The Tesla Effect: Northern Nevada's construction comeback
Tracy Holland of Sparks built a career that was hewn in steel.
For the last 28 years, the 52-year-old iron worker counted on construction as his signature trade, helping create the bones of projects such as Aces Ballpark and the Mathewson-IGT Knowledge Center at the University of Nevada, Reno.
Holland counts himself as a Northern Nevada resident for an even longer time.
"My family moved here in 1971 when I was 10 years old," Holland said. "I don't want to leave; I mean, why would I?"
Yet leave is exactly what Holland did for three years. From 2010 to 2012, Holland worked at four different projects in the Bay Area to support his family, who remained in Nevada. The driving force behind the decision? A real estate collapse that was quickly followed by a severe recession — the worst in the state's history.
"When you're not making money and can't afford to pay for your household, then you're forced to leave," Holland said. "You don't have a choice."
Holland was not the only one.
At the close of 2006, the greater Reno-Sparks area boasted 25,900 construction workers, according to the Nevada Department of Employment, Training and Rehabilitation. By the end of 2010, that number fell all the way down to 7,300, a drop of nearly 72 percent.
"We had a lot of members who left when the recession hit," said Holland, who serves as an officer with the Iron Workers Local 118 union. "We also had members who left the construction industry and took other jobs."
In 2013, however, Holland finally returned to his roots and reunited with his family for good.
After four years of decline during the recession, Reno-Sparks saw gains in construction employment in three of the last four years. Driving the momentum is an increase in building activity that included high profile projects such as the Apple data center at Reno Technology Park and the biggest construction prize of them all, Tesla Motors' gigafactory at Tahoe-Reno Industrial Center.
The positive trend is backed by the latest jobs numbers, which saw construction employment in Reno-Sparks grow to 10,300 by the end of last year. Unions, meanwhile, are getting increased interest even from out-of-state members eager to land a spot at projects such as the gigafactory or the recently announced Switch supernap and Ghost Systems projects.
Despite the positive direction, however, a sense of trepidation still lingers over the industry that shed the most jobs during the recession. From fears of a repeat of the last big bust to concerns about skilled workers opting to remain in neighboring states, many in the area's construction sector remain guarded about the industry's recovery.
The reaction is understandable, said Brian Bonnenfant, project manager at the Center for Regional Studies, an economic development collaborative at the University of Nevada, Reno.
"The numbers are still very much down (when you compare it 2006)," Bonnenfant said. "It remains to be seen whether construction growth will be sustained."
Concerns about the prospects of a sustained economic recovery are shared by some longtime Reno residents and business owners as well, especially those who lived through the last boom and bust cycle.
"Coming out of the recession, I think Reno has made some good decisions," said Tim Carter, co-owner of Carter Bros. Ace Hardware. "But one problem with Reno is that we tend to snatch defeat from the jaws of victory at the last minute."
THE TESLA FACTOR
For many construction workers, life can be akin to a popular musician on the road minus all the glitz and glamor.
After "pulling green chain" — lumber — at a plywood mill, Mark Terrel switched to construction where he started working as a flagger in 1990. Two decades later, the Medford, Ore., resident became a journeyman electrician, visiting site after site across the country in the last five years.
Ask Terrel about his work travels and he quickly rattles off a long list of more than 20 locations — Bakersfield, Calif.; Big Fork, Mont.; Soda Springs Idaho; Des Moines, Iowa; and Los Angeles' Watts neighborhood just to name a few.
It was at a job site in North Dakota last year, however, where Terrel heard colleagues talk about what they considered the next big thing in construction. Tesla Motors just announced that it was picking Nevada as the site of its gigafactory battery plant. Located at the Tahoe-Reno Industrial Center just east of Reno, the $5 billion facility is expected to span 5 million square feet and will be larger than all the lithium-ion battery plants in the world combined, said Tesla CEO Elon Musk.
"Everyone (at the North Dakota site) knew about the Reno job," Terrel said. "It was the main one that was talked about."
The Tesla project is now leading the charge for a construction comeback in Northern Nevada, boosted by a growing list of high-profile tech projects such as the Apple, Switch and Ghost Systems data centers.
Nevada's requirement for Tesla to hire at least half of the gigafactory's construction workers from the Silver State isn't deterring others from trying to get a job at the high-profile project. Representatives of three local unions confirmed that the gigafactory is generating strong interest in the project from out-of-state members as well. Terrel traveled from Oregon to Reno in early March to drop by the office of the International Brotherhood of Electrical Workers Local 401.
