In the waning days of 2008, our lame-duck legislature passed a very significant piece of legislation - up to $355 million in tax credits designed to lure advanced battery manufacturers to the state. They did this at the very same time GM and Chrysler were on their knees before Congress: With plummeting auto sales and soon to run out of cash, days before President Bush had thrown them a lifeline of $17 billion to keep them both running for the immediate future. It would be President-elect Obama's problem now, and, even though things were looking up as to getting further aid, there were no guarantees that the domestics would survive.
Within weeks of passing the battery tax credits, the stories of manufacturers showing interest in Michigan grew. Even though GM had temporarily halted construction on its Volt engine plant, the company announced in January that they would build an advanced battery plant and research center here. A123 Systems, LG Chem, Compact Power, others applied for both federal and state credits as this advanced manufacturing became a new Michigan reality - giving us a chance to corner the market, because no one in America was manufacturing this product. In February of 2009, Dow Kokam was awarded tax credits to build a battery facility in the Midland area, which brings us to today's groundbreaking ceremony...
The joint venture, called Dow Kokam, involves the Midland-based Dow Chemical Co. A spokeswoman for Dow Kokam says the project will help power the local economy along with new modes of transportation.
"Obviously, we're only looking at temporary employment through the construction phase, but we're creating about 1,000 construction jobs," said Kristina Schnepf, spokeswoman for Dow Kokam. "Once the first phase of construction is complete (in 2012) and the facility is fully operational, we intend to add 320 full-time technical positions. They will be career positions within a high-skill manufacturing environment."
Dow Kokam hopes to complete a second phase of construction in the future that would amount to an additional $345 million investment, for a total of $665 million in all. The second phase would increase total jobs at the factory to about 800 career positions, Schnepf said.
Dow Kokam received $161 million in funding from the American Recovery and Reinvestment Act through the Department of Energy to help build the Midland facility. That’s one reason Vice President Biden plans to personally attend the groundbreaking ceremony this week.
Thanks to our tax incentives and funding from the Recovery Act, 16 companies are now building battery factories in the state. Last August, VP Biden announced that Michigan would be receiving $1.3 billion - over half the funds available - for developing this technology. Dow hasn't signed any contracts as of yet, but has plans to enter both the vehicle market as well as specialized areas.
The factory remains a business in the development stage. It is seeking work contracts as automakers begin building more electric-powered vehicles.
"We are actively pursing the attention of, and getting inquires from, all of the major automotive companies," Schnepf said. "Obviously, Detroit is a critical automotive market and we are pursuing that heavily, but we have not announced any customers at this time."
In addition to their primary objective of powering "plug-in electric" and electric-hybrid vehicles, Schnepf said Dow Kokam will also work to meet the needs of commercial vehicles, marine transportation, heavy equipment and defense contracts.
We are placing a huge bet on this technology, but with automakers and others rushing to get electrics and electric-hybrids on the market, we are poised to create an estimated 62,000 jobs in Michigan - jobs that could have easily gone somewhere else.
Few people believe that current lithium ion technology is adequate to replace gas-powered vehicles on a mass scale. As with other technologies, the advanced battery will evolve. But that means areas already fostering the industry should enjoy a leg up in the future, assuming they can adapt to future changes.
Nearly every state has some program in place to promote clean-energy technology and industry. Michigan's historic strengths as a manufacturing center — as well as its willingness to invest heavily in this area — will give it a big head start if and when clean energy really pays off.
The race is on worldwide.
"The Michigan programs not only get the companies in Michigan," says Rob Atkinson, president of the Information Technology and Innovation Foundation, a Washington think tank, "but I would venture to say that in some cases, without the Michigan incentives, those plants would have gone offshore."
Thank the nice President and Congress for not only saving the auto industry, but for investing in its and our future. And yes, thank the previous legislature, too. They can do good things when they try - and, given the money being invested here and the jobs being created, it sure looks like we are off to a very good start.