The casino in Danville isn’t open yet but Gov. Glenn Youngkin has already laid down the first bet, at least in a figurative way.
The Virginia Mercury reported last week that Youngkin had nixed the state’s pursuit of a Ford battery manufacturing plant over concerns that the technology involved would be owned by the China-based Contemporary Amperex Technology Co., the world’s largest maker of electric vehicle batteries – and also a company that the administration calls “a front for the Chinese Communist Party.”
On Monday, the Richmond Times-Dispatch further reported that if the plant had come to Virginia – and there’s no certainty that the company would have chosen the state – it would have gone to the Southern Virginia Mega Site in Pittsylvania County and created 2,500 jobs.
The implication: A Republican governor, who has vowed to create a “rip-roaring economy” in the state, just nixed 2,500 jobs for a part of the state that desperately needs them. (And a mostly Republican-voting part of the state, at that.)
Some Democrats darkly suggested that Youngkin was not really motivated by concerns about Chinese Communists, but about being perceived as weak on China in a potential Republican presidential primary.
I’m not in a position to opine about the nature of Ford’s China connection or to what degree the Chinese Communist Party is or is not involved. Nor am I in a position to discern whether Youngkin’s true motivations are more patriotic or political. I can, though, do math, so let’s do some math.
Last year, Hyundai looked at the Southern Virginia Mega Site for its own electric vehicle battery manufacturing plant. Hyundai eventually chose Georgia, on the grounds that a site near Savannah was closer to being construction-ready than the Pittsylvania site was. That’s part of what has motivated Younkin’s push to ramp up state spending on site preparation. On Monday, the governor announced $90 million in state grants for site prep at 21 locations across the state (including $1.5 million for the Southern Virginia Mega Site).
Now, here’s the relevant math: That Hyundai plant would have created 8,100 jobs, more than three times as many as the Ford plant, which was looking at both Virginia and Michigan, among other sites.
If you had to choose, just on the basis of the job count, you’d obviously rather have the 8,100-job Hyundai plant than the 2,500-job Ford plant. That’s Youngkin’s gamble – that he can pass up this opportunity because another, bigger one (with no Chinese communists) will come along.
If he’s right, the decision to turn away Ford will become a historical footnote. If he’s wrong, and the Southern Virginia site sits empty for years more, maybe some will wonder whether the Chinese owning the technology is really such a big deal.
We can’t peer into the future but we can look to the past. How often do these big jobs announcements come along? In other words, how risky a gamble was this on Youngkin’s part?
Let’s look first in North Carolina, because that state is regarded as our biggest competitor.
Conveniently, the Raleigh News & Observer has compiled the five biggest jobs announcements in the Tar Heel state last year:
1. Vinfast, a Vietnamese carmaker – 7,500 jobs.
2. Television/film projects – 6,400 jobs.
3. Macy’s distribution center – 2,800 jobs.
4. Wolfspeed, a silicon chip manufacturer – 1,800 jobs.
5. Boom Supersonic, an aircraft manufacturer – 1,500 jobs.
Out of that list, we can toss out the television/film projects, not because those 6,400 jobs don’t count but because they’re not at a single location. That leaves four jobs announcements, two of them bigger than Ford’s 2,500 jobs, two smaller. Multiple news sites in North Carolina reported that most of those Macy’s jobs would be below the average salary in the county where it will be located, so that’s probably not what community leaders in Danville and Pittsylvania County have in mind for the Southern Virginia Mega Site. They would have surely loved to have those 7,500 Vinfast jobs, though. That means one – and only one – jobs announcement in North Carolina would have paid off on Youngkin’s bet.
Georgia, another state Virginia sees as an economic rival, saw two announcements much bigger than the Ford plant: that Hyundai plant we lost out on, and a Rivian electric vehicle plant that would create 7,500 jobs.
In South Carolina, the biggest jobs announcements were for companies that will employ 1,500 and 1,170 people.
In Tennessee, the biggest was 1,300 jobs – for a health care company headquarters, not a manufacturing plant.
In Kentucky, the biggest was 2,000 jobs at another battery plant (hold that thought). Again, smaller than Ford.
However, in 2021, Ford announced plans to build a 5,000-job electric vehicle plant in Kentucky. That same year Ford (again) announced plans to build a 5,800-job electric vehicle operation in Tennessee. (Both of those involved partnerships with a South Korean company.) Both of those announcements became talking points for Youngkin in his gubernatorial campaign that year as evidence that Virginia was falling behind.
I’ve not been able to find a comprehensive list of the biggest manufacturing announcements in the country last year but the Industry Select website compiles monthly announcements, which are the next best thing. It lists some other states with big jobs announcements last year – Ohio scored a microchip maker with 3,000 jobs, Kansas picked up an electric vehicle battery plant with 4,000 jobs, Texas landed a Tesla plant where employment is projected at 5,000, Arizona bagged two semiconductor plants that together would employ 10,000.
I draw two conclusions from this.
First, I count seven jobs announcements last year bigger than the Ford plant that Youngkin turned away, so he’s not making an impossible bet that a bigger (and in his view, less controversial) opportunity comes along. By investing more money in site preparation, he’s increasing the state’s chances for the next big thing.
Second, these opportunities may not go on forever. Notice how many of these are connected to electric vehicles. Electric vehicle detractors won’t like this, but automakers are creating a lot of jobs right now in their rush to get into the EV business. Dare I even say that this is the green part of the Green New Deal? (The website Politico recently published a fascinating story about how Georgia Gov. Brian Kemp, a Republican, has become a gung-ho proponent of electric vehicles because of how many jobs they’re creating in his state. That’s in marked contrast to Wyoming, where Republican legislators are trying to ban the sale of electric vehicles on the grounds that they’re bad for the state’s oil industry.)
On the other hand, this land rush isn’t going to go on much longer. As I’ve written before, the economic geography of the electric vehicle industry is being drawn now. However, once every automaker has the plants it needs, it won’t need to build more for a while. I’ll have more to say about this in a subsequent column but here’s the new thing: The Blade newspaper in Toledo reports that “four or five major battery plants are still searching for a U.S. location.” Of course, battery plants aren’t the only big-employment prospects out there, just one of the main ones at the moment. This is the bet Youngkin is making – that he can pass up these 2,500 Ford jobs and land something bigger later on.
I can’t calculate the odds on that but people in Danville and Pittsylvania may hope the governor can.