Michigan has been the epicenter of America’s automobiles ever since Henry Ford introduced Model T to people almost a century ago, report Bloomberg News. It has also been home to innumerable production plants for vehicle parts and generated employment for tens of thousands of individuals.
However, the epicenter is now suffering setback because as per a piece of a write-up in an editorial, it is not prepared to attain its dream of being dominant in the automotive industry in near future. As such, Ford Motor Co is favoring Kentucky and Tennessee instead for Ford’s new $11.4 billion for new electric vehicle and battery factories.
The project being spearheaded by Ford comprises 3 battery factories in Kentucky and the first brand new assembly plant of Ford to be set up at Memphis. Ford is building the four factories with South Korean battery partner SK Innovation Co. This project is expected to generate employment for 11,000 workers.
The setback of Michigan in being passed over is attracting a lot of criticism from Michigan Governor Gretchen Whitmer, pundits, and politicians for not getting the project since they did not submit a bid for the project.
While politicians and pundits accused Michigan Governor of not securing the project, Whitmer said that Ford failed to give Michigan “real opportunity” so that the state could bid on the deal.
Representative Debbie Dingell, a Democrat from Michigan and in whose district is the home base for Ford states that the previous Republican governor did not sustain the economic development program which could have been made use of for offering incentives to the counter what Tennessee and Kentucky shelled out.
According to Bloomberg News, she also said that an improved and “less fractious” approach was needed to give shape to the automotive factories.
Ford has tried to pacify the discontent neighbors when Chief Executive Officer Jim Farley took to the microblogging site Twitter to express his love for Great Lakes State, where Ford has invested as much as $7 billion in the last five years, as per Bloomberg News.
Executive Chair Bill Ford said that the company did consider Michigan for setting up the EV factory and for the EV expansion, however, it failed to find a suitable location, and there was not enough acreage that would match that of a 6-square mile of the mega-site at Tennessee.
General Motors Co with its South Korean battery partner, LG Chem Ltd has decided upon Ohio and Tennessee for their two initial plants but has not yet announced the site for the other two factories.
Since electric vehicles do not make use of drivetrains and conventional engines, Michigan is at risk during the transformation. One out of 6 internal combustion engines are produced in the state’s factories in America, and a 3rd of transmission, according to the Center for Automotive Research, Ann Arbor, reports Bloomberg News.
While the factories were still running at full strength and capacity, around 32,000 workers in Michigan built transmission and engines that are gasoline fuelled before the pandemic. However, what is at stake is the future of mobility of the automotive industry.
One of the biggest drawbacks of the state of Michigan is the high energy cost. The industrial energy rates of the state are 8¢ per kilowatt-hour, which is more than 7.53¢, the national average and above Tennessee which is at 5.85¢ and Kentucky at 6.06¢, as per US Energy Information Administration.
To add to the woes of the state are the utility regulations that restrict the use of the amount of energy that industrial users are entitled to buy through competitive bids, which is at only 10% of the consumption and that which keeps the rates on the higher side always.
Since electric vehicles are more expensive due to the high cost of the batteries, automakers are moving to the South like Tennessee and Kentucky, and the other states where the right-to-work laws are lower so that the operating expenses are lower too.