How Michigan aims to protect its $1 billion bet on EV battery plants

Crain’s Detroit Business
Kurt Nagl, David Eggert, Rachel Watson
Oct. 7, 2022

Michigan officials are hailing plans for a pair of EV battery factories and combined $4 billion investment as a major economic victory, but they are also hedging their taxpayer-funded bets in case the projects fail to deliver.

Over the next decade, Gotion Inc.’s $2.4 billion plant near Big Rapids and Our Next Energy Inc.’s $1.6 billion plant in Van Buren Township are expected to create a total of 4,462 jobs, according to officials, who have approved around $952 million of incentives – $213,357 per job – for the projects.

Industry experts and observers are split on whether it’s worth it.

Anderson Economic Group CEO Patrick Anderson said the taxpayer risk is too high.

“We’re ballyhooing a billion-dollar investment, and we’ve made commitments of $175 million in grants without seeing a business plan or a building schedule, and that is concerning,” Anderson said of the Gotion project. “I don’t like to see our taxpayers taken for a ride, and this thing has a bad smell about it.”

Glenn Stevens, executive director of MICHauto, sees it a different way.

“It’s just plain and simple outstanding news,” Stevens said. “Both of these are examples of where the administration, legislature, local economic development agencies, the talent, and workforce folks are all working on this together. I think that’s a significant sign for Michigan.”

Economic development officials have emphasized the urgency of landing EV and advanced manufacturing investments to protect the state’s most valuable industry amid transition. Critics have argued that spending taxpayer funds on unproven technology is bad policy.

Opportunity and uncertainty

Michigan has a history of plunging money into EV battery projects, and not all have panned out. A decade ago, A123 Systems used a $249 million federal grant and $125 million of state funds to build a plant in Livonia, which was the largest lithium-ion plant in North America at the time. Cursed by defects and poor market timing, the company went bankrupt before being bought by a Chinese firm.

“Our elected officials cannot make these kinds of giant bets with any sort of certainty that they’re going to pay off,” said John Mozena, president of the Center for Economic Accountability. “We get so focused here in Michigan on this idea that we need to be leading the automotive industry … Maybe Michigan should be spending less time trying to chase the past.”

Both the Gotion and Our Next Energy projects come with opportunity and uncertainty. Gotion, which is backed by Volkswagen, has manufacturing in China but has no track record in the U.S. Our Next Energy, whose founder is a former executive of A123 Systems, has strong investors including BMW and billionaire Bill Gates but has yet to mass produce its lithium iron phosphate batteries or generate revenue.

Neither company has disclosed its customers in Michigan.

Michigan Gov. Gretchen Whitmer on Wednesday announces Michigan Strategic Fund approval of state investments for the Gotion Inc. and One Next Energy electric vehicle battery plants.

The Michigan Economic Development Corp., which signs off on incentives, said it structured terms with the companies to make their incentives contingent on fulfilling promises.

“It is a performance reimbursement,” MEDC CEO Quentin Messer Jr. said recently during a call with reporters. “So there is absolutely not a dime that will go out unless this company performs.”

Gotion’s deal

Gotion, which plans to build two cathode plants and two anode plants near Big Rapids in Mecosta County, will receive a state Critical Industry Program grant worth $125 million if it meets certain milestones.

  • First, it must strike a development agreement with The Right Place Inc., an economic development organization based in Grand Rapids, and buy or be transferred all necessary land at the project site before 2024, according to terms of the agreement obtained by Crain’s. It then can start requesting reimbursement for half of construction and other capital costs, up to $95 million.
  • Second, Gotion must spend nearly $2 billion more and create 1,500 jobs by March 30, 2028. It then can seek the remaining $30 million.
  • Third, Gotion must meet its overall commitments, $2.36 billion in investment and 2,350 jobs by March 30, 2032, or repay some or all of the $125 million grant.

The term sheet includes clawback provisions. Gotion would have to repay up to 100 percent of grant funds if it does not meet the phase two requirements. The battery maker’s failure to meet the overall investment or jobs commitments would result in it repaying a portion based on how much it spends and how many people are hired.

The Right Place will get up to a $50 million Strategic Site Readiness Program grant. Expenses eligible for reimbursement include public infrastructure improvements, site development and land acquisition. It would have to repay the state if the project falls through.

Our Next Energy Inc. plans to produce 200,000 battery packs annually at its new plant in Van Buren Township by 2027.

Our Next Energy’s deal

Our Next Energy plans to open a cell and EV battery pack factory in a recently constructed facility in Wayne County’s Van Buren Township. It will get a state Critical Industry Program grant of $200 million if milestones are reached.

  • First, by July 2023, it must secure $169 million in private financing, execute a lease agreement (which has been done), sign a joint development deal with a materials refinement partner, sign a strategic collaboration agreement with a battery manufacturer, and finalize purchase order requirements and supplier contracts for a cell prototype and training line at its Novi headquarters. It then can request reimbursement for 60 percent of eligible expenses, up to $50 million.
  • Second, before 2024 it must demonstrate receipt of $360 million in private financing total, hire a general contractor to retrofit the facility, finalize purchase order requirements and supplier specifications for the first cell manufacturing equipment line, and sign an additional customer for its Aries battery. It then can seek 60 percent reimbursement, up to $70 million.
  • Third, before October 2026 ONE must secure $560 million in private financing total, show $300 million in company revenue, invest nearly $1.1 billion, launch at least two cell manufacturing lines and initiate purchase orders to scale two additional lines. It then can get $60 million of the grant.
  • Fourth, it must create 2,112 jobs and spend $1.6 billion before 2030. It then can qualify for the remaining $20 million.

