Numbers begin to emerge on how many new households Panasonic plant may attract to the region, but big questions still loom
photo by: John English
The name, of course, is Panasonic, but there are days it feels more like Panasecret for those who are trying to predict the regional impact of the company’s 4,000-job battery plant in De Soto.
But some key details are starting to emerge on the $4 billion project, and for communities like Lawrence and Eudora, none may be more important than the estimated number of plant employees who are expected to move to the region.
A Lawrence crowd of real estate professionals on Thursday was told that Panasonic believes that of the 4,000 people it initially will hire for the plant, 1,600 to 1,800 will come from outside this area.
Rob Richardson, the manager who has been hired by the Economic Development Corporation of Lawrence & Douglas County to help the community capitalize on the Panasonic development, estimated those figures are probably on the “high end” of what is likely to occur.
But they are the best numbers yet available for area communities to start doing some important math. Richardson told attendees of Thursday’s event, hosted by the Lawrence Board of Realtors, that some are estimating, based on those numbers, the need for 30 to 40 new homes per year for Lawrence over the next three years as Panasonic ramps up its hiring.
That would put Lawrence getting about 5% to 7% of all the new employees entering the region. I’m not sure how anyone landed on that number being the right one for Lawrence, but I like the idea of trying to do some projections. Communities near the plant find themselves in a high-risk, high-reward environment. If those communities want to grow their economies, they likely are going to have to make infrastructure investments to accommodate new homes. For those investments to pay off, they need to predict accurately how much new demand for housing the plant will create.
There will be competition for those 1,600 to 1,800 households moving into the region. De Soto and Eudora — which are both within a 10-minute drive of the plant’s front door — are the closest communities to the development. Lawrence and Olathe — at 20 to 25 minutes in many cases — are next in line. But communities like Baldwin City, Tonganoxie and a whole bunch of Johnson County communities also are feasible landing spots for new employees.
I’m not going to try to predict what percentage of new residents each community might attract. But, I think doing some math on the subject is relevant nonetheless.
Could front-line communities like De Soto and Eudora perhaps each capture 30% of the new employees? I have no idea, but if they did that would require about 510 new homes to accommodate the employees and their families. If you assume this might happen over a three-year period, that would be 170 homes a year.
As a reminder, these are household numbers. Population numbers, which are important to organizations like schools, will be different. Growth of 510 new homes easily could produce about 1,500 new residents for a community like De Soto or Eudora.
If a community attracted 20%, you would be looking at 340 homes, or about 113 per year for a three-year period. At 10%, the numbers are 170 homes or about 55 per year for three years. Finally, a 5% capture rate results in 85 homes or not quite 30 a year.
photo by: John English
That is likely a partial picture, at best. State officials have been saying ever since Panasonic chose De Soto last summer that the project is expected to produce about 4,000 ancillary jobs, in addition to the 4,000 jobs at the plant. Those are expected to be of suppliers and other companies that will want to be close to the plant.
If those suppliers also bring in about 1,600 to 1,800 employees from outside the region, then all those numbers above would essentially double. A front-line community that attracted 30% of the new employees would need a little over 1,000 homes, let’s say, in a three-year period. For perspective, that means communities like De Soto or Eudora — communities of about 6,000 people currently — would be building 300 homes a year. That’s the type of pace Lawrence was on in the 1990s and 2000s, when it was a community of about 80,000 and was one of the faster-growing cities in the state. That also would be population growth of about 1,000 people a year for those communities. And that’s just people who are directly tied to the plant. If Eudora or De Soto grew by 1,000 people in a year just from Panasonic alone, how many more people — think everybody from barbers to restaurant owners — would move to those communities as well to serve the new growth?
I’m not predicting that is what will happen to Eudora or De Soto, and I think it is even harder to predict what will happen to Lawrence. But, I do think the math is interesting and important.
The numbers, however, likely get even harder to understand. What no one is saying publicly is the expected turnover rate of employees at Panasonic. But people who have been to the company’s plant in the Reno, Nevada, area say the rate is quite high. Panasonic is hoping to design the De Soto plant in ways that reduce that turnover, but the rate is a big question mark. If turnover is quite high, does that mean the plant will continue to attract hundreds of new households from outside the region to fill those jobs created by turnover? If so, that could create more housing demand, especially if the people who quit Panasonic stay in our communities for other jobs.
In other words, those numbers above may be larger and stretch over a longer period of time than three years.
photo by: Chad Lawhorn/Journal-World
But, we don’t have hard numbers about Panasonic’s turnover rate, and we have even less information about what its suppliers may look like and who they might employ.
Richardson said it has been very tough getting information on that front.
“They’re pretty quiet,” Richardson said.
He said the company is not sharing much information about who its suppliers will be for the De Soto plant.
“This corporate secrecy they have related to their industry is making finding some of those connections really difficult,” he said.
Plus, area leaders are learning that the battery production that will happen at the plant is different than what many laypeople envisioned. There was a thought that the plant would be producing entire battery packages that would be inserted into Tesla electric vehicles or other similar brands.
But Richardson said information has emerged that the De Soto plant will produce a more limited product. Instead of a fully formed battery pack for a vehicle, the plant will produce individual batteries — around 1 billion a year — that are about the size of a AA battery. Those batteries will be sold to other companies that will produce the actual battery packs with wiring that will be used in vehicles.
“There are very few parts,” Richardson said of what he has learned about the product. “We thought there would be hundreds of parts and lots of people supplying wiring harnesses, and different connectors and trays for the batteries and things like that. It is really just the battery.
“They are going to have to have stuff to ship it in, and they are going to need office materials and industrial gases and chemicals, but some of those will be right adjacent to the factory.”
Richardson said he’s also learned that at the company’s Reno plant, about half of all suppliers for Panasonic have their business operations located inside the Panasonic plant. Another 25% are really close to the plant, with the rest scattered.
“That is why we are really trying to figure out who these suppliers are because we thought there would be a big market,” Richardson said. “If there is 100 of them, 10 or 15 of them would want to be in Lawrence because it is a cool place to be. That number has dwindled so we are going to really work hard to find out who those suppliers are.”
photo by: Chad Lawhorn/Journal-World
A few other details emerged from Thursday’s meeting, which attracted more than a hundred people from the real estate community. The details included:
• Production at the plant is still expected to begin in the first quarter of 2025. Hiring for executive-level positions already has begun.
• Panasonic is forecasting the lowest pay ranges for employees at the plant will be in the $22- to $25-per-hour range, Richardson said. Hiring for plant employees is expected to pick up steam in the fourth quarter of 2024, he said.
• Douglas County has struck a deal with the human resources department of Panasonic to have a flyer inserted into the package given to each new employee. That flyer highlights each community in Douglas County as a potential home for new employees. The Economic Development Corporation also is running a marketing campaign on LinkedIn that targets people who are likely to be looking for jobs with Panasonic.
“We want to make sure that before they get a Realtor from a county to the east of us, they know that we are here,” he said.
A big part of Thursday’s meeting was about concerns that Lawrence won’t have enough housing to meet the Panasonic demand. More specifically, the concern is that Lawrence already has an acute housing shortage, and any increased demand from Panasonic will exacerbate the situation.
Economic development leaders, Realtors, homebuilders and others are actively organizing a lobbying campaign to convince Lawrence city commissioners to spend more money in the city’s Capital Improvement Plan to support opening up new areas of Lawrence for residential development.
I’ll report more on those specific conversations soon.