Michigan’s Road to Electrification

Michigan has been collecting some important victories supporting the growth of the Mobility industry recently. To name just a few:

• Our Next Energy (One)’s $1.6 billion investment in a cell-and-EV-battery-pack factory in Van Buren Township will create over 2,000 jobs
• Gotion’s $2.36 billion in 4 cathode-and-anode plants near Big Rapids, creating 2,350 jobs
• Lear Corporation‘s $80 million investment to build a plant to make parts for General Motor’s Ultium EV platform.

Lear’s plant builds on GM’s earlier investments to convert the Detroit-Hamtramck plant to the Factory Zero plant in Detroit – its first fully-dedicated electric vehicle assembly plant – and announcements to invest $6.5 billion in four Michigan sites including $4 billion in converting the GM Orion plant for full-size EV pickup trucks and a battery cell plant in Lansing.

Source: GM Orion Assembly website – https://www.gm.com/company/facilities/orion

While this is great news for Michigan on the road to electrification, we face stiff competition when it comes to attracting and expanding our role in the global transition from traditional internal combustion engine (ICE)-based vehicles to electric and autonomous vehicles.

Nurturing a critical economic concentration

As discussed in SEMCOG’s recent article “Sustaining our Automotive Base and Building Economic Diversification,” Southeast Michigan is 6.4 times more concentrated in auto manufacturing jobs than the national average, which makes the automotive cluster a critical industry for our region. The industry provides over 170,000 high-paying manufacturing jobs in Michigan. These jobs, in turn, help to create about 700,000 jobs. In all, the auto industry supports about one-fifth of all jobs in the state.

State, national, and global sales of electric vehicles are expected to exceed ICE vehicles at some point in the coming years. The market share of EV in Michigan is estimated to increase from 2% in 2020 to 31% by 2030. The future of the mobility industry also includes aviation, maritime, and freight in addition to automobiles and buses. Additional advancements in hydrogen fuel technology provide further opportunities for growth.

Source: Why Electric Cars Can’t Come Fast Enough, Boston Consulting Group 2021 Publication, BCG Analysis

Michigan has taken bold steps in the last couple of years to encourage further private investments. These include the $1 billion Strategic Outreach and Attraction Reserve (SOAR) fund – which was recently expanded; approval by the Michigan Public Service Commission of new business rates for major utilities; end-to-end process review of MEDC’s responsiveness and customer service levels; and release of Michigan’s Future Mobility Plan.

The $52-billion award by the U.S. Economic Development Administration Build Back Better grant to the Detroit Regional Partnership for the Global Epicenter of Mobility (GEM) initiative will be leveraged to “transform the Detroit area’s legacy automotive industry into a highly competitive advanced mobility cluster.” Michigan is also working on creating the future workforce for the EV industry through the Electric Vehicle Jobs Academy. This employer-led collaborative has gathered over 100 stakeholders to identify mobility-related occupation skill needs in addition to a number of initiatives to support the EV industry.

Opportunities to Sustain our Momentum

While Michigan is on the right track, the critical dependence on the auto industry requires more urgent and sustained action. SEMCOG’s partner organization, the Metropolitan Affairs Coalition (MAC), is a civic group made up of leaders from business, labor, education, and government. To help develop a coordinated action plan, MAC has been convening stakeholders from businesses, state and local government, economic development, and business associations.

This initiative was spearheaded by MAC Board Member Ambassador John Rakolta Jr. (ret) and has been supported by co-chairs Congresswoman Debbie Dingell, AFT-Michigan President David Hecker, and ASG Renaissance CEO Beth Ardisana. We worked with many mobility stakeholders, including Quentin Messer, President and CEO of the Michigan Economic Development Corporation (MEDC), Jeff Donofrio of Business Leaders from Michigan (BLM), Jonathan Smith of the Michigan Department of Labor and Economic Opportunity, Trevor Pawl from Office of Future Mobility and Electrification, Maureen Krauss of the Detroit Regional Partnership, and Glenn Stevens of MichAuto.

In September, we convened partners for a symposium to identify opportunities and challenges to maintain and grow Michigan’s leadership in the mobility industry. Representatives from DTE, ITC, Ford, MEDC, BLM, Wayne County, Oakland County, City of Detroit, Orion Township, University of Michigan- Dearborn, Macomb Community College, UAW, and others participated in this event.

Left to right: Amb. John Rakolta, Jr. (ret), Congresswoman Debbie Dingell, (speaker) Quentin Messer, Jr., CEO, Michigan Economic Development Corporation, and SEMCOG Executive Director and MAC president Amy O’Leary

The group identified six main areas where collaborative efforts will make the most difference. These are:

• Site Availability and Readiness,
• Robust Utility System and Competitive Costs,
• Talent and Workforce Development,
• Financial and Regulatory Incentives,
• Culture and Quality of Life,
• Customer-friendly Government Services

There has already been positive action in some of these areas. The Detroit Regional Partnership is developing a site readiness inventory, and the EV Jobs Academy has convened many education institutions to work with employers to understand essential skills and are developing a curriculum to reflect these needs. SEMCOG has also created an EV Resource Kit and Planning Hub, a one-stop shop for information on electric vehicles and includes data, maps showing charging stations, federal funding programs, utility services, and local ordinances.

Key takeaways from the Symposium and associated conversations:

1. Recognition of the importance of the auto industry in Michigan and the need to urgently address a multitude of issues, including: site availability and preparation; utility costs and availability; workforce development and training; financial and regulatory incentives; responsive customer service; and culture.
2. The Economic Development Administration’s award for the GEM project recognizes the importance of the mobility industry and will help support the transformation.
3. There are several initiatives led by partners currently underway to help support the mobility industry, but there needs to be better alignment, coordination, and leveraging of existing efforts to avoid duplication.
4. Marketing and branding of Michigan’s manufacturing strengths, quality of life assets, and career opportunities will be important to retaining and attracting workers and business investment.
5. An asset and partner map will help identify different efforts as well as progress in strengthening Michigan’s leadership in the mobility industry.

We must work on all these issues to make the greatest impact through meaningful and urgent collaboration and commitment to building Michigan’s future. By leveraging our existing expertise, infrastructure, and assets, we can help build success in the mobility industry. Michigan’s road to electrification is on the right track but needs support from business, labor, government, education, and all other stakeholders. We must all work together to continue moving in the right direction to build the human, physical, and business infrastructure to ensure sustained leadership and economic growth.