The term sheet has similar clawbacks to the Gotion deal.

Local impact

Paul Isely, associate dean of undergraduate programs at the Seidman College of Business at Grand Valley State University in Grand Rapids and a longtime professor of economics, said it’s unknown at this point if EVs are a bridge technology or a final technology. If the former, Gotion might have to pivot away from battery production to whatever is next, such as hydrogen technology. He believes that pivot could come within the next decade.

“If the technology changes radically enough, do we have a stranded asset?” he said.

Still, he thinks it’s a risk worth taking for Michigan to stay competitive in the mobility space.

“We’re already seeing a lot more battery plants pop up in the Tennessee, Kentucky, that sort of automotive area, and if we don’t have the supply chain components here in Michigan to supply the automotive industry, the automotive industry won’t stick. So, in reality, we don’t have much of a choice if we’re trying to anchor that primary industry here,” he said. “We’re making a strategic bet that this provides the commitment to the supply chain that will keep (automotive companies) producing vehicles in Michigan. That seems like a good bet.”

In Van Buren Township, the Our Next Energy project has the potential to reshape the battery supply chain, which is why economic development officials said it was so important to secure the project. CEO Mujeeb Ijaz said the plant will be the centerpiece of a localized supply of iron, lithium, iron phosphate, graphite and other materials, spawning further job creation in the region.

“We’re ready to build an ecosystem of suppliers here in Michigan,” he told Crain’s.

The MEDC said the Van Buren Township plant will have a job multiplier of 3.33, meaning an additional 2.33 jobs will be created for every new direct job. The multiplier for Gotion was calculated to be 3.13.

“In addition, these new jobs are generating new income, much of which is spent at local small businesses throughout the community and the state,” the MEDC said in a briefing memo.

Anderson, whose firm has conducted similar job creation studies, said it is “obvious” that the multipliers cited by the MEDC are exaggerated.

“That is a stratospheric multiplier,” he said. “It’s implausible that this or any similar operation would actually generate three jobs for every job in the plant.”

An empty tract of land that encompasses the Big Rapids Airport Industrial Park is part of the 19 parcels across 523 acres on which Gotion Inc. plans to build an EV battery plant over the next decade.

Bill Stanek, Big Rapids Township supervisor, said Gotion, which hasn’t announced its developer or contractor partners, will steer the project with plenty of local oversight, as approvals will be needed at each step of the process. He said he expects Chuck Thelen, vice president of Gotion Global and leader of the company’s North American operations, will hire a local general manager and local leadership team to run the Big Rapids-area facility.

Thelen did not return a request for comment.

Stanek said he studied the Gotion proposal from all angles for about 16 months leading up to the local municipalities’ vote on whether to apply for a Renaissance Zone tax exemption, and he feels it’s a “calculated risk” to dole out these incentives.

Although the U.S. subsidiary, Gotion Inc., has only been in the U.S. conducting research and development since 2014, its 27-year-old Chinese parent company, Gotion High-Tech, is among the largest lithium-ion battery makers in the world, with customers including Volkswagen and the Chinese automobile companies SAIC and Chery. Stanek said in addition to having customers in the electric vehicle segment, Gotion High-Tech also makes power storage components for the solar energy market, although he could not name specific customers.

Green Township Supervisor Jim Chapman said Gotion’s first U.S. manufacturing plant has to be built somewhere, and he’s happy to see it land on his home turf rather than in another state.

He said if Gotion should fail to meet the state’s terms for the incentives, he’s confident the fail-safe terms and clawbacks outlined in the term sheet will protect the state’s investment.

Stanek and Chapman agree that if worse comes to worst, and Gotion doesn’t finish the project, the site could be used for something else — especially now that it’s received so much national attention.

The Gotion project is expected to create 2,350 jobs by 2031. Gotion and the local officials have said they believe those jobs can be filled by sourcing from the community and Ferris State University’s talent pool.

Job training and lifting up “geographically disadvantaged areas” are cited by the MEDC as pillars of both projects and good reason to back them financially.

Our Next Energy said it plans to work with Focus: Hope to develop a skills-based training program for its employee base. Jobs at the new factory would pay $35 per hour by year six, or 55 percent higher than the ALICE (Asset Limited, Income Constrained, Employed) target wage.

“The (Our Next Energy) facility is located close to geographically disadvantaged areas, which will provide residents with employment opportunities and the company with a talent pipeline,” according to the MEDC.

On the west side of the state, where the supplier base is not nearly as dense, a new plant would have arguably more noticeable impact, and present challenges for the company to find workers.

As of August, Mecosta County had an unemployment rate of 5.3 percent, or about 964 unemployed workers. Chapman said Gotion and The Right Place conducted three separate employment studies, and all three found that within a 45-mile radius of the site, there is a “major” potential labor force.

