would fly. What a fine “gateway” statement that would make! Park Lane Mall and the parcel next to the RGJ might also work, but have challenges, as would Drakes Landing. I don’t think there is the political will at this point to expand the current redevelopment districts
Is any of this really happening? The negotiations on these sort of deals are VERY closed door and close to the vest until the details are worked out (and shoved down our throats). If it isn’t happening , it SHOULD be happening. I am very confident that you won’t recognize the economic base of our region come 2015. Do any of you plugged in readers have insider information?
Graphic borrowed from The Awesome Adventure. Cool site.
Sara Lee said:
Apple will most likely be making Mac Pros stateside as they’re the least complicated to assemble and, along with the Mac Mini, are produced in the smallest number (less than a million a year).
Will they be building these out using a “Dark Box” facility here in the States? Or will they still be going manual, giving American workers an easier product to assemble in the way of the Mac Pro?
The thing is, the products they build which would benefit most from a Dark Box facility – the iPhone, iPad, and a potential TV offering – all will be built in Asia for the foreseeable future. That being so, they would logically be experimenting with Dark Box there and instead focusing on standard manufacturing of less “sexy” products like the Mac Pro and Mac Mini here in the States.
Radio Shack said:
Won’t recognize the economic base of our region come 2015?
Reminiscient of the Downtown Makeover Dude in 2007 telling us all how the highrise condo mania was going to absolutley revitalize and remake downtown Reno come 2010. He even had all those pretty artists renderings to show us it was true.
Sully said:
LOL! Ain’t that the truth?
Steve Watts said:
and who can forget the “done deal” Ruth Chris steakhouse at Montage, and the glorious drawings of the soon-to-be super-resort-worlds-largest-waterpark at GSR?
Steve Jobs said:
Remaking our entire economic base of this city by 2015 seems more than just wishful thinking. If these “dark factories” are supposed to do it, good luck – they’re “dark’ because there are no people (employees) in them.
There’s a great serious of articles in the NY Times last week regarding the economic incentives that states heap on companies to get them to locate there. The conclusion – far better for a state to invest in infrastructure and education than to give away millions (sometimes hundreds of millions) of dollars in tax abatements.
As someone in the technology business in Reno, let me assure you the biggest problem I have is the small local pool of technology talent with degrees and the near impossibility of getting the same to move here to work. Take someone from out of town for a spin around town, drive them through downtown, and you might as well just proceed directly to the airport so they can rush home. This town is a very, very hard sell, and I am saying this from direct experience.
REreno said:
I understand that lights out manufacturing itself is not directly a major employer. But supporting these type of facilities can generate a lot of jobs, Apple’s server farm is talking about a 10:1 ratio of support positions to on-site bodies. Lights out will generate the majority of the jobs in logistics support – getting the parts here and finished products out. In the short term, it will be the construction sector that sees the largest emplyment boost, and they (we) could sure use it.
It is the “pile-on” effect that I think will have the most impact. If Reno starts gaining a reputation (deservedly or not) as a tech manufacturing hub, more tech manufacturers will invest here. If they can’t find the workforce here they need, they will manufacture that, too. Intel stragety, setting up their own training schools partnering with local educational systems.
Logistically, Reno is logical – environmentally safe, plenty of of electricity with a lot of renewable potential, climate that minimizes energy consumption, data backbones in place, quick drive to the knowledge centers anc corporate headquarters over the hill, good rail and road transportation, direct cargo flights to the Far East starting up for parts supply, Foreign Trade Zone designation, cheap land.
So I’ll stick by my prediction.
Sully said:
Mike, I would love to agree with you however as I mentioned in the other blog several times in the past, this area just doesn’t “get it”. Steve is right about this area being a hard sell. I got the bug to move here in the early 80′s again in the mid 90′s and yet again in early 2000′s. Finally, retired and moved here, being retired I don’t have to worry about employment.
The Reno 2020 group had the right idea, but has gone dark since the beginning of the year (pun intended). I tried to join the group at one time and I guess my suggestions got buried in file 86. I don’t see much changing for awhile anyway as the local politicians are only interested in creating more tax revenue at all costs. Somewhat like building the pyramids overnight – instant results.
It took Silicon Valley several decades to become the leader it is today. This area hasn’t even tried some of the simple ways yet.
Example (in the manufacturing area) would be to get DeVry to open a campus here that offered Electronic Engineering Technology degrees. They have one in Henderson but doesn’t offer that degree. I know several people in Silicon Valley that are now in management positions that came from DeVry (Chicago Addison). This gives the area some instant credibility especially with alumni already in Silicon Valley. Right now DeVry has a campus in Elk Grove, but I feel they could be convinced to move to a more friendly Nevada. This idea shoots over the heads of local planners like a comet because we have UNR. Great! A mining and casino operations college is gonna do this area a lot of good in the hi tech manufacturing arena!
So, while I hope you are right in your 3 year time frame, experience tells me that until Suzies Adult store on Mill and Kietzke changes it’s black and pink colors that will never happen……..
Randall said:
We are not going to recognize the economic base of our region in 24 months? ( I note that 2015 is about 24 months away).
I like this blog. I think it adds something to the conversational mix. But if you think tech manufacturing is going to transfrom our local economic base beyond recognition over the next 24 months, I would encourage you to take a step back from the bong.
Paul said:
Hey Mike, is there something that you know that you aren’t telling us? Steve Jobs – What were the biggest objections from people you brought here? I have my own guesses – trains of taxis laden with brothel ads all over town, the downtown blight, etc.
Richard said:
Paul,
I will offer my experience to your question posited to Steve Jobs. I have worked as a workforce consultant to the tech industry in Reno for about 12 years and certainly echo Steve Jobs sentiments. First, allow me to say that it is even a bit of a misnomer to describe a “tech industry” in Reno. There are a few companies in Reno who work developing technological products, but hardly enough to call an “industry”. But for lack of a better phrase, that is what i will call it.
The main problem with attracting top notch talent is:
1. There is no infrastructure here attractive to the best people. Palo Alto is 5 hours away. Why come to Reno when you can go there? If you are good enough, you will have offers there that more than offset the high cost of housing/living there. It really does not come down to money with the best people. This is the classic chicken and egg scenario. You can’t attract top talent unless there is already top talent.
2. There is no creative energy in Reno. The reason for this is: see No 1 above. Nothing innovative really happens here. The local university is, with all due respect, somewhere between poor and mediocre in engineering and the related sciences. Why work in the shadow of UNR when you can work in the shadow of a Stanford, or Berkeley, or Duke?
3. Everybody knows where the top guns work. It is not Reno. LIke professional basketball, Reno is at the very best the D-League. At worst it is like playing in Serbia. Yes, it is the pros, but everybody knows that if you have to play in Serbia, you are not really that good. Putting Serbia on your resume is pretty much a black mark that will follow you around for the rest of your carreer. Why put the black mark on the resume if you can play in the bigs?
4. It really does not come down to the brothel ads of the urine soaked alleys downtown. Even Plao Alto has east Palo Alto. It comes down to the fact that Reno is just not a very big light in the tech universe.
Now I am talking about the really innovative creative type of engineers and tech guys. I don’t think even Mike suggests that Reno is ever going to become a home for those types. Mike is talking about tech manufacturing, not innovation. That is a whole different game, really. The biggest problem I see for Reno in that regard is simply that there are 200 other cities in America making the same play.Maybe Reno stands out, maybe it doesn’t.
Steve Jobs said:
Richard nailed it, thank you.