We all know what manufacturing, often referred to as “the backbone of our economy” means.
But what about the term “advanced manufacturing” which has become such a common phrase in corporate site selection and the field of business attraction. The definition that I like to use explains that advanced manufacturing incorporates a heightened level of technologies like automation, artificial intelligence, the Internet of Things (IoT) and other additive manufacturing applications such as 3D printing, nanotechnology and augmented reality to the production process.
These advanced technologies are designed to ensure greater precision, more control, real-time monitoring and data-driven decision-making to the manufacturing task at hand. The Boyd Co.’s early work for aerospace clients Pratt & Whitney and Paris-based Safran Landing Gear are great examples of advanced manufacturing employing state-of-the-art, precision metalworking, machining and fabrication technologies.
Today, advanced technologies are being applied in a wide range of traditional manufacturing sectors well beyond aerospace, including:
- Automotive Industry
- Energy Industry
- Pharmaceutical Industry
- Electronics Industry
- Fabricated Metal Products
- Medical Devices & Supplies Industry
- Food & Beverage Manufacturing
- Consumer Appliances and other Durable Goods
- Robotic Industry
- Homebuilding (3D Printed)
- Others
Growing Federal Involvement in Advanced Manufacturing Investments
Our firm’s interactions during our corporate site selection projects have moved up the governmental ladder in recent years going from local municipalities and counties, to state governments, to the Halls of Congress and most recently all the way up to the White House. Much of this recent movement up the chain of command has to do with the proliferation of new federal economic development initiatives and financial incentives encouraging the reshoring of advanced manufacturing plants from China and elsewhere back to the U.S.
The Chips and Science Act and the Build Back Better Act under the current administration, e.g., both include generous financial incentives for new facilities in advanced manufacturing sectors like semiconductors, electric vehicle batteries and electric vehicle charging stations. A number of advanced manufacturing companies in the semiconductor space have already received grants and loans from the federal government to help kick start new chip production facilities. Some are listed below.
Also, the Bipartisan Infrastructure Law has earmarked $7.5 billion for EV charging investments and the building of a national electric vehicle charging network. In addition, the Biden administration established the NEVI program which provides $5 billion in funding over five years to help states build a coast-to-coast network of qualifying fast chargers.
In fact, two of our firm’s advanced manufacturing clients had their projects announced in the White House. The project of Culver City, California-based Moldex-Metric which manufactures respiratory masks was made public in the White House by President Donald Trump during the pandemic and Australia-based Tritium which produces fast-charging equipment for the EV industry (and was recently acquired by Indian EV charging company Exicom) was announced in the White House by President Joe Biden. Both projects received significant federal grant monies to help write down the cost of these advanced manufacturing investments both of which went to Middle Tennessee.
Historically, politicians on both sides of the aisle would run on the platform of new jobs and spurring their county, city or state economy. Today, given the growing role that federal incentives and federal designations of special U.S. regions for new high-tech and energy-related projects, more and more of our dealings with government officials are taking place in the Halls of Power in Washington, DC. We are also finding that an early point of contact made by Boyd Co. clients is often with a congressional office in Washington in order to get a head start on federal incentives and determining what leverage and support the congressperson’s or senator’s office might provide.
Greater federal involvement in corporate location decisions is also seen by the growing reach and popularity of the SelectUSA Investment Summit sponsored by the U.S. Department of Commerce and held each year in Washington, DC. The 2024 event was the largest Investment Summit to date, with record levels of participation from over 5,000 attendees from 96 international markets and 56 states and territories, all gathering for networking and informative programming on key topics driving corporate site selection decisions here in the U.S.
Geographic Shifts
The California Exodus
While certainly not a new phenomenon, the relocation of advanced manufacturers and wealth out of California is at a pace we have not seen in decades. Compounding California’s high taxes and difficult regulatory climate are new qualitative lifestyle challenges centered around housing affordability, soaring insurance costs, crime and homelessness. Quantifying California’s loss of companies, jobs and wealth has almost become an industry in and of itself.