“Right now, it is not unusual for somebody from our area to drive to Grand Rapids to a job. That’s a 60-mile drive,” Chapman said. “If you were working in a factory in Grand Rapids and living in Big Rapids, and now there’s a plant in Big Rapids that offers the same pay rate, but you don’t have to drive an hour to work and an hour home, what would you do?”

Stanek said downsizing and closures over the past decade by Evart Products and Liberty Dairy in neighboring Osceola County left hundreds of people without jobs, and those people were forced to either move away or add to their commutes. He said he thinks there would be an appetite from those people to work at Gotion if the project pans out.

Jobs at Gotion would average $29.42 per hour, nearly 65 percent higher than the ALICE target wage.

The housing supply across Michigan remains historically low, and Chapman said that could pose a challenge as these new jobs are created. But it also could create opportunity for housing developers to step up and meet the demand.

Stanek and Chapman said that back when the housing bubble burst in 2007, two subdivisions — the Hills of Mitchell Creek and Sunrise Haven in Big Rapids — were never finished. They said those projects have the potential to be restarted with the promise of so many middle-income jobs coming to the area.

Paul Bullock, Mecosta County controller and administrator, said it’s important to remember the Gotion project is expected to happen in phases, so there will be time for the labor and housing questions to be sorted out.

“It’s not, ‘Boom, we’re there,’ right? We’ll build up to that, and that will give developers an opportunity to see exactly what the market is, and it will give them a chance to respond,” he said. “If this were, boom, we’re dropping this whole thing on you, and we’re going to build it out in a year, it would be a whole lot more intimidating than it is with a phased plan that will allow the free market to respond.”

View the original article.

Gov. Whitmer Has Announced 30,000+ Auto Jobs Since Taking Office

Michigan’s legendary auto industry continues strong growth as state supports critical supply chains of electric vehicles, batteries, and chips

LANSING, Mich. – Today, Gov. Gretchen Whitmer highlighted Michigan’s strong auto industry job growth since she took office. This comes on the heels of yesterday’s news of Gotion’s $2.36 billion investment in Big Rapids creating 2,350 jobs to Big Rapids and Our Next Energy’s $1.6 billion investment creating 2,112 jobs in Van Buren Township. Since the governor took office, companies have announced 30,000+ good-paying auto jobs—from line workers to engineers—building on the state’s legendary automotive heritage and securing the future of mobility and electrification in Michigan.

“Michigan put the world on wheels and over the last few years, we have worked together to bring home transformational investments building on our legendary manufacturing heritage to grow our economy,” said Gov. Whitmer. “Since I took office, we have announced over 30,000 good-paying auto jobs including major investments from the Big Three and projects building electric vehicles, batteries, and semiconductor chips in Michigan, supporting critical supply chains. I will work with anyone and compete with everyone to build on our economic momentum, create good-paying jobs, and bring investment to every region of our great state.”

“General Motors’ investments in Michigan demonstrate our commitment to bring employees along on our transition to an all-electric future and create new economic opportunities in our home state,” said Mary Barra, General Motors Chair and CEO. “We appreciate the strong support from the state of Michigan, the Michigan Legislature, local municipalities as well as our collaboration with our workforce and LG Energy Solution that help make our future in Michigan bright.”

“Ford is proud to call Michigan our home, and we are happy to work with Governor Whitmer and state leaders to strengthen innovation, manufacturing, infrastructure, and create jobs,” said Ford Motor Company. “Since 2016, Ford has invested nearly $10 billion in Michigan and created or retained more than 10,000 jobs. Michigan is where Henry Ford’s Model T put the world on wheels, and it’s from Michigan that we’re carrying out the Ford+ plan to transform the company and industry into the electric vehicle future.”

“Stellantis remains fully committed to Michigan, with investments totaling more than $4.6 billion in recent years at plants across Southeast Michigan,” said Stellantis. “These investments to modernize our facilities are preparing Stellantis to meet its electrification goals, outlined in the Dare Forward 2030 strategy, and will keep the state at the forefront of the industry while providing good-paying jobs for residents.”

“Michigan has led innovation when it comes to autos, labor unions and now the transition to electric vehicles,” said Ray Curry, UAW President. “Governor Whitmer’s leadership has promoted all that the state has to offer. Our union looks forward to engaging with the next generation of EV workers as they seek a voice at work.”

“The MICHauto team applauds the bipartisan work that’s gone into bolstering the automotive and mobility workforce here in Michigan,” said Glenn Stevens Jr., Executive Director of MICHauto and vice president of Automotive and Mobility Initiatives at the Detroit Regional Chamber. “Continued progress and commitment to attracting and retaining the best high-tech talent will ensure the longevity of this growth and the state’s global leadership in this space.” 

Here are selected investments by manufacturers of autos, batteries, chips, and auto supplies since Governor Whitmer took office:

Autos

  • GM
  • Ford 
  • Stellantis
    • $4.5 billion, 6,433 jobs: first new auto plant in Detroit in nearly 30 years, game-changing investment for local workers.
    • $83 million: retooling the Dundee Engine Complex to build hybrids.

