Needing to update its R&D scope in the face of an increasingly competitive market, Seagate Technology, PLC (IW 1000/331) had to choose a location for a new center. While the company was fielding aggressive attempts at one of its manufacturing sites in Asia, the best fit turned out to be an expansion in the area where it has had an R&D presence for 20 years. The opportunity arose in the form of the vacant Solyndra site in Fremont, Calif.
In 2013, the company paid $90 million for the Solyndra site and has spent $100 million over the past couple of years to install state-of-the art equipment. The site is an important part of the company’s strategic plan developing next-generation drives in a very competitive disk drive market.
“It all comes down to talent,” Steve Hwang, vice president of development for Seagate Technology said. “We are looking at long-term innovation and this area has the skills. Our needs are unique in that we employ a lot of PhD’s.”
Even with such specific needs Hwang said that he has no problem finding employees. Before the new facility the company employed 450 people and has now added around 600 new positions.
In addition to size of the workforce, the diversity of the makeup of the workforce is critical. Hwang points out that at his location they have people from 80 different countries. This came in handy when recently the company acquired a business from Korea and he found associates who could speak Korean and facilitate a smooth transition.
But diversity also pays in the level of creativity it produces for the company. And that was a key factor in deciding to remain in California, even when it would have been much less expensive to set up a center elsewhere, says Hwang.
Also essential to Hwang is the stability of the workforce. His company has a close working relationship with universities and will help find funding for university research projects. “We help develop the talent pool” explains Hwang.
The talent pool is this area, which is the closest city on the East Bay near Silicon Valley, has been able to build on years of success. “Workforce training in Silicon Valley is different than the rest of the universe,” explains Kelly Kline, economic development director for Fremont. “Our strong base of engineering talent continues to attract employees. Therefore we can adapt to whatever manufacturing needs arise.”
Seagate has joined Thermo Fisher Scientific and Tesla who have recently made significant R&D investments in the city. In fact over the past few years these companies and others have added $500 million to the economy in capital investments. This didn’t happen by accident according to Kline. When the city saw the closure of the NUMMI plant and the demise of Solyndra, it chose to pool resources between the private and public sectors. “The city has been able to retain, grow and attract top advanced industries,” said Kline. The city is a hub of manufacturing with nearly 900 manufacturing companies, comprising 23% of the city’s workforce which is higher than the national average.
Part of the success is due to favorable business conditions which include strong incentives. One of the top benefits for manufacturers is that utilities such as electricity, gas and water are not taxed. There is a business license tax credit, tax credit for manufacturing equipment and various city and state credits. In fact Seagate used an R&D tax credit along with tax breaks for investment for capital equipment.
These economic incentives follow a plan the city has laid out to achieve growth through expansion of existing businesses as opposed to solely focusing on attracting new business. The idea is to allow innovation to foster. “Innovation must be connected to ecosystems,” explained Kline. “Because innovation and skills development do not just happen anywhere. The clustering effect allows for knowledge flows, and access to skilled workers and a regional supplier network.”
The physical manifestation of this strategy is the Fremont Innovation District (FID) which is where there is a concentration of both large businesses such as Tesla Motors, Lam Research, Delta Products, Seagate, Western Digital, ThermoFisher, Boston Scientific as well as a number of startups in clean technologies, life sciences and advanced manufacturing.
In addition to continued expansion of manufacturing companies the area will also be home to housing, schools (located next to the Tesla factory) and a BART station that will open in 2016.
Building residential amenities near advanced manufacturing companies will serve to further centralize talent. “One of the phenomena that is happening in Fremont is that we are catching the wave of IoT,” says Kline. “It’s the first time that software and hardware engineers are coming together. We sit squarely on the industrial hardware and the software talent is across the way. Literally it is connected by the Bay Bridge. This is fueling a lot of growth.”
To Kline’s point, Sigma Design, located in Fremont and provides system-on-chip (SoC) solutions used to enable smart home convergence through a variety of devices including IoT, announced last week that is has won a co-operative program with China Unicom, to bring smart-home automation solutions to China Unicom subscribers via Zeewave's Smart Home gateway.