By some trick of fate, I juust caught the launch here in Aus at 6pm (4am EDT)... Even though it was due to have happened hours ago I clicked the link to see how it had gone... At exactly 17:59:40!
I lived in Cameron County 11 years ago. One of the poorest counties in the USA. The joke down there is, "I love living here because it is so close to the United States!"
Most people in the USA don't realize how far south texas goes. This place is 6 hours south of Houston and 4 hours south of San Antonio. Nice to see this investment made! Excited to go back and visit.
I like taking virtual tours of remote locales using Google Street View. Here is a lovely neighborhood in Edinburg, TX, at the southern tip of the state: http://bit.ly/1y09dGC
I recently read about a study of these sorts of programs in the US and it concluded that the average price to get jobs to your State is $100,000 pr job.
Did the study conclude these deals are a cost to the states that provide them? I guess what I mean is are these tax incentives a net negative over 20 years?
Yes, over 20 years they probably are a net positive for the states (though perhaps not always in direct revenue for the employers). However, that's looking at the deal in isolation, rather than the the impact this has on the market as a whole. It becomes a huge competitive advantage for larger, national & international companies, not to mention a huge distortion on the market and in the end substantially cuts down state revenues (the company was going to set up shop somewhere even if they weren't offered a cent).
I guess I'm not so sure it's a negative for the market as a whole. It allows for some sort of company-buying-market where a non-attractive-location-state can really pull in valuable employers which they otherwise they would not have.
You mean if we can funnel tax friction on local businesses to distort the market enough so that the national & international employers they compete with have reduced friction if they make otherwise suboptimal decisions for locating parts of their business, everyone wins? ;-)
In isolation maybe, but in aggregate it means national & international employers have an additional advantage over local employers, state coffers are thinner, and far more jobs lack long term prospects (because hey, if it only made sense to set up shop when there was a big windfall attached to it, sooner or later it makes sense to go after another windfall somewhere else and shut down what you are doing there).
Haha yeah pretty much your first paragraph sums up what I was thinking. I wouldn't word it so drastically, but I like the point you make at the end: if there's no real investment by business in the community, then why not just relocate when the conditions are optimal? (e.g. another tax break)
The market isn't very free. Aside from regulatory burdens (some of which are onerous, some not) there is a significant tax burden to any business. The US actually has one of the highest corporate income taxes in the developed world. In a saner system a lot of these burdens would be significantly lighter and the pace of business creation would be a bit (perhaps a lot) faster. Instead the negatives caused by these burdens are often attempted to be counteracted through various incentives and in the extreme with corporate welfare.
Usually the benefit of having a particular business sited in your state / metro area more than makes up for the cost of incentives. The $51k per job incentive is a one time cost, whereas the jobs (and the new jobs from growth of the facility) will keep bringing in revenue (and taxes) year after year. SpaceX currently operates at over $200k revenue per employee. Additionally, the cost of constructing the new factory and launch site will vastly exceed the cost of the incentives.
Yeah, the highest nominal tax rate ends up being only a slightly-above-average effective tax rate, and probably a bigger deal than the slightly-above-average effective corporate tax rate is the significantly-lower-than-average benefit that US businesses get for what they are paying...
Having to pay for (compared to other developed countries, both expensive and inefficient) health care for employees on top of paying taxes for instance. Or the comparatively poor transportation, telecommunications, etc. infrastructure -- sure, its an annoyance to individuals, but its also a cost to businesses.
Its probably not a coincidence that the US has both a popular ideology which holds that government is fundamentally horrendously inefficient and an actual public sector that does far worse than other developed countries at providing value for the money customers are paying. Whichever happened first, the two obviously feed off of each other.
> offering $2.3 million ... also offering $13 million
$15.3 million seems like a paltry incentive compared to what I perceive the cost of a launch facility to be. Can someone in the know clarify how generous these grants are, especially relative to the cost of a launch facility?
The article says "this facility will create 300 jobs and pump $85 million in capital investment into the local economy." I suspect that means the launch site will cost $85 million to build.
Yes I read that, but I imagine that means that the total cost is at least $85 million. R&D and components done/made elsewhere aren't going to be figured in to that $85 million.
I seem to recall reading that it is advantageous to launch a rocket closer to the equator, and Cameron County is at the southern tip of Texas. Wouldn't it seem more likely that location played a bigger role in SpaceX choosing Texas than the incentives?
Florida and Puerto Rico, alternatives considered by SpaceX, have locations even closer to the equator than Texas. And non-US locations have options far closer to the equator. Being southern is good, but other factors are important too.
Florida is closer, but the possible launch sites are not. Still, both those sites and the Texas site are far enough south that, as you say, going further south doesn't buy much.
Texas didn't ban direct sales of Tesla motors. Dealership directly owned by automakers are prohibited by an antiquated law. There was a law in the last legislative session which would have allowed Tesla to set up dealerships, but it never came up for debate. Texas' legislature only meets for 140 days each odd numbered year, but it's likely that in the next legislative session the bill will be passed.
