Can a boomtown in the green economy be built over the long term?


NORMAL, Illinois – When he bought a contractor named Weber Electric in 2018, Josh Mosier inherited about 20 employees. By the end of the next year it had grown to around 100 employees. In spring 2021 there were over 225.

“Because of this boom,” says Mosier, whose company often works on large construction projects, “we have grown exponentially.”

The epicenter of that boom is an electric vehicle maker called Rivian, who brought together Mosier’s company and others in the Normal, Illinois area to work on the city’s most expensive construction project in decades: a giant auto plant.

As Rivian prepares to ship its first electric pickup trucks and SUVs this year, Rivian has spent approximately $ 1.5 billion renovating and expanding a factory that was once owned by Mitsubishi. On a typical day, the 3.3 million square foot facility is home to several hundred construction workers alongside more than 2,500 employees for the company, which is expected to double its local number.

The effects are hard to miss in Normal and nearby Bloomington, a metropolitan area of ​​around 170,000 residents. Hotels are often fully booked, pandemic or not; Hundreds of building plots are being developed; and many employers looking to hire a full-time plumber are basically out of luck.

“We heard that Rivian hires a lot of licensed plumbers,” says Lori Stickling, who runs a plumbing business with her husband. “We have had a position with no qualified candidates for months.”

In recent years, electric vehicle manufacturers and their components such as Tesla, Lucid Motors, and Lordstown Motors have collectively spent billions building or renovating factories in Nevada, Texas, Arizona, and Ohio.

The challenges are enormous, as only a few of these companies have brought a vehicle to the market. But if some are successful, the impact could be many times greater than the thousands of manufacturing jobs they directly create.

You could change places like Normal, a university town where highly paid workers stayed behind until the late 1980s when Mitsubishi partnered with Chrysler to build a factory. The plant, which at its peak employed more than 3,000, and its suppliers drew workers from all over central Illinois. The resulting economic activity helped fill the city’s coffers and fund redevelopment.

When the plant cut production in the 2000s and closed in 2015, around the time of the downsizing, Normal felt the need. Suppliers withdrew and many workers went looking for new jobs. Uptown, an elegant neighborhood with brick accents, a restored 1930s theater and two suddenly oversized hotels, has become a monument to the city’s dwindling prosperity.

Local politicians and business leaders hailed Rivian, which is based in California with offices in other states, Canada and the UK, to fill the vacuum. But in a place that has seen such blows of fate, residents can be forgiven for wondering how long today’s good times will last.

Electric vehicles require fewer workers than gasoline-powered vehicles. And while Rivian’s outlook looks good – it filed for a public offering of shares valued at about $ 70 billion in August – the company could be overwhelmed by a growing list of competitors. At some point the buying frenzy will end and the local industry will rise or fall depending on whether Rivian can build a sizable customer base.

The initial foam is already dissolving. After reaching more than 200 employees earlier this year, Weber Electric is now around 100. “We’ve scaled it back a bit,” said Mosier, the owner, adding that he hopes to add staff again when the plant grows Construction work approved.

In this way, the electric vehicle boom is something of a microcosm for the larger transition to a low-carbon economy: if governments and investors pour hundreds of billions of dollars into green industries, there is sure to be an initial boost. But will it take?

“It really saved your bacon”

The hiring started in 2016 when Rivian employed a handful of ex-Mitsubishi employees to maintain the closed factory, but it has accelerated over the past 1½ years. In June and July, the company hired about 100 people a week.

The ramp-up has made workers who were already scarce during the pandemic even scarcer. A branch of the International Brotherhood of Electrical Workers that has helped contractors like Mosier add staff says it has booked out the roughly 280 licensed union electricians in the area.

To meet the demand, the union has brought in a few hundred electricians from other parts of the country this year.

A nearby community college started an electric vehicle technician training program this fall, and Illinois State University, which is adjacent to Uptown, is building an engineering school, in part in response to Rivian.

The boom has also helped local travel and hospitality businesses. In October, after a four-year hiatus, Delta Air Lines resumed a non-stop flight to Detroit.

