A New Energy in the Work Force

Economic development czars and public officials from DeSoto City Hall to the governor’s mansion in Topeka exchanged wide smiles and high-fives earlier this month with the ground-breaking for the Panasonic Energy battery manufacturing plant that will bring 4,000 jobs and $4 billion in investment to western Johnson County by 2025.

It will be, as Kansas Gov. Laura Kelly proudly declared, six days before voters narrowly awarded her a second term, the largest economic development project in the state’s history.

The Kansas City region had seen that kind of bravado before, with the grand vision that was going to produce the largest development project in Missouri’s history: Plans by the former Cerner Corp. to build a southern campus that would eventually employ 25,000 people. But barely one-fourth of the way into that $4.65 billion vision, construction came to a halt with a global pandemic in 2020, then the 2021 acquisition of the region’s entrepreneurial pride and joy by Houston-based Oracle Corp. 

The Panasonic Energy story, though, promises a different ending. For one, the Japanese conglomerate had nearly $66 billion in annual revenues in its most recent fiscal year—more than 10 times Cerner’s top line as the region’s largest public company last year. It would require a mighty big fish to dispirit this region through another acquisition. 

“A deal as large as Panasonic, bringing 4,000 jobs, 6,500 indirect jobs and 16,500 construction jobs to De Soto, will undoubtedly ignite more business growth across the KC region,” said Tim Cowden, chief executive officer for the Kansas City Area Development Corp. 

The region’s diverse and robust industry mix, Cowden said, coupled with a central location and talented work force, “shines a spotlight for other global brands like Panasonic to join our market’s business community. In addition, the opening of the new terminal at KCI within the relatively same time horizon, puts the KC region squarely in the center of more headquarters and professional services opportunities as well.”

It is indeed hard to overstate the scope of change that is coming to the regional economy within both the business and educational ecosystems. For the immediate area around DeSoto, significant road construction and expansion will be needed to turn the Lexington Avenue/103rd Street corridor, now one lane in each direction, into a multi-lane thoroughfare that can handle thousands of vehicles moving through several times a day. Other new and expanded arterials will be required to feed that traffic flow. 

And traffic will be an issue: while Johnson County has a population 20 percent greater than Nevada county, where Panasonic already produces batteries for Tesla, the vast majority of residents here live well to the east and will have to commute. It will take years for the housing situation in sparsely-populated western JoCo to meet the need—and that’s before any vendor/suppliers or other manufacturing companies decide that Panasonic is onto a good thing and follow suit with major workforce additions of their own.

Business advocates in other cities say a manufacturing facility of that scale will exacerbate a tight housing market; schools and universities will be compelled to adjust academic tracks from secondary school through advanced-degree programs, and new classroom space will be a given in the public schools. Owners of retail and blue-collar businesses, most immediately within a 10-mile radius but in some cases well beyond that, can expect the thorny choice between a constant turnover or significantly higher wage structures needed to keep staff in place. 

For each of those challenges, opportunities abound for companies built to address those rapid-growth factors. And the Kansas City region is just the place to do it, Panasonic says.

“In addition to its skilled talent and central location, Kansas values many of the same principles on which Panasonic was founded, including cooperation, gratitude, and contributing to society,” said Allan Swan, president of Panasonic Energy of North America. “We could not be more excited to work together and invest in this community as we strive to advance EV battery manufacturing capacity and innovation in America.”

The exciting part for this region has been the growth arc for electric vehicles over the past decade, especially the past two years. All-electric and plug-in hybrid electric vehicle sales nearly doubled from 308,000 in 2020 to 608,000 in 2021—up 85 percent for the straight EV and 138 percent for hybrids, year over year. By comparison, overall sales of light-duty vehicles were up just 3 percent during the same period.

Another big plus is that a region long known as a national center of excellence in engineering will soon add another arrow to that quiver: Panasonic expects to include between 800 and 1,000 engineers at the new plant starting in 2025. Put that into perspective: The region’s 25 largest design firms, combined, employed fewer than 5,000 engineers at the start of 2022.

Allan Swann, sharing the stage with Burns & McDonnell chairman/CEO Ray Kowalik,  announced that hiring target at the Kansas City Area Development Council annual luncheon, just a week after the groundbreaking. As the big screens overhead flashed the website for employment inquiries, Kowalik wise-cracked: “That’s another website we’ll have to block” to deter folks from migrating west. 

