Nevada holds edge in Faraday race, says economic policy expert

Economic policy expert Robert Lang sees a day in the not-too-distant future when attendees of the International Consumer Electronics show will sign up for a special tour to North Las Vegas to see Faraday Future's new electric car manufacturing plant at Apex.

After all, Lang reasons, the Faraday Future will be more like a smartphone on wheels than any kind of transportation on the road today.

And the thousands of people who travel to Las Vegas every year for CES will want to get a look at the technology they might be parking in their garages in a few years, just as they flocked to Las Vegas to see the first video-cassette recorder, the first compact disc and the first digital video recorder.

"Why not?" asked Lang, the director of Brookings Mountain West at the University of Nevada, Las Vegas. "That's what the show is all about. And it's thousands of people coming to Las Vegas, every year."

Lang firmly believes Nevada holds the edge in the sweepstakes to bring what would be a $1 billion economic engine to the Las Vegas Valley. It will come in the form of a new industry that would probably be a game-changer for whichever location is selected by the company sometime in the next three weeks.

Faraday, the mysterious company led by innovators from other successful tech companies and reportedly financed by a Chinese tech tycoon, has promised to announce its plant location by the end of the year and an Apex site reportedly is high on its list of options.

But representatives of three other states might have something to say about that.

Apex has an edge

The North Las Vegas location has the benefit of inexpensive, developable virgin land, a friendly business environment with favorable tax benefits and incentives, and shipping resources that include easy interstate highway and rail access to Southern California ports. It also has an easily accessible international airport with direct flights to just about anyplace in the world.

But rival candidates Georgia, Louisiana and California say they have their own advantages that could sway Faraday.

The state's economic development leaders can't talk about the prospects of Faraday landing in North Las Vegas because they've signed confidentiality agreements that prohibit them from talking about the company's plans. It's routine for the Las Vegas Global Economic Alliance and the Governor's Office of Economic Development to be mum on projects until their executives are introduced in public meetings when applying for tax incentives — and that is something that's bound to happen soon if Faraday chooses Nevada.

Because of the sheer size of prospective incentives for Faraday, the Nevada Legislature probably would need to convene in a special session as it did for the approval of incentives for the Tesla battery gigafactory approved in Northern Nevada.

But Lang, as an academic, is more than happy to weigh in on Faraday and the state's chances of being selected.

"We are a low-cost labor site, a low-cost land site, a low-cost regulatory site, and we offer incentives. There you go," Lang said. "I think we're well-positioned."

While some observers fear Southern Nevada doesn't have a large enough skilled labor pool to meet Faraday's needs, Lang suggests that's just a temporary problem that would easily be fixed.

"We've never had a problem in Las Vegas inducing labor migration when a large project was underway," he said. "One could argue that we don't have the skilled labor to build resorts, but people show up to the city and execute on that. No project has gone wanting in Las Vegas for a labor pool."

Lang said once migrated labor makes its way to the area, state job-training programs can catch up and provide a steady stream of prospective employees.

"The first and maybe second round will come from neighboring states and all of them will be paying local taxes here," Lang said. "It's not like we face a shortage of workers."

One of Southern Nevada's best assets is its transportation infrastructure, which is still under construction and will have more pieces in place if and when Faraday comes on line.

"Interstate 15 goes right to the heart of Faraday's market, Californians who like their cars and their technology," Lang said. "When (Interstate 11) is done, even the (Interstate) 40 comes into play. There will be one traffic light in Kingman between here and the 40, which is one of the nation's main east-west trunks and goes straight to the Port of L.A."

And eventually, I-11 will be a route to deep-water ports in Mexico.

The competition

While Lang thinks the Apex site provides the best opportunity for Faraday, leaders in Georgia, Louisiana and California believe otherwise.

"Georgia is in the sweet spot in the center of the South's automotive corridor," said Jeffrey Humphreys, director of the Selig Center for Economic Growth at the Terry College of Business at the University of Georgia.

Not only can Georgia match Nevada's transportation logistics with an excellent interstate highway presence, rail lines and the nation's busiest airport by passenger traffic, Hartsfield-Jackson Atlanta International, it also has a port on the Atlantic Ocean at Savannah.

The Atlanta airport is a hub for Delta Air Lines, which has dozens of international flights that fly daily to Europe, South America, Asia and Africa.

Humphreys said he hasn't heard anything specific about Faraday, but Georgia already is home to 35 major automotive industry companies as part of the Southeast Automotive Corridor, many of them suppliers such as tire and parts companies. Between them, they have 250 facilities statewide employing 20,000 people.

