Nevada’s lessons for Kansas about Panasonic EV battery plant

DE SOTO, Kan. — Work has started in De Soto, Kansas, on Panasonic’s new plant to make electric batteries to power electric vehicles.

Elected leaders in Kansas worked hard to land the $4 billion investment that could eventually bring an estimated 4,000 jobs to the area inside the plant and another 4,000 jobs related to nearby companies doing business with Panasonic.

De Soto and nearby communities have already started improvements on local infrastructure to facilitate the imminent construction and large volume of traffic that will soon be moving through De Soto and its neighboring communities.

Census data shows De Soto has less than 6,500 people with the median value of an owner-occupied home around $250,000. It’s hard to tell how those statistics might change as Panasonic builds out its plant, but communities that have experienced similar investment say change is unavoidable.

The communities of Reno and Sparks, Nevada might be able to offer the best insight into what’s coming to the Kansas City metro.

Reno’s new game: manufacturing

No hot streak lasts forever.

Growing up in the gambling town of Reno, Nevada, Elijah Lyons knows that well.

“A lot of our economy was in hospitality and casinos before the influx of cheap land for folks to build factories on,” Lyons said as he biked home from work through Reno’s downtown.

When Las Vegas cemented its stronghold as the nation’s top gaming destination a few decades ago, Reno started using its cheap land for a different bet.

“Being a casino town is a hell of a lot worse than being a manufacturing town,” said University of Nevada, Reno’s Center for Regional Studies Project Manager Brian Bonnenfant, who has been studying the cost of living, wages, and economic landscape around Reno for three decades.

When the focus turned to attracting manufacturing, the region pushed its chips to the middle of the table for the Tahoe-Reno Industrial Center, with more than 100,000 acres of land, far enough away from residential communities to prevent concerns over what kind of work would happen there.

“Heavy industrial, large footprint, manufacturing of all sorts, hazardous waste issues,” said Bonnenfant.

It attracted big-name tenants for years as it built up until it caught Tesla’s eye in 2014, leading to the company’s Gigafactory opening in 2016.

Bonnenfant said that put Reno on the map for a long list of other investments.

“All of a sudden, ‘What is this Tahoe-Reno Industrial Center, why does Tesla want to go there,” Bonnenfant said other companies were thinking. “So that’s what really started the dominos.”

Inside the Gigafactory, Panasonic makes the Lithium-Ion batteries in the same facility where Tesla puts those batteries into their cars. About 8,000 people work inside and Tesla says the massive structure is still only about 30% complete.

“For us it was a game changer, and it drastically changed our region,” Bonnenfant said.

The trade-offs

Outside the Industrial Center the Gigafactory fingerprints show up almost everywhere, creating a long list of tradeoffs in the surrounding community.

Wages and workforce

Local wages have grown to roughly $40 per hour, which is great for workers but a growing challenge for their former employers.

“If you’re paying $15 an hour plus tips at a restaurant and bar in Reno/Sparks and guessing you can make $40 an hour out here [at the Gigafactory plant] without dealing with grumpy clients, then that’s how they got a lot of the labor force is cannibalizing the workforce,” Bonnenfant said. “So that’s an issue in itself.”

“What that does is it sucks employees out of everything they’re doing right now,” Economic Development Authority of Western Nevada President and CEO Mike Kazmierski said.

Kazmierski was instrumental in getting Tesla and Panasonic to land in Reno/Sparks and he’s telling anyone who will listen in the Kansas City metro not to underestimate the impact Panasonic’s plant will have in De Soto and the surrounding communities on wage, workforce, and housing.

“You’re on the outskirts of your metro area,” said Kazmierski, referring to De Soto. “No one is going to drive an hour to a retail job. They’re going to suck those retail jobs from the area around it.”

He said a similar issue happened in Reno, raising wages but also making it hard for service industry businesses like bars and restaurants to stay open. Higher wages also drove up the cost of living for other expenses, especially houses.

Housing

“Make decisions now, get out ahead of it, don’t wait for it to be ten years into the project and you’re saying, we have a housing crisis,” said Reno City Councilmember and Vice Mayor Devon Reese. “No, you have a housing crisis today.”

The median price for a home in the Reno/Sparks area has gone up nearly $200,000 in just two years, driving homebuyers farther out of town or out of the region all together.

“It gets you from every angle,” said Reno/Sparks Association of Realtors’ Sara Sharkey.

She and her colleagues have been swamped while watching the median price of a home in the region go up while homebuilders struggle to keep up.

“The demand is still there,” Sharkey said. “We’re constantly still asking them to build, of course affordable is more of what everybody is asking for at this point.”

Just the housing market has created tradeoffs of its own.

“It’s driving out the people that can’t afford to buy a home here anymore,” said long-time Reno resident Amy Bekowich. “The profile of this town has really changed.”

Bekowich admitted she’s been one of the most vocal critics of the way new industry has changed the quiet reno she grew up in.

“Having grown up in a rural town where you drive down and you see ranches everywhere and now there’s freeways and congestion and commuter traffic,” Bekowich said. “I never thought I’d see that happen here.”

And yet, she also admitted that selling her two rental properties worked out pretty well for her.

“Because the market was what it was at that time, we decided: let’s just sell,” Bekowich said. “So these were homes that were purchased at $150,000 and they sold for $500,000 and $525,000.”

Since interest rates have started going up, Sharkey and Bekowich said the home sale market around Reno has slowed down as it has across the nation.

Renting

That housing market has already bled into the rental market, where renters like Elijah Lyons are battling rising rents. He says two recent raises at work were essentially wiped out when his rent went up at the same time.

“I know quite a few folks who have left Reno just because mathematically, eventually, it’s not worth it,” Lyons said.