The battery-production world has changed profoundly since Panasonic Energy opened its first U.S. production facility in 2016 in Sparks, Nevada. Those changes may stand this region in good stead—Gigfactory 1, as it’s known, incorporates both the battery production as well as vehicle assembly for the target buyer, Tesla.

The two industrial giants have been on uneasy terms in the years since, and it’s worth noting that the DeSoto plant will be producing for EV makers in addition to Tesla. That speaks to broadening demand from other vehicle makers and the potential for longer-term stability.

But before any of that production ramps up, there’s the small matter of workforce. Where, exactly, in a state with an unemployment rate of 2.6 percent, will 4,000 skilled employees come from?

The Work-force Response

That’s not merely a rhetorical question for the here and now. The regional response to filling Panasonic’s needs will go a long way toward fulfilling the prophecy that the new plant is the start of a truly transformative period in the regional economy.

“Once Kansas shows that it can support Panasonic, supplier companies will be attracted, but other major manufacturers will start to take note,” says Elisa Waldman, director of workforce training for Johnson County Community College. “Obviously, we have the land; the hope is that this economic-development activity will continue to build and the training will continue to elevate the broader workforce—again, bringing more jobs with high-paying, sustainable wages.”

Waldman is part of a consortium of education officials who have already jumped into the challenge: devising a coherent regional approach to training workers with skills specific to Panasonic’s needs. A ticking clock amplifies that chore: If the battery plant is to begin production in 2025, the workers will need their certification, in many cases, by the end of 2024—and 2023 kicks off just eight weeks after the groundbreaking.

That gives K-12 programs, community colleges, and four-year institutions a tight window to implement academic programming, recruit students, and put them through their paces. Some of that instruction is baked into the cake with current manufacturing-related training, Waldkman noted, but some key additions must add the icing for Panasonic.

“We don’t currently train people in the manufacturing of lithium-ion batteries,” she says. “We have wonderful trades programs with college credit or certifications in industrial maintenance, auto, HVAC, plumbing, electrical—all those in the advanced-manufacturing realm already exist. What we will do is customize that training to fit Panasonic’s needs,” something JCCC already has experience with in working with other businesses in the region to deliver special skill sets.

“That training, contract or customized, specifically fits the needs of that employer,” she says. “So instead of students with general backgrounds, you end up with those who have the general skills and the knowledge of that employer’s specific needs.”

Before that can begin, though, a fair number of conversations must take place with Panasonic’s leadership.

“We are still, as a caveat, waiting to hear more details from Panasonic about the exact number of these positions they need, and what does that look like in terms of workforce development,” says Keely Schneider, executive director of the non-profit Workforce Partnership in Kansas. “Does Panasonic require the same skill sets for X-number of positions as we think? It’s really the kind of nitty-gritty detail we have to talk about, and that has not yet happened.”

There is, she says, that collaborative effort by which her team, area colleges, and K-12 districts are ready to pounce. By happy coincidence, her organization has been working with the DeSoto schools on just such programming to promote student interest in trades’ careers. The participation of one district, though, only hints at what will be needed.

“The concern is volume and how we get 4,000 people ready for these jobs over the course of the next two to three years,” Schneider says. She’s confident Panasonic will be an engaged civic partner, one that helps demonstrate the value proposition of relatively higher pay, straight out of high school or community college, with minimal long-term college debt.

The issue now, she notes, is that ticking clock. “If we’re not filling the pipeline soon, we’ll never reach the 4,000-job level,” Schneider says. “Young people right now don’t understand manufacturing; they don’t know what it means. When they see the environment, see the robotics, understand that a lot of it is high-tech and clean, then they have a very different image of it in their minds.”

And therein, she says, is yet another example of how this development deal may truly prove transformational. High school administrators have long prided themselves on the number of students that go immediately to four-year colleges. Some, like their counseling staff, are actually rewarded financially for hitting college-placement targets.

That kind of thinking, Schneider says, echoing an argument construction executives have made for a decade, “has to go away. We have to be as proud of the achievements of students moving directly into the workforce with great jobs and great skills as we are of students going off to college. We’re not at that point yet. I think the boat is turning, but slowly.”

Few things will accelerate the pace of that change like, cold, hard cash. At Gigafactory 1 outside of Reno, for example, the local community college has expanded its instructional space and added new instructional programs. Six years after its opening, that Panasonic plant still has an immediate need for 400 jobs paying up to $32 an hour, the company has said—a powerful draw for students in its manufacturing programs.

Based on a 40-hour work week, that annual $66,000 is a full $10,000 higher than the median household income in the Kansas City region.

Transformative? Indeed.