Auto workers' strike and its impact on Joe Biden's manufacturing boom.

author: FutureCar Staff    

S TANTON, TENNESSEE, appears to be a town frozen in time. Its town hall resembles an old-fashioned grocery store from the 1960s, and a cannery next door serves as a communal cooking space for the locals. Stanton has relied heavily on cotton farming for income, but the depressed cotton industry has driven many smallholders to leave the town.

However, amidst the cotton fields, something extraordinary is happening. Ford, one of America's largest car manufacturers, is building its largest industrial complex to date in Stanton. The complex includes an electric-vehicle (EV) plant, a battery factory, and a base for suppliers, with a total investment of $5.6 billion. Construction has been underway for a year, and thousands of acres have already been transformed with concrete and steel. The influx of construction workers has brought newfound business to Suga's Diner, the only food joint in town. The owner, Lesa "Suga" Tard, is now facing a shortage of staff due to the increased demand.

A similar transformation is taking place in De Soto, Kansas. The town's industrial activity was halted years ago when an army munitions factory closed down. However, construction recently began on a $4 billion Panasonic battery factory, marking the largest investment in the state's history. The mayor of De Soto, Rick Walker, is optimistic about the future, pointing out the construction of a four-lane highway and a giant solar farm in the area.

Driving through America's "auto alley," which extends from the Great Lakes to the Gulf of Mexico, reveals the ongoing industrial transformation. The country is experiencing a surge in investment, with companies announcing a cumulative $210 billion of investments in EV and battery factories by late 2022, up from $51 billion in 2020. These investments have contributed to a boom in construction spending across the country.

Several factors are driving this manufacturing renaissance in America. President Joe Biden attributes much of the investment to his financial incentives, such as the Chips and Science Act and the Inflation Reduction Act (IRA). State and local incentives also play a role, as well as the desire to outcompete China and the reshoring of supply chains after the pandemic. Car manufacturers like Ford are motivated to invest in electrification to maintain their dominance in the industry.

Although many Americans still prefer traditional gas-powered vehicles, the surge in EV and battery factories is driven by commercial logic. These factories have become points of contention in the ongoing strike against Detroit's big three carmakers. President Biden and former President Donald Trump are both scheduled to visit Michigan to show support for the strikes. The United Auto Workers (UAW) is concerned about the difficulty of unionizing the new factories and the impact of labor costs on the industry's competitiveness.

Contrary to expectations, there is little evidence of a complete migration of the car industry from unionized northern states to less union-friendly southern states. Non-American carmakers have been building factories in the South for decades, and new activity is happening in both old and new carmaking states. The clustering of factories in certain regions helps minimize transportation costs, especially for heavy batteries.

The new factories also rely on clean energy sources, aligning with the proliferation of wind and solar developments in nearby areas. For example, Kansas has a significant number of wind turbines generating electricity, and the Tennessee Valley Authority is investing in solar and other forms of generation to meet the rising demand for electricity.

Despite the positive aspects of these investments, there are challenges to overcome. The cost and efficacy of government incentives are a point of contention, with concerns about the fiscal costs and potential subsidy wars with the European Union. Environmental and social impacts are also a concern, as some locals resist turning fields into factories and worry about pollution and increased living costs. The issue of unionization is another challenge, as the new factories are located in states that are not union-friendly.

However, despite these challenges, the impact of these megaprojects at the local level is extraordinary. They are revitalizing left-behind places that have long awaited a manufacturing revival. These places share common features such as earmarked land for industrial development, access to a large pool of labor within commuting distance, clustering of related industries, and reliance on clean energy sources. Overcoming the hurdles will be crucial for rebuilding America's manufacturing sector and reviving these towns.

In Stanton, the presence of Ford's supply chain and the projected population growth indicate a promising future. The mayor is already securing investments in infrastructure to support the expected growth. The town's unique attractions, such as the cannery and Suga's Diner, are a good starting point for turning Stanton into a creative hotspot that attracts enterprising individuals.

FutureCar Staff