The visitors, including contractors, suppliers and Rivian employees from other locations, helped keep the city’s restaurants and hotels afloat during the pandemic. “It really saved your bacon,” said Mayor Chris Koos. An indication of their dependence on Rivian: The company operates a shuttle service from 6 a.m. to 8 p.m. to and from a stop near the hotels

Basically, a factory like Rivian’s should provide a more sustainable boost than a solar or wind park, which ensures lively construction but requires relatively few employees to operate. An automobile factory could also provide a bigger boost than an e-commerce warehouse because its workers tend to be more productive and therefore can be paid higher.

Such factories also attract more suppliers, said Willy C. Shih, a manufacturing expert at Harvard Business School.

Despite this potential, not all cities benefit equally from new factories. Opening a factory that already employs a large population can dampen net profits for the local economy, according to research by Timothy J. Bartik, an economist at Michigan’s WE Upjohn Institute for Employment Research.

But in an area like Normal, which is suffering from industrial decline, a factory’s impact on employment can be up to three times as great. The benefits can last for decades – if the factory survives.

“If the employment rate goes up, it drives up incomes, and it goes on for 20 years,” said Bartik.

A virtuous cycle

In 2010, about 65% of people of working age were employed in the Bloomington Normal area, far more than the national average of 57%, according to the Census Bureau. However, on the eve of the pandemic, the local employment rate had fallen just below the national average, which had rebounded to around 60%.

The formwork of the Mitsubishi plant, originally known as Diamond-Star Motors, contributed to the decline. The 2015 announcement blinded workers, some of whom were hired just weeks earlier, and financially challenged the skilled production workers whose hourly wages were once in the top $ 20 per hour.

The closure also wiped out suppliers and put pressure on local restaurants and retailers. “We had restaurants nearby,” said Bob Dobski, who owned several McDonald’s franchises in the area. “We definitely saw less traffic.”

Around the same time, State Farm, headquartered in Bloomington, was shrinking its local workforce. The real estate market withered.

In 2016, an auction company prepared to sell the Mitsubishi plant in pieces. After Rivian executives came to explore equipment, the company’s 38-year-old founder, RJ Scaringe, who holds a PhD from the Massachusetts Institute of Technology, decided that the facility itself was the real find. “It was like, ‘How much for the whole thing?'” Recalled Scaringe.

The company barely had a website, let alone a product. When it asked for tax subsidies prior to the closing of the $ 16 million purchase, local government officials weren’t entirely convinced the company was real.

“We gave them a list of things we need,” said Mark Peterson, the city manager at the time. The list contained rudiments such as the names of the board members and a photo of a prototype. The company answered about half of the inquiries, Peterson recalled. (Both he and the company said Scaringe provided more information later at a city council meeting.)

The city and other local authorities definitely approved a package of tax breaks and grants worth up to $ 4 million, realizing they had no other option to revive the plant, but skepticism remained.

However, in 2019 the company raised nearly $ 3 billion from Ford Motor and Amazon, which also ordered 100,000 electric vans. That fall, Rivian hosted a public curtain in Normal on its $ 70,000 trucks, which are said to accelerate to 60 mph in about three seconds.

“For many people in the community it was the first solid contact they had with Rivian,” said Koos, the mayor. “The excitement was great”

Workers in the non-union factory start at $ 20 an hour and go up to $ 23 after three years – less than what experienced workers in unionized plants at General Motors and Ford make, but more than the typical wage in the Bloomington-Normal region, where most of the new hires are from.

“I was just about to start sending applications,” said Becky Skeen, a longtime Mitsubishi employee who was in limbo before Rivian hired her in 2017. “I was really grateful.”

To the local economy, the suppliers that Rivian attracts can be equally important, part of a positive cycle that can attract workers from the fringes of the workforce.

Some could end up in a recently revitalized industrial park near the Rivian plant. More than a decade ago, a construction company called Stark Excavating took over an unfinished 500,000-square-foot structure there after the developer ran into financial problems.

But last year, Stark Excavating sold the building to a real estate investment firm who completed the construction and rented it to Rivian, then began work on a second 500,000-square-foot building that could be used by suppliers or Rivian itself.

“It’s all down to Rivian – they drive this town,” said David Stark, president of Stark. “It reminds me of when Diamond-Star Motors built the original auto plant that was taken over by Mitsubishi. That made Bloomington normal grow. “

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