How Michigan can lure EV jobs will be hot topic at Mackinac conferenceMay 30, 2022
May 28, 2022
As 1,300 leaders head to Mackinac Island for the Detroit Regional Chamber’s policy conference Tuesday to discuss issues, none is more pressing to its long-term prospects than figuring out how to make Michigan more competitive in the race for growing EV opportunities.
That assessment comes from John Rakolta Jr., chairman of Walbridge and former U.S. ambassador to the United Arab Emirates, who is waving the flag as he sees major opportunities ahead and Michigan missing out if things don’t change — and fast.
The topic of the state being more competitive will be vetted in conference sessions and in more private settings with influential leaders on the island. Stellantis’ announcement Tuesday it was bypassing Michigan and locating its new electric vehicle battery manufacturing plant in Kokomo, Indiana, only added more fuel to this long simmering fire.
Rakolta, who has had leadership roles in nearly every major business organization in the state, and whose firm builds auto plants and facilities around the globe, has a suggestion on how to turn things around in Michigan: Create a task force to look at the situation.
It would be comprised of leaders from business, government, both political parties, and unions and charged with brainstorming ideas and practical solutions. The group would gather for six months and come up with ideas but hold off on releasing them until January, after the dust settles from the 2022 election, to alleviate the finger-pointing that often goes on over who is to blame for the problems.
“With things changing and new EV plants being announced in rapid fire, we need to get moving,” Rakolta told me. “We’re already in the third inning of a nine-inning game. We can’t waste any more time.”
Much goes into deciding where to locate these billion-dollar plants or facilities.
“This is about much more than offering incentives,” he said. There’s utility costs, land costs, talent needs and ease of working seamlessly with each other — things that have hampered the state’s efforts.
It’s been playing out in full view for years, even before the electric revolution took hold.
Who could forget the beauty contest during the 1980s between states including Michigan for GM’s Saturn plant — some governors appearing on the “Phil Donahue” show — to impress execs making the decision (it went to Spring Hill, Tennessee).
Rakolta’s Detroit-based company has been building plants and he’s talked to leaders involved in those site selections and heard more than an earful on why they bypassed Michigan. He, too, will attend the chamber’s conference.
I posed a few questions. His answers have been edited for length.
QUESTION: Why are you suggesting a task force?
ANSWER: My suggestion is that the governor, along with the House and the Senate leadership, set up a 12- to 15-person bipartisan commission in conjunction with MEDC to study the problem, develop far-reaching solutions and be prepared to present to the governor and Legislature the first week of January (2023). This will avoid the finger-pointing during the election cycle. Economic development is a bipartisan issue, and the states that excel at attracting new plants are the ones who present a bipartisan face to new projects.
Q: You were involved when VW was looking to locate plant in the U.S. in 2008. What happened?
A: Michigan was shortlisted by VW for a new assembly complex, along with Tennessee and Georgia. Gov. (Jennifer) Granholm took the prospect seriously and offered a winning incentive package. In fact, the best of the three. VW chose Tennessee. Walbridge constructed a large part of that new facility and on a trip to Wolfsburg, Germany, I was afforded the opportunity to learn why Tennessee instead of Michigan. Their answer was simply one-word: cohesion. Tennessee had it, Michigan did not. Michigan didn’t have the level of cohesiveness required to make a $3 billion investment and have the assurance that it could remain competitive (with labor costs and regulatory issues). While the incentive was attractive, it was insufficient to make up for the lack of cohesiveness.
Q: When did you first notice this issue?
A: It really started when the Japanese automakers decided to stop importing cars into America and build plants here. Since the 1980s, three new automakers (Tesla, Lucid, Rivian) and 12 foreign manufactures (Toyota, Honda, Nissan, BMW, Mercedes and others) have built a total of 24 major assembly complexes in the U.S. By comparison, the Big Three have a total of 25. … Not a single new or foreign car maker has located a production or assembly plant in Michigan. The handwriting has been on the wall for a very long time. This also doesn’t count the component plants, including powertrain, which is at heightened risk due to the electric vehicle and battery revolution currently underway. Over 25 battery plants have been located elsewhere in the U.S., with only two in Michigan. Within a decade, up to 50% of all new car sales will be EVs. Our state is currently heavily invested in ICE-related plants. Eventually, most of those plants will be obsolete.
Q: How do unions fit in to this conversation?
A: Let me start with this, I respect the unions. They are not the problem. They are part of the solution to the talent gap. The apprentice schools are top notch and should be expanded. Just visit the new carpenter and millwrights apprentice school in Detroit. It’s an amazing place that can put out hundreds of well-qualified tradesmen a year. Good union labor can compete with anyone and anywhere. By the way, the Big Three have unions in Indiana, Kentucky and Tennessee and they are still getting plenty of new BEV plant investment. Concerning “Right to Work” … remember when folks said adopting it here was going to change the business climate in Michigan. Well, it hasn’t.
Q: Who do you blame for the situation that has evolved in Michigan?
A: Blame? I am not going there. There is enough to go around for everyone, including me. We need to learn from the lessons and mistakes from the past, recognize that the world is incredibly complex and a new paradigm has emerged. We need to look for solutions that work for Michigan. So far, we have collectively failed.
Q: If Michigan does nothing, what’s ahead?
A: As the industry transitions from ICE (internal combustion engines) to BEV (battery electric vehicles), the need for powertrain facilities is changing, too. Engines and transmission are being replaced by batteries and electric motors. Michigan currently has 13 powertrain plants employing thousands of workers. It is estimated that 170,000 workers currently depend on this. That includes teachers, doctors, truck drivers, retail, and a host of support industries. If we don’t fix this, it will be 2008 all over again — in fact, it may be worse. This is the most fundamental transformation of the auto industry since Henry Ford. If we don’t get our share of new EV-related projects, we will lose our status as the automotive state. And we are going to lose a significant number of the best paying jobs in the world. Our best and brightest are going to leave the state. Our families will be dislocated. Our future will be compromised. This is a crisis moment for our state.