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Published in Economic Development
Ford’s plans to invest $3.5 billion in a battery plan near Marshall will help “create a critical mass” in West Michigan for EV technology, said The Right Place Inc. President CEO Randy Thelen. (COURTESY PHOTO, FORD MOTOR CO.) Ford’s plans to invest $3.5 billion in a battery plan near Marshall will help “create a critical mass” in West Michigan for EV technology, said The Right Place Inc. President CEO Randy Thelen. (COURTESY PHOTO, FORD MOTOR CO.)

Ford battery plant deal demonstrates West Michigan’s ‘cohesive industry cluster’ in EV technology

BY Tuesday, February 14, 2023 02:03pm

Ford Motor Co.’s plans to invest $3.5 billion to build an electric vehicle battery plant near Marshall came as good news to economic developers across West Michigan. 

The automaker said Monday it expected to build the advanced battery plant on a 950-acre site in Calhoun County that would give Ford about 35 gigawatt hours per year of new battery capacity, enough to power 400,000 electric vehicles. Ford hopes to begin production in 2026 and projects it will create 2,500 jobs at the new facility. 

Battle Creek Unlimited President and CEO Joe Sobieralski said the Battle Creek area has the necessary industrial real estate and infrastructure to support additional spin-off investments expected to come about as a result of Ford’s project.  

“We see this as one of our key economic benefits of this project landing within 10 miles of Battle Creek,” Sobieralski told MiBiz via email. “We have an industrial park with available land to support additional suppliers but more importantly we already have the infrastructure in place to support the development at those sites from day one.”

BCU also partnered with developers to build spec buildings at Fort Custer Industrial Park, where the first project has been fully leased and developers plan to break ground on a second building this spring.

“Our real estate situation makes us an easy choice for multiple reasons,” he said.

While not taking anything away from the potential for spin-off investments for automotive components manufacturing that could occur because of the Ford project in Marshall, Sobieralski tempered his expectations given the maturity of the region’s industrial sector. He expects to see new investments, “although maybe not as significant as you would see if the project were to land in a state or region where its industrial base wasn’t as strong as Michigan’s.” 

Still, Sobieralski remains bullish that the manufacturing base within a 100- to 150-mile radius has the ability “to absorb or retool” to serve the needs of the new Ford plant. 

Ford’s announcement of the Calhoun County project comes about 16 months after it detailed plans for an $11.4 billion investment in advanced battery and electric vehicle manufacturing in Kentucky and Tennessee. That project, the largest investment in Ford’s history, spurred economic developers across Michigan to put the state on notice that it lacked the necessary tools to compete for major site selection projects. 

Economic Development Leaders for Michigan, a 12-member coalition of economic development agencies, at the time warned that the state’s “economic development toolbox was inadequate to compete for these pivotal projects.”

In response, the Republican-led state Legislature and Gov. Gretchen Whitmer in late 2021 created the Strategic Outreach and Attraction Reserve (SOAR) Fund to give the state a new tool to compete with other states for large corporate investments in jobs and facilities. 

Jennifer Owens, president of Lakeshore Advantage Corp. which serves Ottawa and Allegan counties, credited SOAR and a focused state effort on preparing shovel-ready sites for improving Michigan’s chances of winning the major projects. 

“The increased investment and new long term funding stream for SOAR and site development support will help ensure we can compete for projects that require significant infrastructure and site preparation investments,” Owens told MiBiz via email, noting the state must still work on preparing additional sites for redevelopment. “I look forward to working with our partners at the MEDC to establish additional shovel ready major sites for future growth in emerging technology industries.”

Randy Thelen, president and CEO of The Right Place Inc., said Ford’s announcement “proves the power of site readiness” while also noting the historical context of an automotive OEM building a new plant in Michigan. 

“When I look back historically to 40 years ago when the Japanese automotive transplants were starting to locate in the U.S., Michigan chose not to compete. As a result, you saw Toyota, Honda, Hyundai, Kia and European automakers like Mercedes and BMW all go to southern states,” Thelen told MiBiz. “We missed that last wave of automotive investment, but we can’t miss this wave.

“After all the heat and pressure that was applied after Ford announced that it was going to invest in Tennessee and Kentucky, the state deserves kudos for luring in a multi-billion-dollar investment in a high-tech field.”

Thelen noted investments from LG Chem in Holland and Lansing, Gotion’s plans in Big Rapids and Ford’s recent announcement as examples of the state making a concerted effort to evolve with the automotive industry. 

“The next wave of propulsion for autos is concentrated here,” he said. “Now there’s a critical mass. … It’s moving from being a one-off here and there to being a cohesive industry cluster.”  

Creating that cluster, Thelen added, will likely lead to the creation of specialty training and degree programs that will help in luring additional companies in the sector to locate in Michigan. 

Said Owens: “Securing these advanced energy storage investments now ensures our region and state will be part of the automotive industry’s vibrant future.” 

‘Not a good trade’

A budget bill passed recently by a committee in the Democratic-controlled state Legislature would steer up to an additional $500 million to the SOAR Fund for the next two budget years. The allocation would avoid automatically rolling back the state income tax from 4.25 percent to 4.05 percent, a move that would cut revenues by an estimated $650 million, because state revenues were too high in the prior fiscal year.

In a weekly briefing Monday, Small Business Association of Michigan President and CEO Brian Calley said he understands the need for the state to use incentives for large economic development projects.

While the state “won the deal” and lured the Ford project, it was “at a pretty high cost,” totaling $1 billion, Calley said.

“I get why the state’s going after these deals so hard, it’s just very difficult to swallow that the state is saying that it cannot afford a $650 million tax cut already in law and due to small businesses and individuals,” Calley said. “SBAM has never opposed this type of economic development, but it shouldn’t come at the expense of small business relief.

“This is the first time that we saw a very explicit trade to say, ‘We must … take away a tax cut that is already in law and due to small businesses. We’re going to cancel that and give it to a handful of large corporations.’ The state can afford to do both if it really feels it needs to do both, but that’s just not a good trade.”

Labor is also a consideration for BCU’s Sobieralski, who said workforce availability will continue to affect project pipelines, even with the Ford plant coming online in a couple of years. He’s hopeful the Ford announcement will boost the Battle Creek area’s image and work in the region’s favor for attracting other investments.

“Can we as a region with this announcement leverage positive inward migration of workers like we’ve not done before?” Sobieralski said. “If we can, the pipeline of projects may actually grow.”

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MiBiz senior reporter Mark Sanchez contributed to this report.

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