Needless to say, the economic loss for California is enormous and growing. Assisting companies leaving California and finding optimum sites outside the state has been a major profit center of our firm for decades. Each year, another shoe seems to drop for California, whether it be wildfires, floods, earthquakes, new killer taxes and regulations, crime, homelessness, etc. As they say, economics is the dismal science.
A 2024 Boyd Corporate Site Selection Leading Indicator Poll™ addressed the California exodus and highlights of that poll are shown below.
One close-in region has become a popular landing spot for exiting California advanced manufacturers, especially those leaving the Bay Area of northern California. The Reno, Nevada, area, historically known for its tourism and gaming industry, is now a growing hub of advanced manufacturing operations, including those of Telsa’s Gigafactory, Panasonic, Redwood Materials’ battery plant, International Game Technology, Drone America, Iris Automation ‒ a drone avionics manufacturer ‒ and others.
In the Minden area, south of Reno, advanced manufacturers include American AVK ‒ the world’s leading manufacturer of hydrants and valves; BK Vibro ‒ a top manufacturer of machine protection and vibration sensor products; North Sails ‒ a major producer of high-performance racing sails and superyacht sails; Inneos ‒ a leading advanced manufacturer of fiber optic components for aerospace, medical, automotive and industrial applications; PME Babbitt Bearings – a leading manufacturer serving the power generation industry; and Starbucks which operates a one-million-square-foot advanced manufacturing coffee processing plant.
Shovel-ready industrial sites, new expressway improvements and proximity to Lake Tahoe―where a number of California industrialists own second homes―distinguish the Minden/Douglas County area as an up-and-coming Reno submarket for advanced manufacturing operations. Longtime Boyd client UPS recently completed a new regional distribution center on a site near the Minden-Tahoe Airport.
Northern Nevada’s Thacker Pass Lithium Mine, the largest known lithium deposit in the U.S., represents a key raw material for advanced manufacturers in the EV battery industry. In 2024, the U.S. Department of Energy awarded a loan of $2.26 billion to Lithium Americas Corp.’s subsidiary, Lithium Nevada Corp., to help finance the construction of an advanced manufacturing plant that will produce about 40,000 metric tons of battery-grade lithium carbonate each year, a key input for lithium-ion battery manufacturing. The project is supported in part by an equity investment into Lithium Americas by General Motors.
In late 2023, the Nevada Tech Hub was selected as one of 31 Designated Tech Hubs in the U.S., a flagship initiative of the U.S. Economic Development Administration aimed at advancing U.S. leadership in advanced manufacturing and critical technologies. The Nevada Tech Hub, led by the University of Nevada, Reno, focuses on lithium batteries and electric vehicle materials. UNR President is former Nevada Governor Brian Sandoval, who in 2014 helped to attract Tesla’s Gigafactory to the Tahoe Reno Industrial Park―the largest advanced manufacturing industrial park in North America.
Nearshoring of Advanced Manufacturing in Mexico
Mexico has become the top destination for nearshoring, as companies from around the globe move their operations closer to the U.S. to minimize extended supply chain risks. For the first time in more than 20 years, Mexico has past China as the leading importer of goods into the U.S. Nuevo León, bordering Central Texas, has become the leading destination in Mexico for nearshoring. The state has attracted some $50 billion during the past year in new advanced manufacturing investment, most near Monterrey.
Monterrey is not only the capital of the state of Nuevo León, but also considered the national capital of advanced manufacturing and the most “Americanized” city and with the highest per capita income in Mexico. Global manufacturers Whirlpool, GE, Johnson & Johnson, Mercedes-Benz, Bosch, John Deere, KIA and many others have manufacturing operations in the Monterrey area.
