Jim Farley’s decision to invest $7 billion in green-field new battery and electric-vehicle assembly plants in the mid-South is not only a huge new commitment by the Ford Motor Co. CEO to the fast-gaining propulsion technology. It’s also a mammoth declaration by America’s iconic carmaker that the future of the auto business in the United States will remain anchored in flyover country.
Kentucky and Tennessee scrapped to land the $11.4 billion in new industrial production that will be located northeast of Memphis and in Glendale, Kentucky, including commitments by SK Innovation, Ford’s battery supplier. The two states came up with nearly $1 billion in financial incentives for the two companies to plunk the facilities and an estimated 11,000 new direct jobs in their precincts.
“West Tennessee will now lead the nation in the next American industrial revolution, said Governor Bill Lee of Tennessee in a news conference, with actually not too much hyperbole. Andy Beshear, the governor of Kentucky, predicted “these enormous plants will capture the attention of the entire world. Every nation will know where Kentucky is and who we are.”
Losers React
The repercussions were immediate in other states that lost out. Michigan officials, for example, were left explaining how they couldn't land such a watershed new investment by an important homegrown company, and reminding everyone that automakers are continuing to invest other billions across the state. Ohio was the other reported finalist.
“I was shocked, very disappointed to see” that Ford decided to locate the plants out of state, U.S. Rep. Tim Walberg told the Detroit News. Quick analysis by the News concluded that Michigan’s comparatively high industrial-power costs, lack of large-scale tracts suitable for modern developments, and its “difficulty quickly mustering the kinds of financial incentive packages that can help close big deals” all contributed to the state’s failure to land Ford’s plants.
Meanwhile, in Illinois, the announcement goosed Governor J.B. Pritzker’s strategizing behind a plan that would boost the state’s efforts to attract its own share of EV investments. Electric-truck startup Rivian put its first plant in Normal, Illinois, in an old Mitsubishi facility, and now Pritzker wants to convince Samsung to build a massive battery factory next door.
“The governor’s goal is to build an ecosystem, not only to build vehicles but [also] the supply chain,” one senior administration official told Crain’s Chicago Business. “The governor repeatedly has said this is a key area for us.”
The First Boom
Indeed, the froth these days as automakers begin to build out their EV-production infrastructure is reminiscent of what happened 40 years ago across the heartland when global players were all trying to figure out how to build and sell small cars profitably in an American market that was being choked by high gasoline prices.
Nissan built its first U.S. plant, near Smyrna, Tennessee; Toyota built its first U.S. plant, near Georgetown, Kentucky; and General Motors plunked its Saturn complex near Nashville. Meanwhile, Volkswagen – ill-fatedly, as it turned out – had refurbished a plant in Westmoreland, Pennsylvania, and began churning out little cars in 1978.
The mid-South plant locations then made a lot of sense because they were in states unfriendly to unions and yet close enough to the supplier industry’s existing infrastructure, centered in the Upper Midwest, to make sense logistically.
Forty years later, there’s similar logic to Ford’s decision in favor of Tennessee and Kentucky, including relatively inexpensive supplies of the massive amounts of electricity it takes to make batteries for all-electric vehicles.
At the same time, Ford’s new plants now will be in the relative center of a massively expanded auto-industry supply base and assembly-plant network that now occupies essentially all of flyover country -- from a Mercedes-Benz plant in Alabama to a Kia plant in Georgia; from new GM battery plants planned for Ohio to the company's long-existing assembly plant in Missouri; and from the Subaru plant in Lafayette, Indiana, to the Toyota plant about 170 miles to the south in Princeton, Indiana.
Read the rest of this piece at Flyover Coalition.
Dale Buss is founder and executive director of The Flyover Coalition, a not-for-profit organization aimed at helping revitalize and promote the economy, companies and people of the region between the Appalachians and Rockies, the Gulf Coast and the Great Lakes. He is a long-time author, journalist, and magazine and newspaper editor, and contributor to Chief Executive, Forbes, the Wall Street Journal, the New York Times and many other publications. Buss is a Wisconsin native who lives in Michigan and has also lived in Texas, Pennsylvania and Florida.
Photo: courtesy Flyover Coalition
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