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The Californian city of Fremont seems to be benefiting from an effort to attract intelligent manufacturers. Mayor Bill Harrison told Brent Balinski a little about Warm Springs, Fremont’s innovation hub.
How to encourage an innovation hub
After the federal government’s announcement in February that it would establish a network of innovation precincts, more than a few people started to ask what the point was and, if there was a point, how a cluster of talented people and smart companies could be brought together.
A major part of the Plan For Australian Jobs statement – valued at a billion dollars – was the Industry Innovation Precincts network, aimed at assisting manufacturers by making collaboration with researchers easier.
On the fringe of the world-famous Silicon Valley technology area, the city of Fremont is working hard to turn its Warm Springs district into an innovation hub, and it has big plans to lure advanced manufacturers – particularly in clean technology and biotech – through measures including spending heavily on improving infrastructure and offering tax breaks to businesses looking to set up.
“The Warm Springs District has a centralised location, vast and unoccupied land, accessibility to BART [Bay Area Rapid Transit system] and a world-class workforce,” Mayor Bill Harrison told Manufacturers’ Monthly in an email interview.
“The City of Fremont seized the opportunity to transform the area into an innovation hub, where visionary entrepreneurs and business leaders can work and play.”
Described in an AP article earlier this year as a “nondescript suburb of 217,000 tucked in the high-tech region between San Francisco and Silicon Valley”, Fremont became a city a little more than half a century ago, and its history as a factory city is highlighted by the GM factory in the heart of its Warm Springs district, which used to be home to the General Motors/Toyota joint venture factory, NUMMI (New United Motor Manufacturing).
The Toyota and GM JV wasn’t a success, though the site is now occupied by what some are calling one of the world’s most exciting automotive companies, electric car manufacturer Tesla Motors, which takes up 212 acres in Warm Springs.
Skills and infrastructure
Fremont, as well as being close to some of the most formidable tech entrepreneurs in the world, has plenty of know-how in its own right. Last year Reader’s Digest ranked the city, the Bay Area’s fourth-biggest, number three in a list of “America’s Sharpest, Smartest Cities”.
As well as a skilled population to tap into, a handy location – close to ports and the interstate 680 and 880 highways, with the BART Warm Springs/South Fremont station slated for delivery in 2015 – makes transport of people and what they make in and out of the city easy.
Fremont has spent up significantly to improve its infrastructure in and around Warm Springs. Fremont Patch reported last month that over $US 318 million worth is being spent on three Bay Area projects now underway: extending BART to a new Warm Springs/South Fremont station, a seismic upgrade of the local water pipelines, and on the Mission/Warren Area Improvements Project, for rail bridges over Mission Boulevard and Warren Avenue.
Harrison said that plans for a new downtown area were also in the works. “Our city will not only serve companies and manufacturers, but will also offer the professionals working here a culturally diverse place to live,” he added.
Not too taxing
Besides Tesla, a number of other advanced manufacturers have been drawn to Fremont. The city is particularly keen to appeal to biotechnology and clean tech companies. Of the 110-plus manufacturing companies operating in the city, 30 of these were in clean technology.
“With a strong cluster of both already here, we want to build on this momentum,” said Harrison. “But we know that these two sectors, in particular, face some of the longest lead time to market.”
To help find a way around the lead time issues, Fremont offers a five-year business tax waiver. The tax is often payroll based, the mayor pointed out, making hiring a little easier and assisting to keep costs under control in a company’s early years.
“Perhaps most importantly, this exemption shows companies in targeted growth sectors that we understand their business model and are making an investment in their future success,” said Harrison, in comments which would resonate with Aussie executives who point to the disincentive of payroll taxes.
When asked of some of the city’s success stories, Harrison cites Thermo Fisher Scientific, an international medical device manufacturer with a new facility under construction in the innovation hub, West Coast Quartz, which supplies to semiconductor makers, and Seagate, which moved into the site of Solyndra, a solar products company which filed for bankruptcy in 2011.
“Fremont worked very closely with them to expedite their building permits and they are currently under construction,” said Harrison of Thermo Fisher.
Similarly, the city’s officials claim they acted with eagerness to help West Coast Quartz, which invested in its Fremont facility.
“This included significant manufacturing equipment installation, some of which is nearly one of a kind,” said Harrison.
“The City’s strong expertise in reviewing manufacturing operations meant that getting this company up and running was much smoother here than it would have been in some other communities.”
Seagate, according to Harrison, is another success story for Warm Springs worth claiming. The disk drive company’s purchase of the former Solyndra site was approved in November last year. The Fremont site was chosen for the high-tech R&D facility, according to Seagate, from over 39 possible locations all over California.
For Harrison, his city provided obvious benefits to Seagate.
“Like many local companies, they have benefitted from Fremont’s talented workforce, central location, and suitable real estate options,” he said.
As Manufacturers’ Monthly revealed this morning, a Coalition government would do away with the government’s planned Innovation Precincts network if it won office later this year, and the two sides of Australian politics have significant differences over how manufacturers can be attracted and clustered here.
Following the recent example of Australia losing out to the United States for a new Incitec Pivot plant, and the company citing a superior pro-business culture as part of the reason behind its decision to invest in Louisiana rather than here, perhaps Fremont provides another lesson for the country’s policymakers on how Australia could help its manufacturers.