The SH 130 Corridor in Central Texas – linking the high-growth Austin and San Antonio markets and with superior highway and rail access to Monterrey – houses one of the hottest real estate markets in the U.S. for advanced manufacturing. Texas State Highway 130 was built as a high-speed alternative to I-35―dubbed the “NAFTA Highway.” It is a key link to Mexico along with being one of the most congested interstates in the U.S. and notorious within the logistics community for heavy traffic, frequent accidents and costly delays.
Central Texas counties served by SH 130 are attracting significant new manufacturing investment due to available and affordable land as well as by growing relationships with Mexican nearshoring companies and demand generated by massive new investments by Tesla’s Gigafactory and other new plant start-ups in the region like Samsung’s $17 billion semiconductor plant in Taylor. Samsung’s new chip plant will produce advanced logic chips for mobile, 5G, high-performance computing and artificial intelligence applications. Both UT Austin and UT San Antonio, at either end of the SH 130 Corridor, have nationally-ranked quantum computing and AI programs coveted by advanced manufacturing firms.
Other advanced manufacturing plants in the SH 130 Corridor area include those of Toyota, Navistar, NXP, Applied Materials, Flex, Durcon, Boeing, Airtronic, Caterpillar, Ziegenfelder Co., Infineon Technologies, Pure Castings, CMC Steel, Vitesco Technologies, Plastic Ominium, Metal Finishing Solutions, Cangshan Cutlery and others.
Advanced Manufacturing Costs Under the Microscope
Historic levels of inflation, rising corporate tax burdens and domestic and geo-political tensions are all causing a greater focus on comparative operating cost structures in the advanced manufacturing sector. Many site-seeking companies in the industry are concluding that improving the bottom line on the cost side of the ledger will be far easier than on the revenue side in 2024.
Advanced Manufacturing Operating Cost Ranking
Shown below is a ranking of 20 advanced manufacturing locations recently surveyed by Boyd’s BizCosts® unit. Annual costs include labor, taxes, real estate, construction and utilities and are scaled to a 150,000-square-foot production plant employing 500 hourly workers. Annual operating costs were projected solely for comparative purposes, with only major geographically variable factors being considered.
Cost differentials between an acceptable advanced manufacturing site and an optimum location can be substantial even within a given U.S. region. Itemized annual operating costs are detailed in the following table for several high and low-cost advanced manufacturing cities included in Boyd’s BizCosts® analysis.
Trends in the Corporate Site Selection Field
While site selection consulting firms continue to play a leading role in many corporate relocations and expansions ‒ a greater number of site selection projects are carried out in-house because of the explosion of online data, previous site selection experience within the company and the heightened sophistication of state and local economic development organizations and their data-rich websites.
As background, The Boyd Co. was founded in 1975, making us one of the oldest, if not the oldest consulting firm specializing exclusively in corporate mobility. When our firm started, the site selection field was pretty much an under-the-radar screen, cottage industry with only a handful of national players. Today, there are hundreds of consulting firms tied to the corporate site selection field. There is even a trade group for the industry – termed a Guild and founded by my old friend and colleague the late Bob Ady ‒ that serves our industry well by providing networking services, stages seminars, arranges speaking engagements and provides public relations support for members.
The explosion in the number of consulting firms linked to corporate site selection can largely be explained by how the field emerged from the shadows and into the 24-hour news cycle of the national media. This emergence was brought about by some very public, high profile corporate relocations like General Motors’ Saturn project in the 80’s where governors went on the Phil Donahue TV Show to pitch their states and more recently very public relocation projects of GE, Amazon H2, Tesla and X (formerly Twitter). Further catapulting corporate location decisions into the limelight have been high profile CEOs like Elon Musk, Jeff Bezos, Kevin O’Leary, Mark Cuban, Ken Griffin, Jamie Dimon and others weighing in to the media on where and why people are moving and jobs are being created. Also, CNBC’s popular Top States for Business TV programming hosted by Scott Cohn brings the industry of business location into millions of living rooms around the country each year.
