The New Factory Is Coming To Town

The Real Estate Espresso Podcast

The New Factory Is Coming To Town

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The New Factory Is Coming To Town

Welcome to the Real Estate Espresso podcast, your morning shot of what’s new in the world of real estate investing. I’m your host, Victor Menasce. On today’s show, we’re talking about the biggest obstacle to manufacturing in the U.S.

When I was deeply involved in the tech industry as a microprocessor design engineer, there was a culture. It’s a culture that’s turned out, in fact, to be unhealthy and one of the core reasons why we don’t have manufacturing in North America.

Design engineers like me had an elite attitude that we were at the top of the intellectual food chain. Those manufacturing engineers were one step above factory assembly line workers and almost second-class engineers. Those roles were not valued in the same way as the design roles. Design roles had the highest salaries, and it was hard to attract top talent into those manufacturing engineering roles.

After all, manufacturing was easy compared to design, and you didn’t have to be that smart anyway to be a manufacturing engineer. Well, at least that was the mentality. So as a result of that truly nationwide, continent-wide culture, manufacturing moved to places like Japan and Taiwan and eventually China, where the process design and manufacturing engineering was truly valued.

In those countries, production created jobs on a large scale. The manufacturing engineers were responsible for the design of the factories, for the assembly lines. In fact, the entire process.

Well, yesterday, Apple made a new announcement that they were going to take another run at opening manufacturing in the U.S. There’s a Foxconn warehouse in the northwest of Houston, about nine miles from one of our projects, and this is the site of a newly announced manufacturing facility for the Mac Mini computer. The plan is to convert an existing 220,000 square foot warehouse into manufacturing space.

Now, demand for the Mac Mini has skyrocketed in recent weeks. With the introduction of OpenClaw, which is a new AI agent that runs natively on a Mac Mini, it takes over the entire computer, turning that little box with a latest generation M4 processor into a standalone digital employee.

The announcement of the 220,000 square foot facility is hardly newsworthy in the grand scheme of things. Foxconn has also recognized the same thing that I just talked about. The manufacturing engineering brain trust does not exist in the U.S. in the way that it exists in Asia, so they’re pairing the new manufacturing facility with a training facility that’s designed to train people in the Foxconn manufacturing methods that are used in China and Taiwan for Apple. And that’s the key.

Whenever I hear about a new manufacturing facility opening in the U.S., I ask the simple question: where are the people who know how to build and operate a facility for that product, where are they going to come from?

For example, Micron is opening a new memory chip plant in Syracuse, New York. That’s only a few hours’ drive from my house. I know the area, and there are no semiconductor process engineers who truly know how to tune the machines of a leading-edge process and get maximum yield.

You can fly in a few from the Micron location in Idaho, or maybe somewhere else, but you need a deeper bench than just a few key individuals. You need expertise in much larger numbers. Sure, there’s going to be lots of robots and a high degree of automation, but the machines don’t run themselves. They need to be programmed, upgraded, tuned, and maintained. This is where the optimizations are going to be made that speed things up, that eliminate steps, or improve quality.

There will be additional sensors to be added in the process to monitor parameters in the manufacturing process and ensure higher yield. All of that requires expertise. So when I hear about a new manufacturing plant coming to town, the very first question I ask is, where’s the brain trust going to come from?

Secondly, where are the factory workers going to come from? This Foxconn facility is going to be highly automated. It is probably going to employ between 1,500 to 2,000 people, if I understand what their staffing is going to look like. But unlike China, where the labor costs are much lower, the U.S. is going to really focus on maximizing automation.

This northwest area in Houston has sufficient rental housing vacancy to easily absorb the added workforce at attractive rental rates. That’s going to be a great step for that area in Houston which, by the way, continues to grow despite stories of its demise following Hurricane Harvey.

Now, there’s going to continue to be announcements of big projects, new data centers, manufacturing, perhaps other major investments. But the success of those investments is not about tariffs or real estate or tax incentives offered by the local government. It’s going to be about growing the talent pool of skills to gain critical mass in those geographic locations. And it’s only then that you’re going to see the transformation of industrial activity in this country.

That kind of brain trust is not developed in a week or a month. Where we may have dozens of people with that expertise in a major city, you’re going to find tens of thousands of them in Taiwan and China. And that’s where we need to get to.

As you think about that, have an awesome rest of your day. Go make some great things happen, and I’ll talk to you again tomorrow.

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