Local builders are trying to meet the demand as best they can.

In the center of downtown Reno, where some casinos show more wear and tear than others, at least one closed casino and hotel is marked to be turned into apartments. Reese said that could happen to other shuttered properties that don’t yet have future plans.

A 10-minute drive from those properties, Reno Experience District’s (RED) signage attracts drivers’ attention towards its mixed-use development that still isn’t very common around Reno.

The development is still being built, but already has space for retail on the ground floor, luxury apartments above, a movie theater, and plans for a tech center. It’s capped off with a massive interior space metro residents might compare to the Kansas City Power and Light District’s “living room” concept in the heart of downtown.

Other high-density apartment projects are easy to find under construction all over Reno/Sparks as builders add thousands of units to the market while they still struggle to keep up with the demand because of the Gigafactory and all the companies that have opened up facilities nearby.

Still though, Lyons said it’s important to recognize the tradeoffs.

“Construction is through the roof which is great on paper but makes it difficult to live here,” said Lyons.

Upward mobility

For residents and workers who can overcome those challenges has a unique chance to advance in Reno that doesn’t exist elsewhere.

“We can train [workers] up for entry level work in a matter of weeks,” said Truckee Meadows Community College (TMCC) President Dr. Karin Hilgersom.

Since the Gigafactory opened in 2016, thousands of people have been trained at TMCC using a curriculum created by Tesla and Panasonic to teach applicants what the companies need them to know.

A series of related training courses allows workers to start at an entry level and gradually train their way into the management ranks while often being paid to learn new skills in an electric vehicle industry that experts say is only expanding.

“And all the other American automakers, they’re all jumping on this EV train, and I’m so glad that they are, there are going to be lots and lots of jobs in this area,” Hilgersom said.

Kazmierski said fears over a massive influx of workers from out of town hasn’t happened in Reno, partially because of the training at local educational institutions like TMCC allowing local workers to get the skills they need.

“Our numbers on a new company are 90 percent of jobs are filled by people right here,” said Kazmierski. “Ninety percent.”

Anton Novak’s experience with Tesla shows that existing entrepreneurs are able to get in on the benefits too.

His company, Life Tastes Good, operates a variety of food and catering businesses around Reno and was one of the first business partners to provide food inside the Gigafactory.

“The size and scope of the Gigafactory is so large that most people don’t have the time to leave the property to have a snack or take a break,” Novak said. “My job was always to say ‘yes’ to everything they needed and then figure out how to do it.”

He says it was a huge boost to his business, allowing him to more than triple his number of employees while discovering how it could potentially limit his growth in other ways.

“When you approach a bank and you say, ‘We’ve love to scale, we need this capital loan,’ and they look at your finances and they realize 80 percent of your revenue comes from one customer, that’s a very challenging lending environment for banks,” Novak said.

Still, he’s very positive on the larger impact the plant and all the businesses that moved to town to work with it have had on Reno.

“It’s really changed what Reno is known for and how it’s represented to the rest of the world and the community,” Novak said.

The future

Both Gigafactory supporters and critics in Reno invoke the next generation to back up their stance.

Bekowich regrets that younger residents can’t see the open land and large ranches as easily as she could when she was a child and admits that the same housing market that allowed her a large profit on two properties makes it much harder for her buyers.

Kazmierski, Bonnenfant, and Reese focus on the next generation’s job and earning opportunities and what it would mean for them to not have the kind of investment the region has seen in the last decade.

“This is an opportunity to grow the region in a way that’s sustainable and long term and allows you prosperity over time,” said Kazmierski.

“There’s a lot of economic opportunity for people,” said Reese. “They can have a job there that pays well that then allows their kids to go to college, maybe for the first time.”

“Do you want your kids to live here and afford a house or do you want them to leave,” said Bonnenfant. “At the end of the day that’s the question you have to ask.”

Despite that, Elijah Lyons said despite the investment, his inability to feel like he was getting ahead financially was starting to be a strain. From his perspective, the tech advancements were out-pacing the housing upgrades, keeping him stuck in an apartment he was struggling to continue to pay for.

Stepping into homeownership for this life-long resident of Reno seemed a step too far.

“By the time that I would be owning a house and raising a family it’s going to be more of an issue, an issue to the point that honestly, I feel like there’s only a finite amount of time left for me in this town.”

Lessons for De Soto

“It’s like the dog that caught the car, now what? The ‘Now What’ is a big deal,” Kazmierski said. “The work just begins when you win the project because there’s so much that has to be planned for.”

“You need leadership at the top that says, ‘This is going to happen and we’re going to do this,’ and resources from the government on down to accelerate house or homebuilding or road construction or things that really need to be done early on,” Kazmierski said.

He also added that transportation is a bigger piece than most people think about.

“Just realize that the area around that facility is going to be pretty crowded,” Kazmierski said. “It’s going to take some work now to get the turn lanes and the traffic lights and the other things. The number one thing that aggravates the anti-growthers is traffic.”

Reese also noted that the workforce in the Kansas City area will have to change as well.

“The universities, all of them in the greater metropolitan area in Kansas City, are going to have to adapt to a new workforce need and if they don’t adapt, someone will adapt for them,” said Reese.

“You have to hold on to what you can, but you can’t deny that people are going to come and build near you,” Reese said. “If it doesn’t happen right in De Soto, they’ll just move across the county lines and build there because someone will welcome them to do it.”

“Make decisions now, get out ahead of it, don’t wait for it to be ten years into the project and you’re saying, ‘We have a housing crisis,” Reese said.

“No, you have a housing crisis today and say, ‘As a region, how are we going to collectively respond to the things that are coming down the pike.’ If you don’t have those interconnected relationships, if you’re not good at building bridges across territorial lines, there are going to be a lot of problems.”

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