OnMonday, Vice President Joe Biden will attend the groundbreakingceremony of a new $600 million advanced battery production plant. Forpeople who have been following the growth of this industry — andtracking the billions of dollars the federal government has devoted topromoting it — it comes as no surprise that Biden will be heading toMichigan.
Enlarge Carlos Osorio/APThevice president was in Detroit last August to announce billions ofdollars in federal grants. He'll be back in Michigan Monday at aground-breaking.
Carlos Osorio/APThevice president was in Detroit last August to announce billions ofdollars in federal grants. He'll be back in Michigan Monday at aground-breaking.
Thanks to a combination of federaland state incentives for private companies, Michigan is suddenlyemerging as a major center of production for advanced batteries — thebig ones that can power electric cars.
There are now 16 batterycompanies building factories in the state. Last month, Ford Motor Co.announced it would spend $135 million to retool a pair of plants toassemble battery packs and build electric drive transaxles.
Nearlyhalf of Ford's investment is being underwritten by the federalgovernment. All told, Michigan has attracted $6 billion in investmentover the past 18 months geared toward battery-powered vehicleproduction.
Last year's federal stimulus package included 30percent tax credits for clean-energy manufacturing facilities, as partof an effort not only to promote economic growth but to also addressclimate change. In August, Biden traveled to Michigan to announce that$1.3 billion in Energy Department grants for battery development andmanufacturing — more than half the funds available under the stimuluslaw during its two-year lifespan — would be spent in the state. Theplant in Midland he'll be visiting Monday received a federal grant worth$161 million.
Enlarge Bill Pugliano/Getty ImagesThefirst battery pack for the General Motors Chevrolet Volt extended-rangeelectric vehicle comes off the assembly line in Brownstown Township,Mich.
Bill Pugliano/Getty ImagesThefirst battery pack for the General Motors Chevrolet Volt extended-rangeelectric vehicle comes off the assembly line in Brownstown Township,Mich.
"Frankly, these are the most significantsubsidies I've seen in 17 years of doing this," says Randy Thelen,president of Lakeshore Advantage, an economic development firm inwestern Michigan. "I've never seen anything quite like this."
Inhis Tuesday evening Oval Office address about the Gulf of Mexico oilspill, President Obama underscored what he sees as the criticalimportance of such investments: "The tragedy unfolding on our coast isthe most painful and powerful reminder yet that the time to embrace aclean energy future is now," Obama said. "Now is the moment for thisgeneration to embark on a national mission to unleash America'sinnovation and seize control of our own destiny."
Hungry For Work
Michiganhas emerged as a battery hub partly because of its historic strengthsas a manufacturing center, but also because the state was aggressiveabout offering tax incentives that have supplemented the federal grantdollars for private companies.
Anticipating passage of thestimulus program in the early days of the Obama administration, theMichigan legislature in December 2008 approved a major tax incentivepackage to piggyback on it. The state has now spent some $2 billion onits battery efforts.
Michigan's main motivation, of course, iscreating jobs. Other states may be struggling to emerge from theso-called Great Recession, but Michigan has never really recovered fromthe recession that officially ended in 2001.
The state has suffered the nation's worst unemployment rate for years. It's currently at 14 percent.
TheMidland plant hosting Biden next week is expected to create 320 jobsover the next four years. Democratic Gov. Jennifer Granholm estimatesthat battery production should be good for 62,000 total new jobs in thestate.
Even accounting for the inflated expectations such jobprojections are prone to, billions of dollars in fresh investment dooffer new hope to communities that have long been struggling.
"There'sno guarantee in life that this will be the next big thing," says KurtDykstra, the mayor of Holland, a city of 35,000 along Lake Michigan thathas landed two of the big lithium ion battery cell plants. "But I'drather be in the position we're in, having these two facilities in ourcommunity, rather than having them be somewhere else."
Secrets Of Holland's Success
Enlarge John F. Martin/GM handout via Getty ImagesChevrolet's first pre-production electric Volt was on the assembly line earlier this year in Detroit.
John F. Martin/GM handout via Getty ImagesChevrolet's first pre-production electric Volt was on the assembly line earlier this year in Detroit.
Holland'stwo plants arrived courtesy of the same sort of help manufacturerselsewhere in the state are getting. The two plants have received betweenthem just over $450 million worth of federal grants.
But whyHolland? The city has long been a place that makes things — one-third ofits employment is still in manufacturing. That gives the two companiescoming in to build batteries, Johnson Controls and LG Chem, the prospectof a base of local suppliers as well as a workforce with the right setof machine-operating skills to offer.
"The west Michigan area inparticular has a long, decades-long heritage in manufacturing," saysP.J. Thompson, president of Trans-Matic, a local precision metal workcompany. "We grow and nurture craftsmen here."
But Dan Clark, deanof Grand Rapids Community College's Lakeshore campus, notes thatadvanced battery work requires more skill in chemistry and electricalwork than the kinds of manufacturing work Holland has specialized in —making office furniture and interior parts for cars. To fill the gaps,both the community college and Grand Valley State University areoffering new programs to train workers in areas such as energyengineering.
The state, the city, the local business community andthe institutions of higher education have all worked cooperatively tomake the area as attractive as possible to the battery makers. ButHolland had one other big advantage over its competitors. The electriccompany is municipally owned and offers rates that are about 20 percentless than the Michigan average. That will more than offset thetransportation costs involved in shipping batteries roughly 200 mileseast to Detroit, or elsewhere.
Needing Jolts From Volts
Ahalf-billion dollars worth of new investment is obviously good news forHolland, which has suffered through a "lost decade," as Mayor Dykstrasays. But, he notes, "The ultimate success of these plants is going todepend on how many electric cars are sold."
Thompson, theTrans-Matic president, says he hopes to expand his workforce by about 10percent to help supply Holland's new battery plants once they're up andrunning. But he concedes that some people in the area remain skepticalthat even two large companies are enough to turn around the region'seconomic prospects.
"It remains to be seen how the lithium ionbattery is commercialized in automotive," he says, "and what thepublic's true appetite will be for electric cars."
Few peoplebelieve that current lithium ion technology is adequate to replacegas-powered vehicles on a mass scale. As with other technologies, theadvanced battery will evolve. But that means areas already fostering theindustry should enjoy a leg up in the future, assuming they can adaptto future changes.
Nearly every state has some program in place topromote clean-energy technology and industry. Michigan's historicstrengths as a manufacturing center — as well as its willingness toinvest heavily in this area — will give it a big head start if and whenclean energy really pays off.
The race is on worldwide.
"TheMichigan programs not only get the companies in Michigan," says RobAtkinson, president of the Information Technology and InnovationFoundation, a Washington think tank, "but I would venture to say that insome cases, without the Michigan incentives, those plants would havegone offshore."