Mark Robison

mrobison@rgj.com

Tesla, Tesla, Tesla. Is that all anybody in Reno wants to talk about?

Well, there's a reason: The gigafactory has the potential to touch everyone's lives in Northern Nevada. It might even raise your pay.

Jeff Lynch of ITS Logistics said the Tesla plant with its wage requirements around $25 an hour will put employers on notice that if they don't want to lose employees, they better pay attention.

"I already know of some wage studies happening in the area for current companies that are here and they give justification for (staff) to go back to their corporate offices to say, 'Hey, we're gonna have to make some bumps,'" he said. "All that's positive. It brings wages up throughout the region."

This is just one of the indirect effects that will ripple through Northern Nevada because Tesla has decided to locate the largest battery factory in the world just east of town in the Tahoe Reno Industrial Center.

What all of the changes will look like is too soon to tell, but some area people and businesses already are capturing glimpses.

Mike Kazmierski, president and CEO of the Economic Development Authority of Western Nevada, said, "We have already received numerous calls from companies that heard Tesla is coming here and want to visit and a few that have already decided to relocate here."

Other positive signs involve being expected are higher home values, more investment capital, an improved Reno image nationwide and more work for companies already here.

Truckin'

ITS Logistics is just one local company that expects to benefit because of Tesla.

"We are the largest Nevada-based transportation and logistics," Lynch said. "We have 250 drivers; about 200 of those are in the Northern Nevada market. We have half-a-million square feet of warehouse distribution space ourselves where we do third-party warehousing services for other clients.

"That's an area where we absolutely will be trying to get in with Tesla to talk to their vendors, their suppliers, maybe somebody who doesn't have enough volume to justify opening their own 50,000 to 100,000 square foot building — maybe we could do that for them."

Lynch said the nice thing is that the Tesla factory won't pop up immediately but will start in a year or two so the region can prepare.

"In time, the infrastructure will be here. And people will come. It's going to be a great employer for the region," he said.

"I think it'll have a very positive effect on, hopefully our business, but also the local economy."

Paul Enos of the Nevada Trucking Association said Lynch's feeling is typical throughout the trucking industry.

"I've already had some of my member companies talking with Tesla about how they're going to service them," he said. "Members from southern Nevada are already doing site work on the gigafactory, delivering equipment up for construction of the factory itself."

He expects an expansion of Nevada's trucking industry because manufacturing facilities always need trucks to move stuff around.

"We're not finding enough qualified men and women to move the freight we currently have so this is going to be a little bit of a challenge," Enos said. "But it's much better to have this challenge than to have no freight to move. It's a welcome change from the last few years."

On the other hand, he thinks Tesla could contribute to solving the driver shortage by bringing drivers who don't want to do long-haul trucking.

"One of the benefits I see for having a company like Tesla locate here is you can attract guys who want a stable home life and want to be home at night and coach football and watch soccer games," he said. "It gives those drivers the opportunity to work locally and spend more time with families. A company like Tesla can make lives of drivers a lot better."

Enos wants to learn what portion of Tesla's products and materials will be moved by truck and what portion by rail.

The Tahoe Reno Industrial Center is located on the rail line and Interstate 80. Because of Tesla, the road into the industrial park — USA Parkway — will finally be extended to U.S. Highway 50.

Enos said this will help trucks needing to get to manufacturing facilities in Carson City but that sometimes can't because Washoe Valley is closed to high-profile vehicles because of the wind.

"Having Tesla come in, it's absolutely a game changer," he said.

Enos dismissed critics griping about the deal because they overlook the levels of investments required of Tesla, the high wages, performance audits and clawback provisions that allow the state to get back money from tax abatements if goals aren't being reached.

"I look at the Tesla deal and it's so much better that anything the state of Nevada has considered in the past," he said.

Build it

The first indirect business expected to benefit from Tesla is Northern Nevada's construction industry, which was decimated in the Great Recession.

Cary Richardson — vice president of Miles Construction, which happens to be building a facility for a different battery company at Tahoe Reno Industrial Center — said he's already seeing the benefits starting.

"The combination of Tesla and Apple relocating to this area is generating the feel that the end of the recession is here and now is the time to purchase that property and pull the trigger on a new building expansion or building space," he said.

"We just met with company that had plans that were mothballed for six years. We're seeing people who were looking for something to hang their hat on that the recession was over and they could start spending money and making commitments again.

"Everyone has been on the cusp of wanting to be out of the recession but have still had doubts. Tesla has created positive momentum in this area. People are upbeat for the first time in years."

