Cars won't start rolling off the assembly line at Hyundai Motor Co.'s "Metaplant," under construction on 3,000 wooded acres in Bryan County, Georgia, for at least a year. But the $7.6 billion electric vehicle and battery project a half-hour west of Savannah has already taken firm hold in the imagination of nearby residents. A rumor circulating this summer was that Hyundai planned to buy the local golf course to convert it into housing for some of the eventual 8,500 plant workers.
Source: Bloomberg
A Manufacturing Resurgence
Across the United States, spending on manufacturing facilities reached $198 billion on an annualized basis in August, an almost 66% increase from the previous year and the highest level since the Bureau of Economic Analysis began tracking the data in the 1950s.
The surge of activity is being driven by a pair of laws passed by Congress last year that together offer hundreds of billions of dollars in subsidies, tax credits, and other incentives to stimulate the construction of chip factories and electric vehicle, battery, a
nd component plants. It's Washington's attempt to catch up to China in zero-emission cars and reclaim leadership in semiconductors, an industry the United States pioneered.
The American manufacturing boom promises to attract well-paying jobs and investments to areas in desperate need of them. But along with the excavators and hard hats come concerns about whether there is adequate infrastructure to support the new factories and worries about the changing fabric of surrounding communities.
Attracting Big Investments and Creating Jobs
Few places are reaping more benefits from the Biden administration's industrial policy push than Georgia, where state and local governments are also offering tax breaks, free land, and other incentives to lure manufacturing jobs. Governor Brian Kemp called Hyundai's Bryan County plant the biggest entirely new investment in Georgia's history. Electric vehicle startup Rivian Automotive Inc. is investing $5 billion in a factory 45 miles east of Atlanta that's supposed to employ 7,500 workers by 2028. And there's the multiplier effect of car parts suppliers and other companies moving to the Peach State to serve the manufacturers setting up shop.
Accelerating Electric Vehicle Adoption with Federal Tax Incentives
The United States is far behind other major markets in the adoption of electric vehicles: fully electric cars along with plug-in hybrids accounted for just under 9% of all passenger vehicles sold in the first half of 2023, compared to 27% in China, according to Bloomberg NEF. Now, U.S. demand is getting a boost with the introduction of federal tax credits of up to $7,500 on purchases or leases of new electric vehicles, available through the Inflation Reduction Act that President Joe Biden signed into law in August last year.
To take advantage of the tax incentives, automakers building plants in the United States are trying to go from innovation to grand opening in record time. Oscar Kwon, whom Hyundai picked to lead the Georgia project, spent four years in India helping open a factory for Kia. He'll have just over two years to get the facilities near Savannah up and running. To help move things along, the state and municipalities are chipping in $1.8 billion in tax credits, sales tax exemptions, and road projects.
Michael Toma, an economist at Georgia Southern University, estimates that the Hyundai Metaplant will generate a total of 20,000 jobs: just half in the plant itself, another 5,000 in car parts suppliers, and several thousand more in companies springing up to serve them. All of that amounts to 10% of the entire Savannah area's workforce.
Source: Niquette, M.S. (October 5, 2023). America’s Factory Boom Brings Billion-Dollar Projects to Tiny Towns. Retrieved from Bloomberg
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