Electric Vehicles & Batteries

  • Gotion, $2.36 billion, 2,350 jobs: world-leading battery maker announces plant in Big Rapids, largest economic development investment in Northern Michigan ever.
  • Our Next Energy, $1.6 billion, 2,112 jobs: Novi-based battery maker announces new factory in Van Buren Township, building supply chain in Michigan using more sustainable materials.
  • LG Energy Solution, $1.7 billion, 1,200 jobs: manufacturer of large lithium-ion polymer battery cells and packs for electric vehicles quintuples production capacity at their Holland plant.
  • Rivian, $4.6 million, 100 jobs: manufacturer of electric adventures vehicles builds state-of-the-art, highly technical service support operations center in Plymouth.
  • Magna, $70.1 million, 304 jobs: producer of complex structural battery enclosures for electric vehicles builds new facility in St. Clair.
  • AKASOL, $40 million, 224 jobs: manufacturer of high-performance lithium-ion battery systems for commercial applications such as buses, commercial, rail, and industrial vehicles, ships and boats builds battery facility in metro Detroit.
  • FLO, $3 million, 133 jobs: electric vehicle charging solution company expects to produce 250,000 EV chargers by 2028, builds new facility in Auburn Hills.
  • XL Fleet, $1.2 million, 49 jobs: high-growth commercial vehicle technology company focusing on developing and producing cutting-edge technology to convert conventional vehicles into hybrids establishes R&D center in Wixom.

Semiconductor Chips (not counted in auto jobs total)

  • Hemlock, $375 million, 170 jobs: founded in Hemlock, MI, one of the longest-operating manufacturers of polysilicon in the world and the largest producer of high-purity polysilicon in the U.S., while also being the only U.S.-headquartered manufacturer. High-purity polysilicon, as the foundational material used to create semiconductor chips, is essential for all products in the electronic and solar power industries.
  • SK Siltron, $300 million, 150 jobs: manufacturer of critical silicon carbide wafers acquired and rehabilitated a facility near Bay City.
  • KLA, $150 million, 600 jobs: doubling their initial investment for new R&D facility in Ann Arbor, considered more than 350 North American locations before choosing Michigan, citing the area’s attractive business climate, logistical assets, and talent base.
  • Wacker, $50 million, 300 jobs created and supported: a pioneer in silicone and polymer technology who is the leading provider of polysilicon for the solar industry, innovator in biotechnology for food, nutrition, and pharmaceuticals, and backs other industries including automotive, construction, paints, and textiles opens regional headquarters in Ann Arbor.
  • Calumet Electronics, $6.5 million investment, 80 jobs: one of very few manufacturers in the United States with the ability to make organic substrates, a critical component in all microelectronics, expands in the Keweenaw Peninsula.

Auto Suppliers

View the original press release.

High-Tech Talent is Michigan’s Future

Digital Lakes, a new nonprofit whose mission is to attract, develop, and retain diverse high-tech talent while elevating the digital growth of the entire region, facilitated a conversation among partners KPMG and MICHauto at the Detroit Athletic Club on Thursday, Sept. 29.

Employers Must Rethink Their Hiring Processes to Attract and Retain Top Talent

Emma Andersen, director of Deal Advisory and People Strategy at KPMG, opened the conversation by saying that the labor market is “an incredibly inefficient economic market” and doesn’t meet the needs of candidates or hiring organizations. Factors that contribute to this include:

  • Lack of units of measure
  • Lack of visibility
  • Lack of pricing transparency
  • Lack of skill definition
  • Lack of available talent

Companies exacerbate this problem with their own hiring procedures such as overvaluing referrals, hiring candidates that aren’t actively seeking jobs, using inaccurate job descriptions, considering too many candidates, poorly structured interviews, and prolonging the interview process. Another common practice that works against employers is discarding candidates that aren’t the best fit for the job they applied for instead of evaluating if they could be a better fit elsewhere in the company. Overvaluing a candidate’s potential to be a good fit for the culture can also shift focus away from whether they have the right skillset for the position.

When beginning the hiring process, employers tend to post the position externally before looking internally for talent that may already exist within. This approach is expensive, ineffective, and doesn’t ultimately lead to increased retention. Citing a study from the ADP Research Institute, Andersen said, “the cost of acquiring a new hire is about 50% of that individual’s salary. With U.S. companies paying $15 billion annually for hiring support, the estimated cost of continuous voluntary turnover in the U.S. is $630 million per year.”

Cities in Michigan that are experiencing the most growth are Traverse City, Grand Rapids, Saginaw, Ann Arbor, and Battle Creek. However, with more growth comes more demand and competition among employers for talent. Based on data tracked from 2018-2022, an average of only two out of five positions are being filled, showing that the demand is not being satisfied.

To address this problem, Michigan will need to take a multipronged approach which includes investing in communities, reskilling the existing workforce, and hiring for skills over degrees. Employers will also need to consider what talent is seeking from them, like pay transparency, formal and informal professional development, and meaningful work.

Andersen concluded by saying, “you can’t make a tech hub overnight. It’s going to take a lot of partnership between organizations.”

Building the Foundation for Michigan’s Tech Future

Glenn Stevens Jr., executive director of MICHauto and vice president of Automotive and Mobility Initiatives at the Detroit Regional chamber, highlighted that not only is Michigan’s job market growing, but these new jobs require a higher proficiency in technological skills than others. With tech hubs popping up in Tennessee, Ohio, and Ontario supported by government and industry investment, it’s critical for Michigan to take steps to ensure that it is positioned as desirable place to live, work, and play.

