skip to Main Content
Arizona, Texas Attracting EV And Chip Megafactories

Arizona, Texas attracting EV and chip megafactories

Arizona, Texas attracting EV and chip megafactories

Available land, a large educated labor pool and a favorable business climate have helped attract manufacturers of electric vehicles, batteries and semiconductors to Arizona. (Photo: Jim Allen/FreightWaves) While Arizona has had a large presence in the aerospace and defense sectors dating back to the 1980s, the state is becoming a hub for makers of electric vehicles, batteries and semiconductors. Some of the latest wins for Arizona include LG Energy Solution , which recently announced a $5.5 billion battery manufacturing facility near Phoenix, and Taiwan Semiconductor Manufacturing Co. (TSMC), which is investing $40 billion to open the company’s second chip plant in the Grand Canyon State. “We always had a technology-rich workforce, a lot of engineers here because of Raytheon, Honeywell, General Dynamics, Northrop Grumman, Lockheed Martin,” Steve Zylstra, CEO of the Arizona Technology Council , told FreightWaves. “But the preponderance of the growth here in the tech manufacturing sector has been in the last five to 10 years.” The Arizona Technology Council is a statewide trade association for science and technology companies. Zylstra said available land, a large educated labor pool and a favorable business climate have helped attract tech manufacturers. “We have a very light regulatory environment here, the best research and development tax credit in the U.S., also a lot of available land, which a lot of places don’t have,” Zylstra said. “We have five electric vehicle manufacturers here, four battery manufacturers here and two lithium ion battery recycling firms here.” Another plus for Arizona is that it borders Mexico, which has been undergoing a nearshoring boom. “Another benefit that we have is that we’re adjacent to Mexico, and Mexico has a lot of the automotive industry there, the supply chain is close,” Zylstra said. Nearshoring, reshoring helping to revive high-tech manufacturing across North America John Boyd, principal for The Boyd Co. Inc. , said parts of the U.S. and Mexico are benefiting from unprecedented interest in reshoring and nearshoring of manufacturing because of shifting supply chain strategies. The Boyd Co., founded in 1975, is a corporate site selection firm based in Princeton, New Jersey. “Nearshoring is a major focus today for advanced manufacturers, and when we tend to look at advanced manufacturing site selection projects, whether it be for battery production, or semiconductors, we look for corridors,” Boyd told FreightWaves. Boyd said the CANAMEX Corridor, which extends from Mexico through the U.S. into Canada, has helped regions like Central Texas attract major automotive manufacturing facilities from companies such as Tesla and Navistar. “We think about the State Highway 130 corridor [in Texas], which has emerged as a premier place for advanced manufacturing and brought in companies like Navistar, Samsung, Apple and Tesla’s gigafactory in Austin,” Boyd said. “Look at the proximity to Monterrey, Mexico, which has really become a global hub for advanced manufacturing in the country.” Officials said Texas has been attracting EV, battery and semiconductor factories due to its available land and favorable business climate. (Photo: Jim Allen/FreightWaves) Boyd said the supply chain from Monterrey to Central Texas is about a seven-hour drive. “Those markets approximate nearshoring opportunities in the U.S. that translate into real economic development opportunities by way of the supplier activity,” Boyd said. “One of the silver linings, if you will, with the pandemic was it really put a spotlight on the risks and hidden costs associated with supply chain outsourcing to remote parts of the globe.” The 10th annual Kearney Reshoring Index , released April 13, shows that up to 96% of U.S. CEOs are considering reshoring their operations, or have already reshored their operations, compared to 78% in 2022. Patrick Van den Bossche, lead author of the Kearney Reshoring Index, said CEOs cited diversifying their supply chains as one of the main reasons for reshoring or nearshoring manufacturing away from China to another Asian country or North America. “What is driving it is still very much the fact that you can’t just put your eggs in one basket, and you have to either go to another one of those other Asian countries, or come back to the U.S. or Mexico, and maybe in some cases a combination of those,” Van den Bossche told FreightWaves. Electric vehicle and chip manufacturing are industries also influencing companies to reshore operations, according to the Kearney Reshoring Index. “EV batteries, EV cars, that part of the automotive industry is really being pulled back into the states by government policies, incentives, like the Inflation Reduction Act, for instance,” Van den Bossche said. States are competing […]

Click here to view original web page at Arizona, Texas attracting EV and chip megafactories

Daisie Hobson

Daisie Hobson is a Director at the Reshoring Institute and an engineer with many years of experience in manufacturing and project management.

Leave a Reply

Back To Top