SK Innovation starts constructing battery plant, $1.7B bet
on Georgia. Digging
Deeper: Development by
J.Scott Trubey 3/18/19. AJC.
SK Innovation broke ground Tuesday on a sprawling factory
that will supply batteries for electric vehicles, a venture expected to bring
2,000 jobs to Jackson County, northeast of Atlanta, the largest economic
development deal in Georgia since Kia Motors a decade ago.
The company, part of a
South Korean conglomerate known as SK Group, said the nearly $1.7 billion
factory will open in phases and should reach its full jobs potential by 2025.
The project is a coup for Georgia, officials said, adding that the facility will be on the
leading edge of the electrification of automobiles.
The new factory is
expected to produce enough batteries to power 250,000 electric vehicles, or
EVs, per year at full capacity.
The
Sun Belt continues to grow as a hub of automotive production. But the plant
also will come with a price — with tax credits and other incentives likely to
rise into the tens of millions of dollars or more, though the state did not
immediately provide SK’s incentive agreement.
SK
said the plant will initially supply batteries for Volkswagen electric vehicles
to be made in Chattanooga. The plant — to rise along I-85 in Commerce, about 65
miles northeast of downtown Atlanta — will have a production capacity of 10
gigawatts, a measurement that denotes the total power capacity of the batteries
expected to be produced each year.
The
site can accommodate a facility to produce 50 gigawatts worth of batteries, or
five times the production of the project’s first two phases, a company official
said.
“Volkswagen is doing
business in Tennessee; Alabama is home to companies like (Mercedes-Benz parent
company) Daimler and Hyundai,” Jun Kim, president and CEO of SK Innovation,
said Monday. “South Carolina also has facilities for Daimler, Volvo and BMW;
and there is Kia Motor Co. in Georgia as well. Slightly up north, there are
other companies like Ford. This is where the demand is concentrated.”
Gov. Brian Kemp hailed
the ground breaking, saying the factory will create jobs in northeast Georgia
that will keep locals in their communities.
“It’s not only an
exciting day for all of us here, but it’s an exciting day for all hardworking
Georgians out there, for the opportunities they’ll see in the future,” he said.
SK announced its planned factory
in November, during the
closing weeks of former Gov. Nathan Deal’s second term.
Georgia lost its
domestic automotive plants when Ford closed its Hapeville assembly plant in
2006 and General Motors shuttered its Doraville factory in 2008. But in 2009,
Kia helped fill the hole, opening a $1.2 billion factory in West Point, where the
company now makes Sorento and Telluride SUVs and Optima sedans.
The state also has
landed many auto parts suppliers as companies seek to gain a supply chain and
production foothold in the world’s second-largest automotive market and to
temper the ups and downs of global trade.
Southern rivals,
including South Carolina, Tennessee and Alabama, boast more automotive
manufacturing centers. But Georgia is the North American headquarters for
luxury brands Porscheand Mercedes-Benz.
More than 27,800
Georgians work in the automotive industry, according to the state Department of
Economic Development.
“From an economic
development standpoint, we care about the number of jobs created and the
compensation these jobs have. And so, it doesn’t have to be the final product
for it to be a major win,” said Roger Tutterow, an economist at Kennesaw State
University. “Even if the batteries produced here end up leaving Georgia and go
into final production (of vehicles) in surrounding states, it’s really somewhat
irrelevant in terms of how meaningful it is for the Georgia economy.”
Jobs in manufacturing
tend to beget others, as manufacturers require vendors nearby. The jobs also
tend to lift people in different socioeconomic strata, Tutterow said.
More than 17 million new
cars and trucks were sold in the U.S. in 2018, but only about 2 percent were
EVs, said Matthew DeLorenzo, senior managing editor of automotive website
Kelley Blue Book. Still, automakers are pushing aggressive plans to electrify
their fleets to meet fuel economy and emissions standards in the U.S., and
strict EV mandates in China and the European Union.
SK customer Volkswagen
Group announced a $50 billion global EV investment program last year, with
Chattanooga as its North American manufacturing center.
Regulatory
considerations are driving the battery demand more than consumer preferences,
DeLorenzo said. Costs to make EVs remain higher than conventional gas vehicles,
though EV prices are coming down.
“Until that cost curve
is bent down substantially, I don’t see natural demand matching what the
manufacturers are gearing up to produce,” he said.
Still, if manufacturers
can deliver cost-competitive EVs that become popular, “those (investments) will
likely pay off,” DeLorenzo said.
Kim said, by 2030, he
expects about one-third of new car sales in the U.S. to be electric. “I am
confident that Georgia will be the center of the battery industry for electric
vehicles in the world,” SK Group Executive Vice Chairman Jaewon Chey said.
Representatives of
automakers including BMW, Ford and Volkswagen attended Tuesday’s event. The
announcement and SK’s commencement of construction come as the United States
under President Donald Trump has enacted tariffs on foreign automobiles and
vehicle components.
The Trump administration
has generally tried to push foreign companies to do more of their business in
the United States and for foreign countries to buy more U.S. goods. The U.S. is
negotiating trade deals with China and an overhaul of the North American Free
Trade Agreement between the U.S., Canada and Mexico.
The results have been
decidedly mixed. The trade deficit with China, for instance, a key yardstick
Trump has used to measure the fairness of global commerce, has grown in China’s
favor to record levels — the exact opposite effect as intended, but as many
economists predicted.
But in a sign of the
importance of the SK facility, U.S. Secretary of Commerce Wilbur Ross attended
Tuesday’s ground breaking. He said the project “is evidence that our plan to
make the United States the best place in the world to invest is working.”
South Korea is the
United States’ sixth-biggest trading partner, with bilateral trade in 2018 at
$131 billion, which Ross said was the highest ever. Korean companies have “at
least 75 facilities” in Georgia, employing more than 10,000 in Georgia, Ross
said.
Asked in an interview
whether U.S. trade policies under Trump motivated the decision to build a U.S.
factory, Kim said that the driving factors were primarily the need for
automakers to source batteries within the U.S. and automakers’ push to
electrify their fleets.
Norb Leahy, Dunwoody
GA Tea Party Leader
No comments:
Post a Comment