The sustainability and digitalization of the vehicle and the ecosystem around it are creating new opportunities in Michigan’s automotive and mobility industry and driving growth. Stevens said, “one of the things we all know is we make things here,” including at GM’s Orion assembly plant, which will soon be the third primarily electric assembly plant in the state. With nine more plants yet to be converted, the transition to EV is far from over, but the industry’s supply chain, talent, and technology have already been impacted.

“One of the things I always heard in this industry growing up in Michigan and going through it, is we need to diversify away from automotive. I would argue that the best platform for diversification is our automotive industry,” said Stevens. “When you look at all of things happening in Factory 4.0 and the connected vehicle, artificial intelligence, and machine learning, why not expand those into other industries in Michigan? Now tech becomes industry agnostic.” To be successful moving forward, we must bolster the manufacturing footprint that already exists and build the digital tech and knowledge-based economy.

Stevens noted that while prominent, Silicon Valley is not the only blueprint for developing a tech hub. Michigan’s neighbors in Ontario have already evolved their approach to talent attraction by branding and positioning their tech hub as “The Corridor.” Ohio has also launched a successful initiative called OhioX with a mission to build the state as a tech hub. “Our competition is right next door,” he warned.

“When you look at why a company grows, it’s about consistency in workforce, high-tech talent, skilled trades, and digital proficiency in all jobs,” said Stevens. He also cautioned that as companies grow, they shouldn’t limit their perception of the talent pool. “It’s not just about youth. We must look at this holistically. It’s about new Americans, retraining and reskilling, and people coming back into society from incarceration. There should be opportunity for everyone,” he said.

Ultimately, ensuring that Michigan is a place that people want to live, work, and play is the base for all of this. “If you don’t have that, the rest does not matter,” Stevens said.

Talent Isn’t a Pipeline, It’s a Supply Chain

Robert McMahan, president of Kettering University, said the bottom line is that we treat everything in business as a supply chain problem except the most critical element, which is talent. “That’s what makes their organization go and it’s the only thing they treat as a hunting and gathering problem.”

He noted that these companies look to universities to deliver students with the right skills, universities look to high schools, and high schools look all the way back to middle schools. Because STEM and technical disciplines are “implicitly linear in their nature,” the chain of custody for the development of talent starts very early. The key inflection point for the talent supply chain is in the 5th and 6th grades, where students make key life decisions not by pursuing something but by withdrawing from subjects they deem uninteresting or too difficult. “We have to engage that supply chain in its formative stages as meaningfully and as seriously as we engage it in its latter stages,” McMahan proposed.

McMahan shared that the founders of Kettering University “understood that to build the industry, they would have to take the tens of thousands of untrained people flooding into Flint and they would have to train them in a way that was practical, applied, and integrated with the businesses they were building. There is a difference between learning and mastering, and that is practice.” If businesses want talent that fits their specifics needs, they will need to not only work collaboratively with education partners, but also shift their efforts to much earlier than they have done previously.

Glenn Stevens Jr. Joins Citizen’s Research Council of Michigan’s Board of Directors

The Citizen’s Research Council of Michigan’s 106th Annual Meeting of the Council of Trustees and a joint meeting with the Board of Directors was held on Wednesday, Sept. 21. The primary purpose of the meeting was the election of members and officers of both bodies.

Newly elected to the Council of Trustees are Madhu Anderson from The Nature Conservancy, David Blaszkiewicz from Invest Detroit, Chase Cantrell from Building Community Value, Michael Goorhouse from Community Foundation for Holland and Zeeland, Carolee Kvoriak from Consumers Energy, Tom Kyros from Varnum, and Kathleen Wilbur from Michigan State University.

The Council bids adieu to five departing directors – Beth Bialy from Plante Moran, Larry Bryant from Comerica Bank, Ron Hall from Bridgewater Interiors, Michael McGee from Miller Canfield, and Diane Young from The Athena Financial Group.

The newly elected Board of Directors include Darnell Adams from the Gilbert Family Foundation, Stacie Behler from Grand Valley State University, Paul Bryant from Plante Moran, Mark Burton from Honigman LLP, Zenna Elhasan from the Kresge Foundation, Patrick McGow from Miller Canfield, and Glenn Stevens Jr. from MICHauto.

Learn more about the Citizen’s Research Council of Michigan. 

Glenn Stevens Jr. on WJR-AM: Detroit Auto Show Highlights

Glenn Stevens Jr., executive director of MICHauto and vice president of Automotive and Mobility Initiatives for the Detroit Regional Chamber, spoke with WJR-AM at the Detroit Auto Show Charity Preview to discuss the show’s highlights. Listen to the full interview below.

WJR-AM
Sept. 16, 2022

Midwestern Partnership Backs Hydrogen as Clean Energy Source

Crain’s Detroit Business
John Flesher
Sept. 19, 2022

Seven Midwestern states are teaming up to accelerate the development of hydrogen as a clean-energy alternative for automobiles and factories that rely largely on climate-warming fossil fuels, governors said Monday.

