FREMONT—A few years after finishing high school in 1994, Steve Andersen found work building auto hoods and fenders in a loud, gritty auto plant in his hometown here. Today, he has a new job in town: supervising technicians in smocks and hairnets who create material for solar panels in a white-floored laboratory.
Ariel Zambelich for The Wall Street Journal
Solaria employee Krissel Silva, above, prepares silicon strips that are used in solar panels.
The 34-year-old is a beneficiary of an economic shift in the Bay Area's fourth-largest city, which is known for the shut-down Nummi auto plant where Mr. Andersen once worked. While Fremont, population 206,000, has long been an industrial center pumping out cars and their parts, the city has over the past few years increasingly attracted a slew of so-called clean-tech firms, which produce energy-efficient goods or services.
Mr. Andersen is in the minority from benefiting from Fremont's clean-tech shift, however. Many of the new clean-tech arrivals—including electric-car maker Tesla Motors Inc., which bought the Nummi plant last May, and solar companies Solyndra Inc. and GreenVolts Inc., and Mr. Andersen's new employer Solaria Corp.—employ lean staffs and have special exemptions on taxes.
"I don't know that you're going to be able to find a clear dollar connection" between the clean-tech arrivals and a boost in revenue for the city, says Lori Taylor, Fremont's economic-development director. Still, she adds that she hopes clean-tech companies will eventually become a new growth engine, along with new biotech and high-tech firms that also have cropped up in recent years.
Overall, there were 20 clean-tech firms in Fremont in 2010, up from 12 in 2008 and six in 2006, according to Fremont's economic-development department. The city occupies a sweet spot for clean-tech companies because of its relatively low rents and abundance of buildings that combine offices, manufacturing and research-and-development, thanks to the city's manufacturing and high-tech legacy. That mix is rare in the costly Bay Area, where many clean-tech firms like to set up shop because of the proximity to engineering talent and venture-capital funds. One drawback is Fremont's location outside the heart of Silicon Valley.
The average asking rent for research-and-development space along Interstate 80 and Interstate 880, where Fremont is located, is 90 cents per square foot, compared with $1.04 in Santa Clara County and $2.19 in San Mateo County, according to Cassidy Turley/BT Commercial. but it's slightly less convenient
Mr. Andersen joined New United Motor Manufacturing Inc., or Nummi, in 1997. He rose up the ranks to become a supervisor by the time GM and Toyota closed the factory last April, leaving 4,700 workers jobless.
After the closure, Mr. Andersen applied to work at Solaria. He joined the company last August as a manufacturing shift supervisor after impressing executives with his background in efficient manufacturing processes, which they planned to use at Solaria.
Ariel Zambelich for The Wall Street Journal
Steve Andersen joined the Fremont company last year.
Solaria executives say they chose Fremont in 2006 because of the low rents and plentiful space, along with the access to nearby semiconductor-industry veterans and manufacturing workers and to the companies that buy Solaria's goods. When Solaria decided to move last year to a larger headquarters, executives considered other cities but decided to stay in Fremont.
"You can't throw a Frisbee in Fremont without hitting another solar company," says Dan Shugar, chief executive of Solaria.
Yet most clean-tech firms in Fremont have tiny staffs and haven't grown as quickly as some hoped, some even laying off workers amid competition from low-cost Chinese solar rivals. All the clean-tech firms combined employ about 1,000 to 1,200 people full time in Fremont, far fewer than the number that worked at Nummi. Fremont's unemployment rate was 8.2% in November, compared with 5.7% and 7.4% in nearby Pleasanton and Livermore and 9.3% nationwide.
"It's pretty bad," says Abel Martinez, owner of Taqueria Las Vegas, a Mexican restaurant and bar across the street from the former Nummi plant, now called the Tesla Factory. "I haven't seen the new people."
In addition, few of the new clean-tech firms in Fremont own their own property, and their rental of existing space typically doesn't add to the tax rolls, though companies can be assessed property tax on their manufacturing equipment in some cases. Clean-tech companies also can take advantage of a state sales-tax exemption that allows them not to pay taxes on equipment used in clean-tech manufacturing, as well as a local corporate-tax exemption on clean-tech businesses.
Fremont's changing economic base has sometimes led to clashes among older businesses and the newest ones. Cyndy Mozzetti, whose father founded Fremont's Mozzetti Trucking Inc. in 1946, last summer encouraged her peers on the Fremont Chamber of Commerce board of directors to support Proposition 23, the ballot measure that would have suspended a state global-warming law that she worried would drive up her costs.
Solaria argued against the measure, which it said would hurt the environment and the clean-tech industry.
In the end, the Fremont Chamber of Commerce opposed Prop. 23 but said it might still oppose certain aspects of the global-warming law. That wasn't "a statement that we were for clean tech and against others," says Nina Moore, director of government and community affairs at the chamber. "You want to encourage clean tech, but if the bubble bursts, you still want a strong economic base."
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