When Justin Singletary heard that Volkswagen was building its first electric vehicle factory in the United States in his city, he began expanding his real estate business to capitalize on the expected economic boom.

A few months later, the 33-year-old real estate agent had already built a house and sold it to a Volkswagen manager. He is in talks to develop four residential properties and expects an influx of hundreds of workers to Blythewood, a small town of about 5,000 people near Columbia, South Carolina.

Clearing has begun on the 1,600 hectare electric vehicle site, which will not begin production until 2026. The $2 billion factory is one of many projects being built across the U.S. using lucrative federal tax credits and state subsidies. South Carolina has spent a record $1.3 billion in taxpayer money to build Volkswagen which begins production under its US brand Scout Motors.

“It will transform the economy in Blythewood and it will take the community to a higher level,” said Singletary, 33, owner of JS Premier Real Estate. “This gives a lot of people an opportunity who can’t really find a way out.”

Many rural economies across America are betting that the Inflation Reduction Act, President Joe Biden’s landmark climate law, will spur economic transformation in their communities. Cleantech production projects are now flooding the country. A year after the law was passed, more than $84 billion has been invested, most of it in Republican-controlled districts.

Richland County Economic Development Director Jeff Ruble has changed his views on electric vehicles and is now a supporter © Sean Rayford/FT

The influx of production money could reshape many of the cities and regions that won projects. But it also brings challenges. Businesses are struggling with labor shortages and some residents are fearful of the changes the investments will bring. Republican efforts to repeal the IRA, meanwhile, could derail some projects and hurt small towns that have reshaped their economies on the prospect of a manufacturing renaissance.

Whether the factory expansion in the United States is successful will be determined in part by places like Blythewood. It has become a test case for whether the prospect of economic opportunities and jobs can solidify support for the transition to renewable energy. The Scout Motors factory is in a county that voted for Biden, but in a state and district that leans Republican.

“This will be transformational. . . We found what we were looking for with Scout,” said Jeff Ruble, head of the county’s economic development agency, who courted several solar and battery companies before securing Scout Motors.

“You convinced me that electric vehicles are the way forward. . . I would never have gone out and bought one, and now I’m going to be first in line for a Scout vehicle,” Ruble said.

The Scout Motors plant plans to hire more than 4,000 workers in the city and surrounding areas. Reviving the SUV in an electric form is part of Volkswagen’s strategy to generate more market share with a purely American brand and increase the attractiveness of electric vehicles.

The population of Blythewood, once a rural town known for its cotton and indigo plantations, has more than doubled in the last decade as government workers and retirees flocked to the countryside in search of a quieter, cheaper life. According to U.S. Census data, the median household income is $102,000 per year, nearly double that of the rest of the county.

Emanuel March (left), Victor Vidal and Ashley Ross work on a road widening project near the planned Scout Motors plant in Blythewood © Sean Rayford/FT

There has been some backlash against the factory from retirees and middle-class residents of the county who fear that industrialization would destroy the neighborhood’s southern charm.

“People aren’t moving here to make it another Detroit. Many retirees have moved here because it is a quiet city. It’s land,” said Sandie York, a 23-year resident.

“What if this doesn’t last in the next 10 years? What are you leaving behind?”

In 2002, US-based Mack Truck closed its operations in neighboring Fairfield County, eliminating hundreds of high-paying jobs overnight.

“When Mack left, it left a big void,” said Gene Stephens, a spokesman for the county’s economic development department, which is preparing sites to attract Scout Motors suppliers and preparing to build new housing for employees.

“There were 600 high-paying jobs that no longer existed. It was hard for us to overcome it.”

Younger and minority residents say the jobs are needed in a county where jobs often pay minimum wage for workers without four-year college degrees.

Instructor Stan Frost, center, speaks to students during a mechatronics learning program at Midlands Technical College in Columbia, South Carolina © Sean Rayford/FT

“Most of the older white people here have all the money,” Singletary said. “Our generation is just trying to get to where it is. What do we need for this? We need jobs.”

Annual wages for an hourly worker at the factory are expected to average nearly $60,000, about four times the state minimum wage, which is among the lowest in the nation. The factory is expected to generate $4.2 billion in economic activity by 2029, according to a study by the University of South Carolina’s Darla Moore School of Business.

“It will bring money and business here,” said Kevin Robb Jr., executive chef at a Caribbean restaurant near the site. He is skeptical about electric vehicles but hopes the factory will attract more late-night visitors to the sleepy town.

Local trade school Midlands Technical College is developing a bespoke program to train and mobilize the 4,000 workers needed for Scout Motors. To do this, it sends university administrators to the Volkswagen factory in Germany to identify the necessary skills.

“This is a new horizon for the country. . . “The kind of skills people will need will make our country much more competitive,” said Ronald Rhames, president of MTC, adding that the factory would provide “more opportunities for minorities” for great jobs. About 45 percent of students at MTC are people of color.

The incentive package South Carolina offered to secure this transformation includes plans to build a new rail bridge, highway interchange and other infrastructure improvements.

The Republican state has been a “very aggressive” recruiter of electric vehicle and battery projects, securing $6.2 billion in manufacturing last year – one of the top five states, according to EV Jobs Hub. Scout chose Blythewood over 73 other locations for his project.

“Much of what we are seeing in terms of battery supply chain development in the United States is happening because of the IRA’s incentives,” said Harry Lightsey, the state’s commerce secretary under Republican Gov. Henry McMaster last year, calling the IRA a “ruthless one.” Tax and purchasing spree”.

The IRA’s state support for investment in electric vehicles diverges from wider parties’ calls for a repeal of the climate law. Former South Carolina governor and Republican presidential candidate Nikki Haley called the IRA a “Communist manifesto” on X in August and said she would repeal the law as president.

Scout Motors executives said their plans to manufacture in South Carolina were a “generational commitment” and that they would make infrastructure improvements to accommodate the additional traffic and await federal approval for wetlands construction. They hope the IRA’s economic benefits will increase the importance of tax credits if there is a change of government in the upcoming 2024 election.

“This brings production back into the country. This brings jobs, and that’s a good thing whether you’re a Republican or a Democrat,” said Neil Sitron, general counsel for Scout Motors.

Source : www.ft.com

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