Going All In on Tesla
Reno Remaking Economy with Help from Carmaker and College
After months of scouting about the western United States for a location for the world’s largest battery factory, or “gigafactory,” electric car maker Tesla Inc. finally settled on 980 acres of rocky, barren, desert land east of Reno, Nevada.
The selection, in 2014, capped an intense, high-stakes public competition. California, Texas, New Mexico and Arizona, all dangled hundreds of millions of dollars in incentives. In addition to providing the land for free — it was donated by a local landowner — Nevada crafted a $1.3 billion incentive package of tax breaks and grants to be paid out over 20 years.
When the plant opens next year, Tesla and its partner Panasonic will be manufacturing the lithium battery cells that Tesla will bundle into battery packs to power its electric cars. The mammoth plant, the size of seven football fields, will hire 6,500 employees. Republican Gov. Brian Sandoval and state lawmakers predict that over the next two decades it will spur creation of 20,000 jobs and generate $100 billion for the state. In Nevada, one lawmaker said, the Tesla plant is the biggest thing the state has seen “since at least the Hoover Dam.”
The project is also being counted on to help transform an economy that long has been dependent on tourism, gambling and hospitality, making it vulnerable to economic downturns. Reno, a city of about 235,000, is striving to shed an image as a poor man’s Las Vegas, a second-tier destination for gamblers and visitors to Lake Tahoe.
But to make that transformation a reality, thousands of Northern Nevada residents will need workforce training in engineering, advanced manufacturing and science-related fields. Local colleges currently aren’t graduating enough students with the technical skills to fill the gigafactory’s expected 6,500 permanent jobs.
Under an agreement with Tesla, at least half of the jobs must be filled by Nevadans.
The challenge is enormous. Nevada has little history in high-tech employment; according to a 2014 Brookings Institution report, only 15 percent of workers in Nevada now work in the STEM fields, compared to 21 percent nationally.
“The first priority for Nevada has to be: Train, train, train and educate, educate, educate,” said a paper written by Mark Muro, a Brookings Institution senior fellow. “By all reports, the Tesla plant is going to require thousands of ‘middle skill’ assembly workers, operators, and maintenance technicians as well as hundreds of engineers and technical supervisors.
That will be welcome to a state that was hammered during the (economic) crisis. And the great news is that many of the jobs will be accessible to the state’s high school and community college graduates. However, the numbers involved alone will challenge Nevada, as will the state’s relatively thin cadre of STEM-skilled workers.”
Into that void has stepped Truckee Meadows Community College, a relatively small college charged with a huge task: spearheading the development of the skilled, qualified workforce that will be able to make the Tesla/Panasonic plant a success, and at the same time stamp Nevada a business-friendly state where businesses can relocate or expand and have their need for trained employees fulfilled.
So far, the college is off to an uneven start, said J. Kyle Dalpe, the college’s interim dean of technical sciences.
“We are behind the curve,” he said. “We don’t have enough people in the pipeline.”
“They are wanting to fill 2,400 positions by the end of the year,” he said. Students are just beginning to complete the certificate programs designed to fill the Tesla pipeline.
The difficulty facing Truckee Meadows is a familiar one to community college leaders. At the height of the Great Recession, unemployment in Reno peaked at nearly 14 percent. As in other places in the country, classes at Truckee Meadows were filled to capacity with workers looking to burnish their skills or develop new ones.
But as the economy has improved, the unemployment rate has plummeted and is now about 5 percent. As unemployment has declined, enrollment at community colleges has been on a downward path.
“My problem is that most of the people in the workforce are working,” Dalpe said. “So we are trying to reach the unemployed and the under-employed.”
In addition, some 75 percent of Truckee Meadows students are enrolled parttime, making retention a challenge.
Panasonic has made it clear to the college that the workers they need do not necessarily need a college degree. They do need training beyond high school in materials handling and production control, Dalpe said.
So the college and Panasonic have designed an accelerated pathway for students looking to work for Tesla. The 10- credit Panasonic Preferred Pathway can be completed within a year, and it’s designed for workers with no manufacturing experience.
“The P3 program is flexible to fit into people's schedules, and will fast track those taking the program with the exact skills Panasonic is looking for,” Dalpe said. There currently are about 400 students enrolled in the program.
The college also launched a fast-track computer numerical control machine operator class. CNC operators use computers to create customized machine parts. The ability to produce precision-machined components is a skill that will be used in Tesla's planned battery plant.
Truckee Meadows was well-positioned to develop advanced manufacturing training programs. Its William N. Pennington Applied Technology Center was already providing training for high-skill jobs in construction, manufacturing and transportation technologies, including automotive, construction management, renewable energy and machining fabrication. The center has since been renovated and expanded, doubling in size.
Students are now allowed to come to the center between 7 a.m. and 9 p.m. and on Saturdays to work towards the certificate on a flexible schedule.
The college is also working with local high schools to provide a vocational training program. Bur restarting dormant vocational programs is expensive, and additional training beyond high school remains a necessity.
“You can’t take a high school graduate and put him in front of a $100,000 milling machine and say ‘make this work,’” Dalpe said. “You need additional training. Even our automobile technology classes are like that.”
For all the promise of Tesla and its potential to provide thousands of goodpaying jobs, uncertainty remains. Company founder Elon Musk said the company isn’t likely to be profitable until 2020, when he hopes to sell 500,000 cars a year.
In 2016, Tesla generated $7 billion in sales but lost money, yet its stock has a market cap of $48.7 billion. By comparison, Ford had $151.8 billion in sales and $4.6 billion in profits in that time.
But according to the Brookings Institution paper, Nevada has an unparalleled opportunity to remake its economy. Community colleges will have a critical role to play, it said, adding: “The bottom line: Nevada — a state that has suffered mightily since the crisis — has worked hard to secure a huge opportunity to improve its economy for the long haul. Now it should turn to building lasting advantage.”