A Volkswagen plant in Chattanooga, Tennessee, is right on the Georgia border and benefits the Georgia economy as well.

The state's latest coup: persuading Kia Motors to locate its North American plant in West Point. The announcement was made almost a year ago that Kia was going to Georgia, joining Hyundai, Porsche and Lotus in the state.

"The auto industry has waxed and waned in Georgia over time," Humphreys said. "We once had GM and Ford assembly plants here, but when they left, their facilities were taken over by other companies. As a result, we have a lot of suppliers that work together throughout the state and across the South."

Humphreys said the state's universities provide quality graduates with automotive production skills, but if it's technology Faraday is looking for, the state has tech clusters in suburban Atlanta and skilled labor from the University of Georgia and Georgia Tech University among others.

Georgia also offers 10 different types of tax incentives to companies contemplating a move to the state, including a "Mega Project" credit that can be carried forward for 10 years.

Louisiana has ports

Louisiana's automotive industry isn't as robust as Georgia's, but the state has more ports that enable shipment via the Gulf of Mexico and the Mississippi River.

In addition to the six deepwater ports, Louisiana has six interstate highways, six Class 1 railroads and seven primary airports, including New Orleans' Louis Armstrong International.

The state views itself as ideally located between the Southeast Automotive Corridor and auto manufacturing and assembly plants in Mexico.

The state's Louisiana Economic Development website touts its right-to-work status and its low tax rates.

The state is pitching two sites as ideal auto manufacturing locations, the so-called England Airpark Megasite near Alexandria and the Franklin Farm Megasite near Monroe.

The England Airpark site is near an interchange off Interstate 49 and is within 10 miles of the Port of Alexandria. All utilities have been mapped, and a Union Pacific Railroad spur is planned.

The Franklin Farm site is 1,440 state-owned acres near Interstate 20 on the KCS-Norfolk Southern Railroad and in close proximity to Monroe Regional Airport and the Greater Ouachita Port.

California competition

Lang isn't too worried about the South's tremendous automotive industry assets.

"We're talking about a completely different vehicle here," he said. "The components won't be a part of a traditional supply chain. It's closer to electronics manufacturing and aerospace and an advanced industry of that nature than automotive manufacturing.

"Some of the traditional components to a car will be rendered obsolete by the new features of the Faraday vehicle," Lang said.

North Las Vegas' biggest competitor might be the one that's closest to home — California.

Faraday the startup company is already based in California, operating from Nissan's former U.S. sales office in Gardena.

Everything that Californians rave about — the high-octane job growth, the nearly 1 million high-paying tech jobs already there, the extremely agreeable climate — are all strong lures. Most of Faraday's 400 existing employees already are based in California.

But some of the same criticisms that dog California and that Nevada economic development leaders often use as justification for a company to instead relocate to the Silver State — the high tax rates, the high utility costs, a business-unfriendly atmosphere — are just as likely to come into play.

What the decision will come down to is how the company prioritizes its needs. Company spokesmen have been silent about what Faraday is looking for.

If it wants already-in-place infrastructure, it probably willy take California or Georgia. If being close to familiar turf is imperative, California and Nevada are in play. If starting fresh on never-developed land is important, Nevada and Louisiana look good.

Nevada is strong as a business-friendly environment, and Georgia and Nevada offer good tax incentives.

Jonas Peterson, president and CEO of the Las Vegas Global Economic Alliance, among those bound by confidentiality agreements, said the 2,000 acres of wide-open, privately held land in Apex has to be enticing to any manufacturer.

"It has excellent interstate highway access, the Union Pacific Railroad is right there, and there are transmission lines to electrical power nearby," he said.

Just as the state invested money to extend the USA Parkway to Tesla's plant in Storey County — linking Interstate 80 with U.S. Highway 50 through the industrial park where the plant is being built — the state could help fund utility line extensions to bring water to Apex or sink wells to use groundwater in the area.

Lang believes any concerns about the Apex infrastructure would be worked out by the state in the same way that the USA Parkway matter was resolved.

In the end, the state's incentives should give Nevada the edge, he said.

"The same things that attracted Tesla to Northern Nevada also will attract Faraday to Southern Nevada," he said. "The state's leaders realized we had an opportunity in the north, and we took it. Now, there's a similar opportunity in the south, and we'll take it," Lang said.

"It's a perfect way to get Apex started. And for us, it's better to be in the game than not in the game."

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Find him on Twitter: @RickVelotta