For local contractors like Miles Construction, Richardson predicts lots of opportunities outside the primary Tesla project.

"With the economy slowly turning, there's not a lot of square footage on the commercial-industrial market that's viable," he said. "So as new businesses come here, the only way to get the business space they need is through new construction."

There are potential for negative consequences because construction firms from outside the region will be coming here to stake a claim and the competition could be too much for some companies barely standing after the recession. Or they could poach local companies' best workers. Or there could be worker shortages.

"For every contractor, there are going to be benefits and negatives," Richardson said. "Instead of just trying to survive the recession, it's a different set of problems — it's a better set of problems."

The main thing Richardson thinks is keeping companies from expanding or locating here is the Education Initiative, also known as the margin tax.

"That is the overwhelming issue in our industry and in the state," he said. "We need to get the margins tax behind us."

In brighter news, Richardson said Tesla should especially help economic development authorities:

"You couldn't script a better scenario to help an individual charged with bringing companies to this area than to have Tesla right on the heels of Apple."

Everybody helped

Indeed, Kazmierski said by email that already "the process is underway" of companies wanting to come here, but he cautioned that these indirect jobs may take many years to develop.

Nonetheless, he's bullish.

"Nearly every industry in the area will grow and add employees as a result of this huge influx of Tesla employees and Tesla capital investment, as well as the significant number of construction jobs created in the first few years at Tesla and in support of the growth in the housing industry," he said.

"These indirect jobs range from more retail and service industry jobs to professional jobs, attorneys and medical, as well as more government jobs like teachers and public safety. In addition to these indirect jobs, there will be many more companies that come to the region, not associated with Tesla, as a direct result of the national attention and credibility we are getting because Tesla chose Northern Nevada."

Kazmierski said critics should top focusing on what may not happen.

"Many of these critics are hung up on ideology and don't really seem to care about the thousands of Nevadans that will get great jobs as a result of this investment," he said.

Jennifer Cooper, communications director for the Governor's Office of Economic Development, agrees with Kazmierski about the positive national attention due to Tesla.

"One of the positive outcomes of this that really isn't as easy to measure is the brand," she said.

"That Tesla chose Nevada, it really strengthens the Nevada brand, especially when (Tesla CEO Elon Musk) is at the podium and he says that Nevada is a get-it-done kind of state. I think that that registers for companies who either haven't spotted Nevada or have us in competition with others. It helps to strengthen what Nevada is looking to do with economic diversification."

More investment

That improved reputation may bring more money to the Reno area to help other companies get started here.

At least that's what Eric Gangloff thinks. He is managing director of Summit Alternative Investments, based in Reno, and is a member of the Entrepreneurs Organization's global board of directors.

"The more proven Northern Nevada is, the more accepted by industry Northern Nevada becomes for locating certain operations, the easier it'll be to raise funds," he said.

Like Enos, he sees only positives from Tesla coming on the heels of Apple coming here.

"The big opportunity for Northern Nevada is the tipping point that it might represent very soon when companies are looking to relocate and they see Apple has decided to locate a data center and they see Tesla," Gangloff said.

"A number of other companies, especially California-based companies, are looking where to locate for lower real estate costs and lower business expenses, and Apple and Tesla will make us the place to look at."

He said that once Tesla gets settled here, it could become beneficial to locate other parts of the manufacturing process here in order to save money.

"If they're successful in bringing skilled workers here, I could see that in the future, other companies like Tesla will come here for the skilled workforce," he added.

Nicola Kerslake is on the same page as Gangloff.

She is founder of Reno-based Newbean Capital, a registered investment adviser.

"One of the things you commonly see with a large technology-based employer is a number of supply chain companies following them," she said. "We've already taken calls from people expecting this."

Tesla has created a halo effect.

"Mostly when I get emails from venture capitalists in the Bay Area about 'Why aren't you down here?' Kerslake said. "But I got three after the Tesla announcement saying, 'Wow, this is big for Reno, now I understand why you're there.

"It's changed the perception in the (venture capital) community — and that's huge for the entrepreneurs in the area. It's huge for investors. Anything that helps encourage the perception that Reno is a place we can invest and build strong companies is really helpful."

Contact info

• Economic Development Authority of Western Nevada:edawn.org

• Governor's Office of Economic Development:diversifynevada.com

• ITS Logistics:its4logistics.com

• Miles Construction:milesconst.com

• Nevada Trucking Association:nevadatrucking.com

• Newbean Capital:newbeancapital.com

• Summit Alternative Investments:saifunds.com