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Proterra CEO: Silicon Valley move to benefit Greenville

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By Bill Poovey
bpoovey@gsabusiness.com
Published Nov. 9, 2015

Greenville will gain jobs, and its innovative manufacturing reputation will be enhanced from Proterra relocating its headquarters to Silicon Valley, CEO Ryan Popple said after the zero-emission bus manufacturer’s California announcement surprised some area economic officials.

“We didn’t have an opportunity to talk with them about it,” said Mark Farris, president and CEO of the Greenville Area Development Corp., for which corporate headquarters are prime recruiting targets. “We hate to lose any kind of company.”

Travis West, a process quality engineer (right), and Jon Davis, production associate, on the production line at Proterra. (Photo by Bill Poovey)
Travis West, a process quality engineer (right), and Jon Davis, production associate, on the production line at Proterra. (Photo by Bill Poovey)
 
Popple, a former Tesla Motors Inc. finance director, said Greenville isn’t really losing anything in Proterra changing the headquarters location. He said that move doesn’t involve employee transfers and production demand is growing. Popple said California is the nation’s hot spot for electric-vehicle technology, with operators of diesel fleets looking at a possible 2040 deadline for all fleets to be zero emission.

Choosing “the single largest market in the U.S.” as its headquarters location four years after moving to Greenville from Golden, Colo., is intended to make Proterra a local in the Silicon Valley for marketing and possible product innovation affiliations, he said.

Popple said the headquarters move announcement “perhaps was more of a surprise than it should have been” but the timing was not an accident.

“If you are a company and you’ve got a plan and your board and your shareholders support it and your customers support it, if you disclose that plan ahead of time you’ve got to be ready to have people talk you out of that plan,” he said. “What we weren’t looking for … (is) somebody to incentivize Proterra to do something different. And we know this community cares a lot about Proterra. So one of the things you’ve got to be careful about, you don’t want to give the impression that you are pitting one region against another.”

Popple said there is also an “advantage to not showing your cards to your competitors.”

Proterra in April announced plans to build a plant in the San Gabriel Valley in California. Popple said that operation will have about 70 employees and could include a few transfers from Greenville.

“It’s a very good idea to seed a new manufacturing line with veterans from your original manufacturing line,” he said.

Popple said Proterra’s plant in Greenville already has plans to add employees in response to growing demand for the $800,000 buses. The headquarters move will further boost production and hiring in Greenville, where composite bus shells arrive from Rhode Island to be equipped, he said. Proterra has about 150 employees in Greenville, and Popple said the private company’s lease on the operations facility at 1 Whitlee Court expires at the end of 2017, which means either an expansion or move to larger space are possible.

“We literally have a year of work for this facility to get through, and that’s if the sales team stops booking orders, and they don’t seem to want to slow down,” Popple said.

The Greenville operation has two production lines, and Popple said “we’ve got to get Seattle their vehicles by the end of the year. We have more vehicles going to Southern California. Then we have Louisville, Lexington (Ky.), more vehicles for Stockton, Porterville, Calif.; Duluth, Minn.; Dallas, Texas; and we picked up a couple of new cities in September that we haven’t announced yet. So we are booking faster than we are consuming the backlog.”

Popple said Foothill Transit — which serves California’s San Gabriel Valley with routes in L.A., Orange and San Bernadino counties — has purchased 17 buses and is getting 13 more within the next year. Foothill Transit was the company’s first customer.

“Last year, I think they provided 600,000 passenger rides with 15 of our (electric vehicles),” Popple said. “So they are in the lead of showing what’s possible with electric-vehicle technology in transit.”

Popple said all major transit vehicle manufacturers have a presence in California and Proterra is boosting its credibility in the “single largest market in the U.S.” He said the company’s increased presence also supports building a “team that can take advantage of some of the breakthroughs in the battery technology that have been occurring primarily in the Bay Area due to the presence of companies like Tesla and Apple and other battery startups.” Popple said Proterra’s leadership “knew if we were going to be at the cutting edge of battery technology in particular, there’s a finite number of engineers who have a decade or more of experience in those technologies, so we had to be there.”

“In terms of the functions that will be physically addressed or located in a different area, my home office is Burlingame (Calif.),” Popple said. “We’ve got a couple of other sales and marketing executives who are based out of Burlingame as well, but you still see the head of manufacturing here. You have a plant here. You have vehicle engineering, supply chain, a lot of staff in HR, finance and accounting who are still here. The way I would view it is Greenville has grown into being a somewhat self-sufficient East Coast manufacturing location.”

Popple said Proterra’s marketing team has “booked multiple new cities in September and we’ll book more before the end of the year. So the perfect state for me as the CEO of the company would be to have a solid-growing, manufacturing, vehicle engineering, operational headquarters on the East Coast. That gives us credibility when New York City, when Boston, when Washington, D.C., when Charlotte, when Atlanta say ‘Where are the vehicles going to be built and what happens if a truck runs into a bus?’ We’ve already had that happen. We’ve been in service for over a million miles. So they want to know where is the depot level support for the product. They don’t want to hear that they have to put a bus on a flatbed and have it go all the way across the country. West Coast customers are the same way.”

Popple said having a strong East Coast manufacturing location and a strong and growing Southern California manufacturing location “is the only way we are going to keep up with the demand that could quickly enter this market, where we have to supply not 100 units a year but 1,000.”

When the company relocated to Greenville, Proterra executives announced plans to build at the Clemson University International Center for Automotive Research and hire 1,300 people over seven years. The company has yet to relocate to CU-ICAR. The 2015 Inc. 500 list of the nation’s fastest-growing private companies shows Proterra’s revenue at $28.7 million last year and a three-year growth rate of 1,119%.

The cost of the battery-powered buses is dropping and is competitive, he said. The average cost for a “fully loaded transit bus” has dropped from $1 million to about $800,000 and more transit operators are relying less on federal grants.

“There are options where they can lease the vehicle. They can lease the batteries, and they can pay just about the same price for this vehicle as they would for a diesel or natural gas vehicle,” he said. “They just sign a battery lease, and the total cash flow for that is cheaper than if they had purchased a diesel bus and then had to buy 12 years of diesel fuel, even at today’s diesel prices. So what we’ve seen is a very dramatic reduction in the cost of the batteries, and our manufacturing costs have come down quite a bit as well, as we have learned how to build the vehicles.”

He said Proterra’s 35-foot long and 40-foot-long Generation 2 buses can be built in about six weeks, twice as fast as the earlier models, “if we get all the configuration locked in with the customers and if all the suppliers hit their ship targets.”

“We are still in early production mode though of the Gen 2 product and so we don’t understand at scale, at full rate, how many direct labor jobs we’ll need,” he said.

Popple said Greenville is an ideal location for the East Coast engineering and manufacturing operation and Proterra has received contacts from a dozen states “about relocating our facilities.

“A lot of other states in the Southeast have looked at what Greenville’s doing with the manufacturing and the product development. They have looked at what Proterra is doing,” he said.

Popple said other states “have asked what would it take for us to get Proterra to relocate out of Greenville. We’ve said it’s not up for discussion. This is the right place for us to be for our east manufacturing and for vehicle engineering. We are not looking for the highest bidder. We are here because this is an excellent area to manufacture automotive products and also to do some of the vehicle side development.”

Reach Bill Poovey at 864-235-5677, ext. 104

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