The partnership includes Michigan, Illinois, Indiana, Kentucky, Minnesota, Ohio and Wisconsin, whose economies are dominated by agriculture and heavy industry such as steel and automobile manufacturing.

“The Midwest will continue leading the future of mobility and energy innovation and has enormous potential for transformative hydrogen investments,” Michigan Gov. Gretchen Whitmer said.

Hydrogen is a colorless, odorless gas that already powers some cars, trucks, buses and trains. But a shortage of fueling stations limits their appeal. Some environmentalists are skeptical because most commercially produced hydrogen in the U.S. comes from natural gas, which emits greenhouse pollutants carbon dioxide and methane.

But hydrogen can be derived using electric currents from wind, solar or other means that produce few if any emissions contributing to global warming. Such “clean hydrogen” releases only water as a byproduct when used in a fuel cell.

“We don’t have to choose between clean energy and clean air and creating good-paying jobs and a strong economy — we can do both,” Wisconsin Gov. Tony Evers said.

The federal infrastructure law enacted last year included $8 billion for the U.S. Department of Energy to fund regional “hubs” that would step up clean hydrogen production and distribution.

Climate legislation that President Joe Biden signed last month offers a tax credit intended to make clean hydrogen more competitive.

Those measures “made it almost certain that clean hydrogen development will become a major alternative for producing energy both in the Midwest and nationally,” said Zachary Kolodin, Michigan’s chief infrastructure officer.

States in the Rocky Mountains and the deep South announced regional associations earlier this year. Another was proposed for the Los Angeles Basin in California.

The Midwestern Hydrogen Coalition hasn’t committed to joint pursuit of federal funding, although smaller groups of states or industries might seek grants. Instead, the seven-state partnership will focus on boosting development, markets, supply chains and a workforce for clean hydrogen, according to a joint statement.

It will take advantage of assets such as the region’s pipelines and tanks for distributing and storing ammonia, which consists largely of hydrogen and is a key ingredient in fertilizer.

Hydrogen “could help us end the use of fossil fuels, and it could be especially helpful for industry, which is the hardest to decarbonize,” said Charlotte Jameson, chief policy officer with the Michigan Environmental Council. “But not all hydrogen is clean.”

Midwest states should focus on hydrogen made from renewables and should not use their coalition to “delay moving our power systems to renewable energy and electrifying our buildings and transportation,” Jameson said. “We have the solutions and the momentum to do that now.”

View the original article. 

Ancor: Q&A With Glenn Stevens Jr.

There are many different factors, thoughts and approaches happening in the current evolution of the automotive industry. During this dynamic time, Ancor Automotive has become a proud investor of MICHauto, the state’s only automotive and mobility cluster association that promotes, retains, and grows Michigan’s signature industry. To help us get an inside view of what’s going on in the industry, we sat down with Glenn Stevens Jr., Executive Director of MICHauto and Vice President of Automotive and Mobility Initiatives for the Detroit Regional Chamber.

Ancor: The auto industry is going through a significant evolution – what does this mean for Michigan?

Glenn: The industry is definitely going through a transformation and a transition, one that I think is probably not like anything we’ve ever seen. If you think about it, an industry that’s been doing the same thing for 120 years, all built around the internal combustion engine, is now transitioning to an electrified and very digitalized form of transportation. That means there’s a tremendous amount happening. And there is no greater concentration of automotive OEMs, suppliers, research and development and testing happening in the world compared to Michigan. That’s a fact. Are there other centers of excellence around the globe? Yes, but not like the concentration we have here in Michigan. We’re operating from a great base of history and a great base of R&D, engineering, and advanced manufacturing.

The way to keep Michigan at the forefront is to make sure that as the vehicles, infrastructure, and all the things around and in the vehicle change, we maintain our leadership in engineering, research, and design. Today, the two primary things are electrification and digitalization, so we need to focus on the high-tech talent to work on these, while making sure our factories become factories 4.0. From this advanced manufacturing standpoint, there are other things that are critical to focus on. For example, policy. We have to make sure we have the right policy, state and federal, in place as it pertains to the industry. The industry is working hard on all this because we don’t take the position that we’ve earned over 100-plus years lightly.

Ancor: With so much going on in the industry right now, automation, digitalization, connectivity, what excites you the most and why? 

Glenn: I think from a technology standpoint, it’s fascinating. What we’re seeing with the change in the propulsion system, it’s not just electrification, because there’s a lot of activity in fuel-cell development too. I think the opportunities these technology shifts provide are tremendously interesting – it really gives me cause for optimism. In this industry, when we look to acquire talent or deploy technologies, we’re trying to solve global problems, unlike back in the day when the industry was viewed as contributing to global problems. Today if you look at climate – safety, sustainability, road congestion issues, the industry is trying to solve these problems. That’s really exciting!

Ancor: Automakers are going full speed ahead in EV development, but consumers don’t seem to be quite sold on the idea. Where do you think that disconnect is?

