September 27, 2023
US tech investment sparks Rust Belt dreams of economic revival – but the results are uneven

Photograph: Rebecca Cook/Reuters

When the plastics manufacturing plant Roger Binegar worked at for 28 years closed in 2009, it seemed as if manufacturing in southwestern Ohio was almost consigned to history.

Yet 14 years later, a major new construction effort is underway just a short distance from his home outside Jeffersonville. Japanese carmaker Honda and electronics company LG are building a battery manufacturing plant that will employ 2,000 people when it becomes operational in 2026.

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Honda has committed to selling only electric vehicles in its key markets by 2040 and sees Ohio as its US hub – where it employs more than 15,000 people across five plants.

Despite Binegar’s concerns that traffic is likely to increase, overall he believes this is a positive step for the local economy. “I would like it to remain corn or bean fields, but it has been put to industrial use over the years,” he said.

“I think this is progress. People got work. You have to have jobs to survive.”

The new battery plant represents a new shift to reimagine America’s long-suffering industrial heartland from the Rust Belt to the “Silicon Heartland.”

An hour’s drive north in New Albany, Ohio, Intel is building a $20 billion semiconductor manufacturing plant, while $100 billion is expected to be spent on another chip factory in Syracuse, New York. In Indiana, thousands of acres of agricultural land are being converted into technology parks.

The 2022 CHIPS Act would inject nearly $280 billion into the U.S. economy through grants, tax breaks and research incentives to restart manufacturing of essential technologies like semiconductors.

“One advantage of big companies returning to the Midwest is that it helps take some of the crises seriously, whether geopolitical tensions, climate change or potential disruption to our supply chains,” said Annelies Gogar, a fellow at the Brookings Institution. “This will help us build greater capacity domestically to absorb these types of shocks in the future.”

But dreams of economic revival aren’t working for everyone.

With much fanfare in 2018, then-Kentucky Governor Matt Bevin broke ground on the site of a new steel mill outside Ashland, a community of 20,000 in his state that had struggled with unemployment and out-migration for decades. The brainchild of Brady Industries (later Unity Aluminum), the project is billed as the world’s largest low-carbon, rolled aluminum producer as well as the first new greenfield aluminum mill to be built in the US for 37 years Was.

Joe Biden traveled to Ohio and attended the groundbreaking for the new Intel semiconductor manufacturing facility in New Albany, Ohio. Photograph: Joshua Roberts/Reuters

The $1.6 billion factory was to create 600 jobs and pay workers twice the local average wage. Kentucky invested $15 million of state taxpayers’ money to help move the project forward. Russian aluminum giant Rusal promised $200 million in exchange for a 40% stake. The news was a big boost for Ashland, which has a century-long history of steel manufacturing.

But things soon resolved. Immediately, Brady Industries struggled to raise funds and by 2021, Rusal had suspended its investment. In Ashland, the proposed mill’s location – inside an industrial parkway – has locals puzzled.

“There was no water, no electricity at the site,” said Kendall Kilgore, president of the local United Steelworkers chapter. “It wasn’t feasible for an aluminum mill – it takes a lot of water to run an aluminum mill.”

Last year, reports emerged that the project would not go ahead. Although Kentucky officials recouped their $15 million investment, locals were devastated: many spent years securing certificates for jobs that ultimately never came to fruition.

,[Locals] Everyone got a degree they couldn’t use anywhere else,” Kilgore said. “The local college had set up a classroom just for that plant.”

Many people have since had to leave Ashland for jobs in Ohio and Michigan.

While each project faces unique challenges, experts say the same obstacles can be expected as CHIPS Act funding begins to flow into towns, cities and research centers across the country.

“The challenge is going to be that these are areas that don’t have the accumulation of what you need, whether it’s the workforce or the managerial skills or the supplier ecosystem that will be needed,” Gogar said. “But you have to start somewhere.

“It may take five years to establish harmony at the regional level. This worries me because a lot of money has to be withdrawn immediately.

Even at the battery plant under construction in Ohio, where Honda has enjoyed strong community ties for more than four decades, the construction phase has not been without obstacles. Roger Binegar said his water well had dried up a month ago. Construction crews at the plant were digging a test well about 100 yards from his property line, pumping massive amounts of water that was diverted from his private supply.

But he was surprised by the response he got.

“we called [the construction company] And as soon as we told them it was dry, they immediately stopped and did not drill any further,” he said.

Binegar’s well refilled, and the company replaced his well pump, supplied extra water and left gift cards for him and his wife.

“That was excellent,” he says. “I have no complaints against them.”


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