Ford’s move discourages economic developers

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When Ford announced its decision last month to invest $ 11 billion to expand into Tennessee and Kentucky from its home state, business developers across the state felt the “sting.”

In western Michigan, The Right Place chairman and CEO Randy Thelen, like all economic developers and alongside the entire auto industry, was closely following Ford’s pending announcement of where it would invest in EVs and batteries, but was unprepared for the announcement that the company would invest $ 11.4 billion in a new mega campus in Tennessee and twin battery factories in Kentucky, which would create 11,000 jobs and fuel the future of the company’s electric vehicles.

Randy Thelen. Courtesy of the right place

“It stings, doesn’t it?” said Thelen. “I mean, Michigan is the birthplace of the auto industry, and here in western Michigan we have 400 auto suppliers and employ about 40,000 people, and so as the auto industry evolves, we need to make sure to keep as much of this work as close as possible because we have companies all over Michigan and throughout the Midwest serving these facilities.

“There may be opportunities for our supply base to serve Tennessee for a while, but over time what happens is maybe the first model, you can supply Michigan suppliers, maybe the second generation you can supply from Michigan, but by then when the third comes in, suddenly the supply chain starts to congregate closer and closer to the auto assembly plant. It stings; it hurts – it should hurt. A long-standing core industry of our state is starting to spread more and more across the country, and we need to find ways to be more attractive and more competitive.

Ford’s plan

Both Tennessee and Kentucky campuses will produce the next generation of F-Series electric trucks and batteries to power future Ford and Lincoln electric vehicles.

Ford plans to make the largest ever U.S. investment in electric vehicles by an automaker and, with its partner, SK Innovation, plans to invest $ 11.4 billion and create nearly 11,000 new jobs on the mega -sites in Tennessee and Kentucky.

A brand new $ 5.6 billion mega campus in Stanton, Tennessee called Blue Oval City will create approximately 6,000 new jobs and reinvent the way vehicles and batteries are made. Blue Oval City will become a vertically integrated ecosystem for Ford to assemble an expanded lineup of F-series electric vehicles and will include a BlueOvalSK battery plant, key suppliers and recycling. Ford’s new assembly plant in Tennessee is designed to be carbon neutral with zero waste to landfill when fully operational.

In central Kentucky, Ford plans to build a dedicated battery manufacturing complex with SK Innovation – the $ 5.8 billion BlueOvalSK Battery Park – creating 5,000 jobs. Twin battery factories at the site are intended to supply Ford’s North American assembly plants with locally assembled batteries to power next-generation Ford and Lincoln electric vehicles. Investments in the new Tennessee and Kentucky battery plants are expected to be made through BlueOvalSK, a new joint venture formed by Ford and SK Innovation, subject to final agreements, regulatory approvals and other conditions.

“This is a transformative time when Ford will lead America’s transition to electric vehicles and usher in a new era of clean, carbon-neutral manufacturing,” said Ford Executive Chairman Bill Ford. “With this investment and a spirit of innovation, we can achieve goals once thought to be mutually exclusive – protecting our planet, building great electric vehicles Americans will love and help our nation prosper.”

The news comes amid strong demand for the new Ford F-150 Lightning, E-Transit and Mustang Mach-E electric vehicles, and adds to Ford’s recent announcement to increase production capacity and add jobs to the Ford Rouge Electric Vehicle Center. in Dearborn.

“Now is our time – our biggest investment ever – to help build a better future for America,” said Jim Farley, president and CEO of Ford. “We are now striving to deliver revolutionary electric vehicles for the many rather than the few. It’s about creating good jobs that support American families, an ultra-efficient, carbon-neutral manufacturing system, and a growing business that delivers value to communities, dealers and shareholders.

Part of Ford’s more than $ 30 billion investment in electric vehicles through 2025, investments in Tennessee and Kentucky support the company’s longer-term goal of creating a manufacturing ecosystem sustainable America and accelerate its progress towards carbon neutrality, backed by science. targets based on the Paris Climate Agreement. Overall, Ford expects 40 to 50 percent of its global vehicle volume to be fully electric by 2030.

decision

Bill Ford told the Detroit News when news broke that “of course” Michigan was being seriously considered for the project, but the state was lacking four essentials to land the investment – ready-to-go sites, sufficiently attractive economic incentives at state and local levels. , competitive utility rates for an operation of this magnitude and a workforce trained in the advanced skills required for the jobs of the future.

Thelen called the decision a “setback for Michigan”.

“The auto industry is Michigan’s losing game, and we lost the first inning,” he said. “This announcement recalls pivotal moments in decades past in Michigan economic history. I was an intern at the university when General Motors Corp. decided to close the Willow Run factory in Ypsilanti, which once employed thousands of workers. This decision was a wake-up call to our state, which has led to the development of an aggressive and robust set of economic development programs and strategies, which have sadly faded away over the past decade.

“We can’t lose without learning, and if Michigan doesn’t learn from Ford’s decision, we risk more losses. How we respond today will set the course for the next generation of Michigan’s economic future.

The answer

He said it was not too late for Michigan to regain its competitiveness for future auto investments, but the state will need to step up its game, providing ready-made sites for businesses to build electric vehicle facilities and other large-scale job-generating projects; create or recreate robust economic incentive tools that match those of competing states specifically designed to attract Michigan businesses; set competitive economic development utility rates for large-scale projects; and train Michigan’s workforce for these high-tech jobs.

“While the news (from Ford) focuses on investments in electric vehicles, the items mentioned above are universal needs across all of our industries,” Thelen said. “Our local businesses have many options when considering their next investments, and other states compete aggressively.

“The good news is that we are still in the game. With a strong supply chain, available infrastructure and a skilled workforce, we can win future automotive investments. While we may have lost this round, we can always come home for the next set, ready to strike. “

Thelen noted that Michigan would do well to think long term, making investments today that would pay large dividends, in terms of increasing the tax base and revenues, tomorrow.

“Over ten years ago Michigan had a compelling economic incentive package. The battery industry started here with several factories in Michigan, including one here in western Michigan, ”he said. “We’ve had early adoption of electric vehicle investments from automakers that have solidified, particularly in Southeast Michigan, for this space. Over time these facilities started to be found in Ohio, Kentucky, now Tennessee, now Georgia, Texas and California, for that matter. So in part, as we saw with the Tennessee announcement, we have to find new ways to be competitive for these projects. Incentives are an important part of this. And the way we’ve changed the mix of incentives over time, relative to our competition, especially in the south, has become less and less competitive. … It is clear that the southern states which have used creative incentives for decades to attract the auto industry and other sectors, they do not regret their decisions.

Thelen said he didn’t think Ford’s move would necessarily set a percentage divestment in Michigan’s auto industry because there is still “no place on the planet” that has a concentration of automotive expertise. – suppliers, talent, training and structure, etc. – as big as Michigan.

“We have a lot of strengths,” he said. “We just have to be able to react (to improve our weaknesses). “


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