Glenn: I think there’s a couple ways to look at it. First, the average cost of an electric vehicle is $66,000 – that’s not accessible to the average consumer. So, I think it’s hard for somebody to say, “Yeah, I can see myself in that vehicle.” In addition to cost, there are a lot of other factors. For example, we’re used to seeing a gas station on every other corner. But we’re being told that with EVs, we’ll have a charger, 80% of which will be in the home. So, there will most likely be a home charger and then an infrastructure of chargers around us. It’s a pretty complex supply chain for bringing these things to mass market and for people to understand.

There’s also a bit of a disconnect when it comes to consumer adoption, infrastructure and what the OEMs announce, but that’s always the case. OEMs announce plans because that’s the nature of the competitive forces that they’re up against. But over time it will start to come together. For example, when the supply chain evolves, battery costs come down, vehicle pricing comes down, infrastructure is in place, etc. Consumers will start to understand that it’s not that complicated and realize they don’t need to worry about going 400 miles because that’s not their normal driving routine.

In the end, it’s a very complex issue. There is a disconnect, but we’re kind of in the wild, wild west phase of a lot of this right now – a lot of things are going to shake out.

Ancor: Workforce, current and future, is a big topic. What do we need to do, or what is the state or MICHauto doing, to attract people to our industry?

Glenn: The number one thing we’re focused on right now is the human capital supply chain for the industry, making sure Michigan citizens of all ages know there’s opportunity in an industry that’s growing, changing, evolving, and solving global issues. In our focus, we’re taking a holistic look. We’re involved in one way or another on things like immigration reform, because we need more new Americans to work in our industry, country and state. Then there’s reskilling and upskilling of current employees as jobs change with digitization and such. We’re also focused on getting people, including younger people, interested in the industry.

Then there’s other, bigger issues like affordable housing and childcare – we’re actively involved in those issues too. Typically, we wouldn’t be involved in these, but they are such a big part of the talent equation that we must make sure we have a voice and the right policies being put in place to address them and ensure Michigan is a welcoming place. We want Michigan to be, and be known as, a place with strong communities where you can make a living in an industry that’s growing and exciting.

Ancor: It’s a lot to accomplish – how do you see the industry succeeding?

Glenn: It’s going to take all of us to accomplish what we need to do as an industry. I’m talking companies of all sizes, schools, community colleges and universities, politicians – all the stakeholders. One of the things we are proud of at MICHauto is we don’t have typical members. We have investors from a variety of different stakeholder groups. This is intentional because we want all the voices to be part of the single voice that represents the industry and where it’s going.

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Panel: Shaping Talent and Workforce Development on the Road to Electrification

Anne Pentika, talent development liaison at the State of Michigan, Ben Cruz, director of the Center for Advanced Automotive Technology at Macomb Community College, and Glenn Stevens Jr., executive director of MICHauto, gathered at the 2022 North American International Auto Show to discuss Michigan’s evolving workforce development needs on a panel hosted by the Center for Automotive Research (CAR).

The Need to Dual Skill the Workforce

The panel’s moderator, Brett Smith, director of technology at CAR, opened the conversation by asking where the region currently stands in the transition into a high-skilled, electrified workforce.

Stevens answered, “the fact is, there is a lot being done, but we are a long way from where we need to be.” He is encouraged that there are plenty of resources and organizations focused on solving the problem but emphasized that the key to success will be ensuring they all remain on the same page.

Pentika shared that the state is looking at developing a workforce with dual skillsets because while we still need skills in maintaining ICE technology that already exists, the industry is moving forward into high-tech and electrified innovation. Therefore, partnering with educational institutions to upskill or reskill employees into other opportunities will become increasingly necessary.

Cruz confirmed that ICE technology will eventually fade out, but that it will remain relevant for many years to come. To address this, Macomb Community College developed a certificate program that can be completed on its own or added to a larger automotive technology course and give students the new skills employers are seeking.

Collaboration is Key

Another initiative striving to address the state’s workforce development needs is the EV Jobs Academy, in which MICHauto, the State of Michigan, and Macomb Community College all participate. According to Pentika, the program led by the Southeast Michigan Community Alliance (SEMCA), the Workforce Intelligence Network (WIN), and the Michigan Alliance for Greater Mobility Advancement (MAGMA) “puts employers in the driver’s seat in building talent pipelines into the mobility and EV industries.”

“By forming this collaborative, we’ve got the state, employers, and educational providers all talking so we can co-develop some of the curriculum that you need in order to train the technicians,” said Cruz.

Smith directed his next question to Stevens, inquiring how he manages to focus and connect large partnerships such as this in a way that moves the initiative forward. Stevens highlighted several similar projects in the area that have recently received funding, saying that MICHauto is convening those entities to create synergy and ensure no duplication in their efforts.

How do companies, especially smaller ones with fewer resources, take advantage of the change and opportunity abounding in the industry?

“The state has an opportunity to find better ways to communicate how they get involved,” said Stevens, “there’s a lot of money available that companies on the smaller end don’t know how to access.”

“They can accomplish so much more when harnessing the power of collaboration,” Pentika agreed.

Changing the Perception of the Industry

“At the end of the day, the industry is solving global issues, not contributing to them,” said Stevens when asked what will attract talent to work in Michigan. For those interested in being part of the solution, companies like General Motors, which has a “zero, zero, zero” mantra regarding emissions, could be a good fit.

