Electric vehicle, semiconductor industries eager to build out Pinal County supply chain
Companies that have planted large manufacturing footprints in Pinal County are betting on the region to support further growth of their operations and related companies in their supply chains in the electric vehicle and semiconductor industries.
Over the decades, Pinal County has become a manufacturing hub but still has plenty of land and room to grow. To support the big visions of technology giants Intel Corp., Taiwan Semiconductor Manufacturing Co., Lucid Group Inc. and Nikola Corp., suppliers for both industries have been looking to cities south of Phoenix for new facilities that can supply jobs for thousands of workers.
This is in large part thanks to the lower costs of land, faster permitting processes, an expanding workforce and proximity to universities; transportation links like Union Pacific rail, Interstates 10 and Interstate 8; and both Phoenix and Tucson. Pinal County also comprises multiple towns or cities, four Indian nations and approximately half a million residents.
“We looked at about 50 to 60 locations within the state, this was obviously not our first choice, but honestly, when you look at the whole project, and take a very long term view on it, you have to look at infrastructure, utilities, our neighbors, what we can do with the community, the workforce. When we put everything together, this became a very obvious choice for us,” said Ziad Haddad, general manager and business director for semiconductor supplier Solvay Corp. Inc., which is building a $60 million chemical plant in Casa Grande on about 25 acres at the southeast corner of Ash Avenue and Burris Road.
Pinal County an ‘easy place to do business’
Proximity to customers is “key,” Hadded said during a Phoenix Business Journal panel event on Sept. 28 focused on Pinal County. When customers need material immediately, being within 50 miles of most of its key customers “made a lot of sense,” he said. Transporting the company’s product, including raw materials, is also dependent on rail access and large highways.
In addition, training and safety are also vital pieces of Solvay’s operations. Pinal County this year approved a $120,000 grant for the company’s training program, which Hadded said will “go a long way” to invest in the community and workforce.
“We’ve done hundreds of projects in my 20 years with the company, and this is probably one of the easiest places to do business,” Hadded said. “With that, not only are we looking at phase one in Casa Grande for Solvay, but hopefully that will translate to phase two and phase three and more jobs for the community.”
The electric vehicle industry has slowly progressed in Arizona to catch up with states that have dominated in the automotive industry, but in recent years, Pinal County has captured much of that growth.
Both Lucid and Nikola agree that Pinal County’s central location between two major cities, as well as other Southwest states and Mexico, close to rail line is crucial for their logistics and operations as they continue to build out their campuses.
“The automotive industry is inherently a globalized supply chain,” Daniel Witt, head of state and local public policy for Lucid, said during the panel. “As much as we want to develop a local economy that surrounds our … growth in Pinal County, we have to be realistic that this is always going to be a globalized supply chain. We’re going to be importing parts from suppliers from throughout the United States as well as globally.”
Nikola, Lucid like region’s employment base
Lucid is currently in the process of creating an OEM auto manufacturing campus in Casa Grande across 2,000 acres. Eventually, the company expects to employ about 6,000 people and build out a supplier park. Training the current workforce can be challenging, Witt said, because of new technology like robotics, but they are working to introduce programs in high schools to start training earlier.
“We’re building the automotive industry from scratch, basically, in Arizona, specifically the EV industry,” Witt said. “For that, not only does that require a huge multitude of people … but also inherently having world-class educational institutions that you can partner with, both at the community college and university level, to ultimately form the basis for a training structure that can start to create a trained pipeline. That’s the goal.”
Britton Worthen, chief legal officer for Nikola, said Arizona stood out compared to other states, despite others offering a lot of money in incentives, because of its “good employment base.” Nikola also benefits from having its headquarters in Phoenix being located close to its manufacturing facility in Coolidge.
“We continue having conversations about bringing partners in and colocating them here and closely,” Worthen said during the panel. “It is a global supply chain, but we do try to pull in as close as you can, as much as is reasonable, some of that supply so you can lower your costs.”
Having a lithium-ion battery supplier such as LG Energy Solution can also help significantly lower costs, Worthen said. LGES, which last year signed an agreement to supply batteries to Nikola, is reevaluating its decision to build a battery plant nearby in Queen Creek.
“That’s a key piece. That’s the most expensive component on our vehicles. Having that closer is good and important,” he added. “It could go all the way down to things as simple as just frameworks, to just getting stuff here locally.”
Witt said Lucid is also trying to establish colocation and bringing additional businesses, whether on-site or direct proximity, to its operations.
“There’s no reason why there can’t be this holistic closed loop from the raw materials that come out of the ground, that go through the refining process, that get sent to the battery manufacturer that provides that to the OEM that creates the modules and packs and ultimately finished vehicle,” Witt said. “There’s no reason that a huge chunk of that can’t be here.”