In a deal called “historic” by North Carolina Governor Roy Cooper, the Vietnamese automaker VinFast will invest $4 billion in Chatham County and plans to hire as many as 7,500 workers during a first phase of the project. But the deal may come with consequences for the local and state economy, both positive and potentially negative, sources told WRAL TechWire.
The deal became official this afternoon as North Carolina Governor Roy Cooper announced the project with representatives from the company as well as an ambassador from Vietnam. Earlier in the day, the state’s Economic Investment Committee unanimously approved an economic incentives package that could provide company the company more than $850 million in incentives if investment and job creation targets are met.
Chatham County will provide as much as $400 million in local incentives, as well, according to an official from the North Carolina Department of Commerce. The facility will be a site where the assembly of two electric SUVs will occur, according to the state official.
“VinFast will bring North Carolina’s first automotive plant, second electric battery plant,” said Cooper, adding that thousands of direct and indirect jobs would also come to the state’s economy.
The project cements North Carolina’s status as a major player in the automotive industry, according to a site selection expert who spoke with WRAL TechWire this week.
“This coveted project in the booming EV industry will spur retail sales in the entire Triangle region, spur new investments in housing by developers and create thousands of well-paying jobs,” said John Boyd, Jr., principal of The Boyd Company, Inc., which assists clients in selecting sites for economic investment, in an interview with WRAL TechWire this week.
IMPACT ON THE STATE
The growing automotive presence will play a major role for the state of North Carolina and for its residents and workers, noted Boyd.
“Workers in some of North Carolina’s more remote and rural areas with high unemployment rates will also relocate for the kind of attractive, well-paying manufacturing jobs being offered by the growing EV industry,” noted Boyd.
“With this announcement we celebrate another transformational win for the region, with three Carolina Core megasites landing high-impact projects in the last 100 days,” said Michael S. Fox, president of the Piedmont Triad Partnership, in a statement. “With this win, and existing operations in the region by Volvo Trucks, Thomas Built Buses and the announced Toyota plant, a premier electric vehicle cluster has emerged.”
Toyota announced in December 2021 that it would invest $1.29 billion in the company’s first North American electric vehicle battery plant in Randolph County, not far from the Triangle Innovation Point, the site VinFast selected for its facility.
“State officials have worked diligently to nurture certain industries, such as aerospace, life science, and more recently, battery and related technologies,” said John Quinterno, a professor at Duke University, in an interview with WRAL TechWire. “Despite whatever political tensions may exist, both Republican and Democratic officials in Raleigh have proven very willing to spend increasingly eye-popping amounts in public subsidies to attract firms coming to the state.”
COMMON GROUND, STRONG CLIMATE
Boyd told WRAL TechWire that economic development is one area where public officials have found common ground, collaborating to cultivate “one of the most attractive business climates in the nation.”
In November, North Carolina was ranked first among all U.S. states for its strong business climateby Site Selection magazine. The announcement from Toyota followed. Earlier this year, Boom Supersonic announced a $500 million investment at a site based at the Piedmont Triad Airport, for a facility that company officials said could employ as many as 2,400 workers once fully operational.
According to an annual report from the Economic Development Partnership of North Carolina (EDPNC), released last week, the organization helped secure 174 corporate relocations and expansions in 2021. According to a statement from EDPNC, “the state is expected to see close to 24,000 jobs and $10.01 billion in capital investment.”
Many of those projects are tied to some form of incentives package. Take the Toyota deal and the Boom Supersonic agreement, for example.
The Toyota deal could provide a refund to the company of $79.1 million in employee withholding taxes over 20 years, should the company meet the annual hiring and investment targets set forth in the agreement, according to prior WRAL TechWire reporting. The state and local incentives tied to the deal with Boom Supersonic approach $130 million, according to prior WRAL TechWirereporting.
And the VinFast deal could yield a total state and local incentives package of about $1.25 billion, if requirements are met.
“The problem with these subsidies is that it often is unclear if they are actually needed,” said Quinterno. “If the firm was going to come to the area anyway, all of the subsidies are wasted money that divert resources that would otherwise be available for public services.”
IMPACT ON THE TRIANGLE
Economic investment deals made at the state level will have local impact, said Dr. Anne York, an economist and professor at Meredith College. That means that local governments will be required to be “especially proactive in managing land use and developing infrastructure.”
That means that local governments, including those all across the Triangle region, will need to focus on the impact that economic growth and economic development will have on the region, beyond job creation targets.
For instance, said York, how might municipalities drive innovation to ensure their communities have housing that is affordable for workers and residents of the community? How will infrastructure, such as roads, schools, or other public infrastructure be improved or enhanced.
“Local governments will likely need to make decisions quicker and more efficiently than they have in the past to try to stay ahead of our projected economic growth,” said York.
CHATHAM COUNTY REACTS TO MAJOR UPCOMING CHANGES
Local economic development officials say this news will transform Chatham from a quiet bedroom community to a hub for high tech manufacturing.
Krystal Stone, co-owner of Ray’s Grocery, just down the road from the megasite where Vinfast will build its new factory, says rural Moncure will be a boomtown before long.
“It’ll bring a lot of traffic to the area, and it’ll be a lot more people around, so it won’t be as small knit community as it usually is. But you know, I guess that comes and goes with everything when you’re building,” she says.
Moncure resident Donna Horton is less excited. She says the local roads are already dangerous.
“It’s just gonna be too many people. This is a rural area with quiet neighborhoods. I think it’s going to make it worse,” she says. “But, I mean, if this is going to bring all these jobs, that’d be great.”
There may be unintended consequences of economic growth, warned Quinterno.
“Left unchecked, this model of growth can fuel displacement of existing residents, especially those connected to unfavored industries or who work in more modestly paying support industries,” said Quinterno. “These individuals may find themselves priced out of their longstanding communities despite being employed and working hard. And, of course, retired persons, disabled persons, and others on fixed incomes may find themselves pushed out of their communities against their own will and despite having done nothing wrong.”
Boyd told WRAL TechWire that when it comes to economic development projects, “a rising tide raises all boats.”
According to Boyd, “naysayers should only look at what BMW was able to achieve in Spartanburg, South Carolina over the past couple of decades.”
When BMW announced intentions of bringing an assembly plant to Spartanburg, said Boyd, many folks thought it wouldn’t be able to secure enough workers in a region that had no automakers or suppliers at all.
“BMW now employs over 10,000 workers at its hugely successful Spartanburg plant,” said Boyd. The availability of workforce was part of what attracted Arrival to invest in the region, both in upstate South Carolina, and in Charlotte, last year.
“We see this same dynamic playing out in the Triangle with the EV planting its flag and expanding as the sector replaces the internal combustion engine in the months and years ahead,” said Boyd.
Original Article Source: WRAL TechWire