The industry is also much more stable, disciplined, and future-focused than in 2008. Factories are cleaner and safer, too. Cruz pointed out that skilled-trades jobs also have the potential to pay as well as engineering jobs.

Pentika likened the Auto Show to the MiCareerQuest program, which hosts events where students are introduced to “things they can move, touch, and see in action.” She expressed that hands-on experience will be critical in changing the industry’s perception and getting families, communities, schools, and educators moving in the same direction.

The Intersection of the Production and IT workforces

As the industry transitions from ICE to BEV, factory production staff will need to gain IT skills, and experienced IT staff will need to become familiar with factories to effectively develop and implement their technological needs. With an abundance of vehicle product development companies, Michigan’s industry requires new skills faster than the rest of the nation.

To address this, Cruz said that at Macomb Community College, “we are trying to blend skills from those different siloes, because the universities and colleges teach mechanical engineering, electrical engineering, and IT, but never the three shall meet.”

Stevens added, “if we’re not from the factory, to the design, to all the industries, looking at the digital proficiency of our citizens here in Michigan, we’re going to have a problem,” because according to the Brookings Institution, almost every job will require an increase in digital proficiency moving forward.

Adapting and Learning Quickly is the Most Important Skill

Smith offered the team at CAR has spent decades questioning if it’s more important for the education system to teach students how to learn or teach them the hard skills for a job site. Cruz answered that with one or two years between major innovations, it’s difficult to predict the future, so individuals who can adapt and adopt new technologies quickly will have the most success.

Stevens offered that Michigan itself must also adapt quickly by making Michigan a strong place to live, work, and play to attract remote high-tech talent that can work from anywhere and give talent that is already present the opportunity to remain.

Let it Rip with Roop Raj: Michigan Auto Jobs and the Electric Vehicle Agenda

Let it Rip – WJBK-TV
Roop Raj
Sept. 15, 2022

In part 1, the Detroit Auto Show-themed program looks at investments by the state to encourage Big 3 jobs. In part 2, is the push for electric vehicles being forced too quick with the infrastructure?

Watch MICHauto’s Glenn Stevens Jr. contribute to these important conversations below.

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Gongwer’s Zachary Gorchow Shares 2022 Midterm Predictions with MICHauto Advocacy Committee

On Sept. 14, Zachary Gorchow, executive editor and publisher of Gongwer News Service Michigan, joined the MICHauto Advocacy Committee meeting to share valuable insight and his predictions regarding the 2022 Michigan midterm elections.

Gorchow began his presentation by describing this midterm election season as “unusual and interesting” – terms he said he wouldn’t have used at the beginning of 2022.

 

Unique Factors for Democratic Party Might Help Even the Scale, But Not Tip It

Historically, the Michigan Republican Party is incredibly successful during midterms because of a few factors, especially the generally low turnouts of Democratic and other left-leaning voters. But Gorchow said in these past few months, some unique factors may slightly change the tone, including the incumbent political alignments, the state’s redistricting, and the U.S. Supreme Court’s overturning of Roe v. Wade.

Further, Gorchow believes social issues, especially the Dobbs decision, will also help get the Democratic Party “out of that malaise” and increase their voter turnout rate.

However, he still believes these specific indications will only create a much more “neutral environment” rather than a complete Republican sweep like in years past.

 

Whitmer is A Likely Win in Gubernatorial Race

Gorchow said Gov. Whitmer has an advantage because of how she’s “repositioned herself back in the middle, after being a central-left leaning position” when she first got elected.

Gorchow detailed a “tough” season for the Michigan Republican Party, such as their struggle to pick a strong gubernatorial candidate before landing on Tudor Dixon this summer. Further, he said Dixon seems to be the least funded candidate within the twenty years he’s been involved with Gongwer, plus there hasn’t been any TV campaigning for her.

Therefore, Gorchow believes Whitmer will take the victory this November—not by any landslide, but “it doesn’t look like she’ll need to sweat it out.”

 

Democrats Have Marginal Lead in the Senate

Transitioning the conversation to Michigan Senate, Gorchow again mentioned how much Michigan is a “jump ball for control” because of the redistricting, which gives both parties a guaranteed 15 seats each, with eight seats up for grabs.

According to Gorchow, Democrats currently have a slight advantage with 19 seats and need at least two more seats to solidify their majority. Republicans are not far behind, however, as they need at least three seats to take control.

He suggested Republicans should focus on its candidates in Bay City, Macomb, Oakland, and Saginaw counties the most to increase their majority.

 

Republicans Have Slight Advantage in the House

The redistricting of Michigan’s House also created a very competitive playing field for the parties, who are both looking to be the 56-seat majority. According to Gorchow, Republicans currently have the advantage at 46.

But because he says 29 seats are genuinely undecided, there’s an opportunity for Democrats to catch up if Republicans aren’t careful.

Gorchow believes the Democratic Party will need to primarily focus on their candidates in Kent, Oakland, Macomb, and southern Wayne counties to gain the 19 seats they need for a majority.

 

Get More Advantages by Investing in MICHauto

MICHauto represents the needs of its members and investors to the local, state, and federal governments to support and inform policies that support the industry’s growth. MICHauto investors have exclusive opportunities to frequently meet with and learn from Michigan legislation experts and leaders. Learn more about investing in MICHauto here.