UNR's Brian Bonnenfant explains. Ian McGibboney/Brian Duggan
Even with unions telling workers like Terrel that Nevada members have priority, many still make the journey to Reno in order to put their names on a waiting list of out-of-state union workers — all for a chance that they just might make the cut in case Nevadans are not able to fill all positions for the site. As someone with experience working on projects for Intel and Facebook, Terrel says he would especially love to work on a high-profile tech facility such as Tesla's.
"It would be a new challenge that I would love to take on," Terrel said.
At the same time, the rabid interest in the gigafactory also reflects some of the continuing construction challenges left in the wake of the recession. Terrel, who started his apprenticeship as an electrician right when the economy tanked, says there are still a lot of construction people looking for work. Many of those are now pinning their hopes on the gigafactory.
"In the last two to three years, the talk was about the new (Levi's) stadium in the Bay Area but that didn't even dent the books (for construction people looking for work)," Terrel said. "Then it was the Apple campus (in Cupertino) that was supposed to clear the books. The Tesla plant is what most of us are shooting for now."
LIFE AFTER TESLA
Although local construction businesses who lived through the recession are the ones who want to see the industry bounce back the most, they are also the most cautious about trumpeting a recovery.
Craig Holt, vice president and co-owner of Sierra Nevada Construction in Sparks, says there's no doubt that big projects such as Tesla are helping the local economy right now, especially construction. Holt wonders, however, what would happen to the industry once construction of the Tesla project is done.
"While we're seeing improvement in the private market with things like warehousing and some smaller projects, I wonder if some of this activity is being driven by the fact that Tesla is coming to town," Holt said. "Once (the gigafactory) is done, will we continue to see the same activity?"
"I'm just worried somewhat that we might be seeing a false boom again," Holt added.
Of special concern to Holt is public construction spending. As a company that counts road work as part of its bread and butter, public infrastructure spending is an important source of business for SNC. Right now, governments are still suffering from a revenue crunch.
"In order to build and maintain public infrastructure, you need public money," Holt said. "Right now, I don't see a lot of public money out there from the state and federal government.'
What's it like to build the biggest lithium-ion battery factory in the world? Here's footage of construction at the Tesla gigafactory site just east of Reno. Jason Hidalgo
Holt's concerns are shared by many workers as well. Despite coming back to the area after spending time in California, Holland says many members of the iron workers union have yet to return to Reno-Sparks from other areas. In addition to the lingering uncertainty about the area economy, people in the industry point to the ongoing debate in the Nevada Legislature about removing guaranteed wages for construction as an issue that is discouraging a potential return by former residents.
"We haven't seen a big influx of workers coming back," said Paul McKenzie, secretary and treasurer of the Building & Construction Trades Council of Northern Nevada and a Reno City Council member. "They have job security where they're at."
The concern now, according to McKenzie, is whether the area will have enough skilled workers to fill positions for high-profile projects such as the gigafactory. Right now, membership in his union is at 60 percent of what it was during the boom. McKenzie expects the number to grow in the next couple of years thanks to projects such as Tesla but that growth could stall if wages become an issue.
Holt of SNC says he already lost two foremen to California because of the state's higher wages. Holt also lost some highly qualified workers to jobs in North Dakota. Replacing the expertise lost from the recession is not easy, he said. Because of the turnover, SNC is doing more training now than it has ever done as a company, according to Holt.
To help fill demand for skilled labor, construction groups are also ramping up training programs. A year and a half ago, the iron workers union had five apprentices, Holland said. Today, it has about 40. Projects such as Tesla combined with strength in warehousing and manufacturing are giving people in the construction industry hope that the rebound they're seeing is real.
"We are on the verge of having a great economy here," Holland said.
At the same time, Holland and others in the industry say that challenges still remain. McKenzie, for example, says his group tried to partner with Truckee Meadows Community College to launch a pre-apprenticeship program that was supposed to start in February. McKenzie says they could not get enough participation in the class.
"Potential students told me they are afraid there is no future in construction," McKenzie said.
Holt recently got a harsh reminder of his own about just how hard the recession hit his industry. While attending a luncheon for the Associated General Contractors of Nevada, Holt ran into a familiar face. It was a worker who used to operate a road roller for SNC. The former worker, however, was not there to represent another construction company.
"He was waiting tables," Holt said. "We have a lot of people who left the industry and I don't blame them. They need to work and feed their families."