DETROIT — Mitsubishi Motors Corp.'s departure from U.S. manufacturing more than two years ago left the central Illinois town of Normal, population 52,500, with an empty 2.6-million-square-foot auto assembly plant and more than 2,000 trained workers without jobs. As industrial sites, such brownfield factories are tough sells in an auto industry that is cautious about investing, leery of taking on new plants and often more eager to build modern greenfield factories than to take on someone else's castoff.
Not so for RJ Scaringe and his suburban Detroit startup, Rivian Automotive. Rivian intends to launch a new brand of electric vehicles, and it acquired the Normal plant for $16 million last year. In a meeting with Automotive News editors and reporters here, Scaringe, 35, explained what attracted Rivian to go brown instead of green.
Q: Why would a small startup begin with an enormous assembly plant designed for mass production?
A: That's a question we often get asked: Why are you producing yourself? Why not go to a Magna Steyr and let them produce it for you? The people we talked to in the tech world asked us, why are you doing this? You're in an environment that's dominated by contract manufacturing.
And we spent a lot of time looking at every option on the continuum — whether to spend $2 billion to construct something brand new, or to go with a turnkey contract manufacturer. In fact, less than 2 percent of all the vehicles produced in the world are built by contract manufacturers. And there are really only two and a half players. There is Magna Steyr, which is very large. There is the company called Valmet in Finland, which has built Fiskers and Porsches in the past. There was also AM General, which has now sold its plant to a Chinese company.
Did Rivian consider them?
Yes. We began by saying, "Let's use a contract manufacturer," and we talked in depth with AM General — we ended up hiring many of their people.
But while it might look easier on paper to go to those players, they're really designed to deliver very low volume and not a lot of scalability. That would mean adding cost on top of the vehicle, and we would still face significant investment. So it pushed us to begin looking at various brownfields.
Why the Mitsubishi plant?
We were very fortune to be in the right place at the right time to buy the plant. In the sea of used automotive plants in the market, it's a very modern facility, commissioned in 1990. We're now modifying the line for assembly. It will look and feel like a brand-new plant, but we're spending 10 percent of the cost.
What's the main challenge of opting for a brownfield site?
We viewed it as finding an empty shell and filling it with equipment, and then finding a work force. That was our assumption. So a couple of years ago, we began touring all the available full-production brownfields out there. We were looking for equipment, looking for staff, looking for team members.
What did Rivian find?
Most of the available facilities were pretty decrepit. They are 50, 60, 70, sometimes 100 years old. They have horrible infrastructure, awful line layout with no modern lines.
That led us to visit the Mitsubishi factory that was for sale. We really went there just to look at their equipment. But what we quickly saw was that the plant itself, the way it was laid out, was very modern. But equally interesting was the work force that was there.
To run an auto plant is not simple, and there were more than 2,000 people who had been running the plant just a year and a half ago. The whole work force was still there in the community. There's a very dense skill set there of people who are already trained to operate the plant. So we asked, "How much for the whole thing?"
How much more will Rivian need to spend to get the plant going?
We'll spend about one-tenth what you'd normally spend on a plant — about $150 million.
We're lucky. We have a very large stamping operation in the facility, with some of the largest presses in North America. You could never spend $100 million to build up a stamping operation if you were starting with a clean sheet. And we got that for free. And all those presses have a lot more capacity than we can immediately use. So we're in the process of negotiating to have a supplier actually come in and operate the presses inside our plant.
But also, you might know, there's a stamping shortage right now in the Midwest. So we will supply parts for others. There's a lot of demand for that stamping.
What role did the local government play to help make this possible at Normal?
The plant was one of the largest employers in the area, so this was an important focus for the local community and the state. We put together a tax incentive plan that alleviated some of the property taxes on the facility, which were not insignificant, for a number of years.