In another life
I would make you stay
So I don’t have to say
You were the one that got away
“The One That Got Away,” by Katy Perry
The great philosopher Katy Perry mourns “the one that got away.” What about the three that got away?
That’s how many employers — that we know of — have in the past year passed up the Southern Virginia Megasite in Pittsylvania County. The circumstances in each were different: Hyundai picked a site in Georgia that was closer to being construction-ready, Gov. Glenn Youngkin nixed Virginia’s bid for a Ford plant because of concerns about the company’s licensing deal with a Chinese company, a North Carolina-based lithium company chose a site in South Carolina because it’s closer to the company’s headquarters.
I don’t mean to dwell on bad news — any of these companies would have meant a transformational number of jobs — but each of these projects is back in the news, so maybe it’s useful to check in on what’s going on.
The aborted Ford deal seems one that will not go away, politically speaking. For some, this is a case of Youngkin turning away 2,500 jobs from a part of the state that could sure use them just to make a political point. For others, this was Youngkin courageously defending the American economy from the Chinese. I suspect we will not settle that debate anytime soon. Ford went instead to Michigan, so the only practical effect may have been to move those jobs from Pittsylvania County, Virginia, to Calhoun County, Michigan. However, the Ford deal has remained a talking point for those on both sides.
U.S. Rep. Morgan Griffith, R-Salem, chairs the House Energy and Commerce’s Subcommittee on Oversight and Investigations. In May, he devoted a hearing to the nation’s dependence on foreign countries for so-called “critical minerals” that are used in a lot of technology. That’s an important topic that cuts across political boundaries, but congressional hearings often aren’t fact-finding missions, they’re showcases for politicians to make their political point. In this case, Griffith used his opening statement to point out that some are concerned about partnerships between American companies and Chinese entities: “In just one example, in my home, the Commonwealth of Virginia, our governor, Glenn Youngkin, withdrew our state from the process of incentivizing Ford Motor Company’s proposed electric vehicle battery factory because of Ford’s subservient role in a partnership with a Chinese company.”
The key word there is “subservient.” That’s not how Ford describes its relationship with CATL, the Chinese company that owns the technology it will use for electric vehicles. “We’ll pay CATL to license its battery cell technology — like we would any other contractor,” a Ford spokeswoman told Automotive News. Griffith, though, returned to the “subservient” phrase later in the hearing. One of the witnesses was Diana Furchtgott-Roth, director of the Center for Energy, Climate and Environment at the conservative Heritage Foundation and adjunct professor at George Washington University. She warned that “Beijing will be able to control both the technology and the factory operation.” CATL, she said, “could choose to pause its Michigan plant any time due to political tension between the U.S. and China.”
Griffith’s first question for Furchtgott-Roth was: “Do you agree with my assessment — that Ford is subservient to CATL?”
“CATL has a tremendous amount of power because it operates the plant,” she replied.
Those are two very different views — CATL as an ordinary contractor, CATL as the real power behind the operation. “An American shell over a Chinese company” is how Griffith described the arrangement. That drew the ire of the House member who represents the district where the Ford plant will be. Rep. Debbie Dingell, D-Michigan, isn’t a member of the committee, but she heard about Griffith’s criticism and showed up to offer an impromptu rebuttal. She called the description of the relationship between Ford and CATL “a gross mischaracterization.” She went on to say: “If Ford wasn’t doing this, the reality is they could import these batteries from China. They could build them in Mexico.” Where others see the Chinese benefitting, she sees Michigan workers benefitting. We may not really know the truth until the Ford plant in Michigan opens in 2026 — and there’s some crisis in U.S.-Chinese relations to test the matter.
For now, the Ford-CATL deal fits into an emerging theme: growing scrutiny of American companies doing business with China. The Ford situation involved a partnership with a Chinese company; another controversy has arisen recently over an American technology company with a Chinese subsidiary.
Microvast is a Texas company that designs batteries. The U.S. Department of Energy last year approved a grant from the infrastructure bill for Microvast to build another manufacturing facility near its existing plant in Clarksville, Tennessee. The company said that would help strengthen the domestic supply chain for batteries, but after some political hoopla raised by Republican members of Congress over whether the company’s Chinese subsidiary would somehow benefit from the Tennessee plant, the department withdrew the grant. Microvast has since canceled the Tennessee project and the 700 to 800 jobs it would have brought to the rural area. Griffith wanted Energy Department officials to testify about how Microvast got the grant in the first place, but they declined to appear. Politico, in its reporting of the Microvast situation, said the case illustrates “how the rivalry between Washington and Beijing is complicating President Joe Biden’s climate agenda.” I’ll add another layer of nuance: In both cases, Republican enthusiasm to stick it to China has resulted in jobs not being created in Republican-voting rural areas. Complicated, indeed.
I’m not one for predictions but here’s the safest prediction of all: We have not heard the last about the Ford plant that could have been in Pittsylvania County.
Ford is projected to employ 2,500 at that electric vehicle battery plant now slated for Michigan, but the number, as large as it seems, is quite small compared to another project that bypassed the megasite: Hyundai would have employed 8,100, or at least that was the number originally cited.
It turns out the 8,100 number may have been right but is more complicated than that. Last month, Hyundai and another South Korean company, LG Energy Solutions, announced that 3,000 of those jobs will actually be at an LG plant that will be built as part of the complex near Savannah, Georgia. Ultimately, it doesn’t matter to us how those jobs are structured — they’re not here, that’s what matters to us. However, this partnership between two South Korean companies underscores the importance of Youngkin’s trade mission to Seoul earlier this year. I wrote then about how South Korea has become the driving force behind a lot of U.S. economic growth, particularly in the electric vehicle market. Here’s more evidence.
Finally, let’s look at the third company that passed the megasite by: the Charlotte-based Albemarle Company, the world’s largest lithium producer. Youngkin put a hard sell on the company but some things were nonnegotiable. The South Carolina site is closer to the company’s headquarters and to the North Carolina site near Kings Mountain that it plans to mine. CNBC recently ran a 14-minute feature on Albemarle and how it became such a big lithium player (that’s an eternity in TV time). Included in that feature was a map of the company’s global operations — which includes three sites in China, yet another example of how the world’s economy is tied together in ways that are often hard to untangle, even if we want to.
Given the geographical factors involved in Albemarle’s choice of South Carolina, we probably shouldn’t worry too much about the lithium plant bypassing Pittsylvania County. Not much we could have done about that. And depending on your political proclivities, maybe we shouldn’t worry about losing out on the Ford plant, either. Nonetheless, it’s instructive to be reminded that these three projects all share something in common besides once looking at the Southern Virginia Megasite: They’re all tied in some way to the electric vehicle market, which, as I’ve pointed out before, is clustering in the Southeast just as the gas-powered vehicle sector clustered in Michigan and adjoining states.
Perhaps instead of looking backwards, we should look forward — and ask what we’re doing to get a piece of that industry. A decade from now, Katy Perry might still dominate the charts, but we want to make sure we’re not singing her song and wondering what might have been.