The company [SOLiD] moved into the Sunnyvale space just four years ago, excitedly touting the space then as its new U.S. headquarters and a place to grow. In an interview, an executive cites the Bay Area’s expensive real estate as one reason for the move to Texas.
Faraday Future is running on fumes. But it’s still running. The Gardena-based luxury electric car start-up raised $14 million in emergency funding and will lease an old factory near Fresno that will enable it to turn out 10,000 cars a year. The company has dramatically lowered its ambitions. Its goal now is to try to remain solvent enough to start manufacturing and selling the FF 91, a powerful, technology-packed luxurious electric sedan with a base price expected to top $100,000. As recently as last year, the company had plans to turn out 150,000 cars a year from a massive new $5-billion assembly plant near Las Vegas.
Apple today has only one plant of its own—in Cork, Ireland. Its contract manufacturers operate two small U.S. plants, in Austin, Texas and Fremont, Calif. Those facilities have never grown beyond their narrow role making Apple’s Mac Pro computer, a niche product that sells for $3,000 or more.
. . . Apple last opened manufacturing facilities for computers in the 1990s with plants in Fountain, Colo. and Elk Grove, Calif. It shut down its last U.S. manufacturing line in 2004, laying off 235 full-time workers in Elk Grove.
Even as Wall Street bulls tout Tesla’s stock, almost a conspiracy of silence has surrounded the most interesting questions. One of these concerns what happens when 300,000 customers who deposited $1,000 each for the forthcoming Tesla Model 3 learn that the $7,500 federal tax credit will expire before they can get their hands on it. Now we know. Tesla may not be too big to fail as far as the federal government is concerned, but it certainly is too big to fail as far as California politicians are concerned. As enthusiast site GreenCarReports.com says frankly of AB 1184, a bill recently passed by the state Assembly and awaiting Senate action: “CA bill would make up for federal electric-car incentives as they expire.”
China-based businesses have been sinking money into various automotive operations—from glass and tire makers to technology developers and car makers—for several years, reflecting Beijing’s goal of eventually dominating the world’s car business. That effort accelerated during the first half of 2017, with eight overseas deals totaling more than $5.5 billion in Chinese investments, compared with nine investments for all of last year. The list includes the takeover of troubled Japanese air-bag maker Takata Corp. , the purchase of a U.S. flying-car developer and the acquisition of a sizable stake in Silicon Valley’s Tesla Inc. TSLA 1.43% by games and social-media company Tencent Holdings Ltd.
Tesla Inc.’s sales in Hong Kong came to a standstill after authorities slashed a tax break for electric vehicles on April 1, demonstrating how sensitive the company’s performance can be to government incentive programs. Not a single newly purchased Tesla model was registered in Hong Kong in April, according to official data from the city’s Transportation Department analyzed by The Wall Street Journal. In March, shortly after the tax change was announced and ahead of the April 1 deadline, 2,939 Tesla vehicles were registered there—almost twice as many as in the last six months of 2016.
Upscale jeans maker True Religion Apparel Inc. said Wednesday that it filed for bankruptcy reorganization, making it the latest Southern California apparel firm to falter as people embrace online shopping. But True Religion said that in tandem with filing under Chapter 11 of the bankruptcy laws, its owner, TowerBrook Capital Partners, a private equity firm, reached a proposed deal with lenders to slash True Religion’s debt by about three-quarters as it continues operating.
Tesla Inc. shares took a beating on Wednesday after several analysts questioned whether customer demand for its two electric vehicles is waning as the company begins producing a cheaper sedan. The Silicon Valley auto maker’s shares fell nearly 5% in midday trading to $335.74—the lowest point in more than a month—after rising about 69% this year through last week on enthusiasm for the coming Model 3 sedan, which is central to Tesla’s plan to sharply increase total sales. Tesla on Monday reported sales of its Model S cars and Model X sport-utility vehicles were lower than analysts expected because of a supply issue with battery packs, raising new fears the company will have trouble meeting ambitious production targets for the Model 3.
Elon Musk has announced the rollout of the Tesla Model 3, which he claims is the car for the masses. But what he really means is that it is a car paid for by the masses. Tesla prominently features the various incentives and credits available to prospective buyers. Purchasers of the $35,000 Model 3 get a $7,500 tax credit—21 percent. In addition, some states provide tax credits or rebates that can range from $1,000 to $5,000, with Colorado at the high end. Plus, owners of electric vehicles (EVs) often get to use HOV lanes without charge, free parking, and rebates on home chargers.
The strongest reading on U.S. factory activity in nearly three years signaled underlying health in the economy headed into the second half of 2017. The Institute for Supply Management on Monday said its index of U.S. manufacturing activity rose to 57.8 in June, its highest level since August 2014. A number above 50 indicates expansion; economists had expected a more modest rise from May’s 54.9.
The company [Avnet] is closing two of its three Silicon Valley facilities and laying off nearly 100 employees as it moves its manufacturing operations out of state.
Kellogg Co., the multinational food producing company, plans to lay off 230 employees and close its Northern California sales office in Roseville.
Although the share of industrial jobs has shrunken from 10.5% of all nonfarm employment in 2005 to 8.5% today, manufacturing continues to have an outsized influence on regional economies, as is spelled out in the latest paper from the Center for Opportunity Urbanism. This stems in large part from the industrial sector’s productivity gains since 2001 — almost twice as much as the economy-wide average, according to the Bureau of Labor Statistics — and it has a far higher multiplier effect (the boost it provides to local job and wealth creation) than virtually any other sector. Manufacturing generates $1.40 in economic activity for every dollar put in, according to the U.S. Bureau of Economic Analysis, far greater than the multiplier generated by business services, information, retail trade or finance.
The Democratic governor gave his usual rally cry in this coastal Chinese city, imploring the packed ballroom to help reinforce a global commitment to climate change. But a more specific theme also emerged, an undercurrent in his five-night trip that he’s echoed in several meetings with officials: Brown is looking to China for the future of California’s electric vehicles. The state aims to put 4 million to 5 million electric cars on roads by 2030, he said at the event, “and we aren’t going to get there until Chinese business people, Chinese government leaders make it a priority to develop batteries and electric cars. And we will too.”
Every manufacturing investment and job creation decision is made by company executives who are looking down the road at future costs, taxes, and regulations. Many states and countries want to attract manufacturing investments and jobs. If they have longstanding policies that will be in effect for ten or more years, they will beat out the locations with policies that expire in the short term. In fact, the larger and more important the investments, the more risk averse company executives will be; they will assume the expiration in existing law will occur, as promised.
Lawmakers may believe that California will nevertheless attract manufacturing jobs and investments even without the policies under discussion, but the data states otherwise. Since 2001 California has attracted less than 2 percent of US manufacturing new sites or expansions, far lower than the state’s share of manufacturing GDP. More recently the re-shoring surge shows a similar loss to the rest of the country, with under 2 percent of those jobs coming to California since 2013. That means manufacturing jobs and investments are now shifting to other locations under our noses and long-term policies to keep manufacturers here are crucial.