And, you can still buy Tesla's in Texas (trust me, you see plenty in Austin and Houston). Tesla just can't open dealerships. They still have showrooms (I've been to one in Austin and one in Houston), they just can't sell the car there.
...the likelihood that right-to-work played even the smallest role in Musk's decision making here is small enough that it appears in the occasional real analysis text.
You should pay a visit to SpaceX company. Union/non-union is a non-issue.
Edit: Come to think of it, Elon would be very very happy if rocket manufacturers really had to deal with union the way car/plane makers do. That would mean rocketing across space is really like getting on a jet liner. But we all know that's many years away.
So yeah, union/non-union is a non-issue for SpaceX.
Union/non-union may not seem like an issue inside SpaceX, but the view from other workers in the industry may not match that. Last month, I was at a 4th of July party which happened to be mostly space workers, and when I brought up the subject of SpaceX the consensus was, 'Cool company. I'd totally work there if the salaries weren't so low.' It surprised me, since I tend to associate up-and-coming companies with money from the Valley with higher salaries.
There are definitely unions in the aerospace industry. My uncle was involved with a strike at United Launch Alliance a few years ago. It's actually the only time I can remember any member of my family going on a picket line.
You definitely don't work at SpaceX for the money. Their salaries are below market rate, the hours are brutal, but you're bootstrapping planetary travel. Just depends on what your motivations as a person are.
Disclaimer: I applied for a low-paying SpaceX IT position in Cape Canaveral, because Mars.
Could you elaborate on what "the way" means? After all, there are such unions now, like the International Association of Machinist and Aerospace Workers. IAM represents employees at, among others, KSC. Eg, they voted to strike at KSC back in 2007. http://www.washingtonpost.com/wp-dyn/content/article/2007/06...
(I mention these because strikes are easily reported in the news. Behind the scenes of course many of the engineers who built Ariane and the Shuttle are union labor, but that fact doesn't have the conflict that brings in readers.)
Since I don't see how union labor implies what you think it does, could you clarify?
Texas actually had the ban on direct sales for quite a while now. It had nothing to do with Tesla. As a matter of fact, Perry has said that he would like to have it repealed.
If he takes after Lockheed and the rest of the industry, he'll wrap his tentacles around at least a few states in order for them to shout when he says.
it's looking more and more like Reno is the location of the battery plant. The governor and Musk have both made statements recently about it and Tesla had something like 300 people working on something here. Work is currently stopped though so maybe the site isn't suitable or the state has done something stupid again.
I have seen more than a handful of stories that the Reno project was shutdown and a majority of construction workers laid off there due to how behind the project is (they were working 24/7 to get back on schedule).
I wasn't aware that work had resumed. It was just a few days ago that kolo reported the layoffs and shut down and I don't catch that very often. It'll be interesting to see if it's the plant or something else.
I've been seeing 3 large manufacturing buildings being constructed on highway 580 a mile away from the Tesla plant. I wonder if Musk is considering those as a possibility.
In the last five days while I happened to catch the news on tv (I rarely watch it) they were reporting the workers had been laid off and work had been stopped. toomuchtodo above states that they are behind and trying to get caught back up so perhaps it was just temporary.
Not being a rocket scientist, I am unfamiliar with some details. Aren't there only a very small number of launch sites even viable for consideration in the US for this kind of activity? Something about being close to the equator, and not landing your rocket on a major city. So, South Texas and... ummm...
Yes. To save fuel, many rockets are launched west to east (they get a headstart from the Earth's rotation). Launching close to the equator helps the most, because rockets get the biggest headstart. To minimize risk to people, launch sites are in locations that have low-population corridors for long distances to their east. Texas and Florida are both southern, with ocean to their east, so they make ideal launch sites for the United States.
Interestingly, you might think that launching from high elevation helps (starting at Mr Everest would give you a headstart), but the benefit is small, a fraction of a percent.
The velocity boost for launching from nearer the equator is only part of the advantage. Another major factor is that many of the most expensive commercial payloads (such as major geosynchronous comsats) need to end up in equatorial orbits. The latitude of the launch site is also the minimum inclination of the initial orbit the launch vehicle can provide. At the equator you can launch into any orbital inclination. At the North Pole you can only launch into polar orbits. At 45 deg. latitude you can only launch into orbital inclinations of 45 to 90 deg. The higher the initial orbital inclination the more work you'll have to do (the more delta V you'll have to apply) in a plane change burn in order to get into an equatorial orbit.
I've always thought the goal was to launch from south Texas and to land the 1st stage in Florida. I don't know if that's too far, or not far enough. Maybe second stage? Although the second stage is a lot higher and faster at the end of it's burn.
The actual goal stated by SpaceX has always been to land the first stage at the facility it launched from. Bear in mind the first stage doesn't actually travel all that far down range comparatively speaking. It's primary job is to get the second stage up out of as much atmosphere as possible.
