By Conor Sen / Bloomberg Opinion
The Battery Belt is taking shape, and it’s creating a new economic development model where a college degree won’t be the ultimate qualification for jobs.
In 2022 we saw industrial policy passed by Congress intersect with investment plans from major manufacturers and start-ups, all emphasizing the future need for batteries for energy storage. But unlike the urban employment centers we’ve seen emerge in the last several decades, the regions now being dubbed the “Battery Belt” don’t feature college graduates clustering together in office buildings in a handful of expensive cities to create internet- and software-related products. It’s more geographically diverse, with different economic and infrastructure needs than the prior era that was so heavily influenced by Silicon Valley.
An obvious difference between building batteries and building software is that batteries for electric vehicles and other large-scale industrial uses can weigh more than 1,000 pounds. The production and warehousing requirements for that kind of equipment rules out urban knowledge centers — the economic winners of the past 40 years — as the focus for this new wave of industrialization.
A year ago I foresaw that the electrification of the auto industry would be a boon for the South. While that’s certainly been the case, the Midwest has also seen its share of wins this year. With an additional year of data to analyze, there are patterns emerging in the kinds of places being chosen for new battery plants.
The most important feature for sites is large tracts of land available near the right kind of physical infrastructure and major population centers. Here in Georgia and adjacent South Carolina, five multibillion-dollar battery plants have been announced over the past few years. Two of them are in the counties next to the ports of Charleston and Savannah, and the other three are about an hour outside of Atlanta next to both railroads and highways.
After that, softer factors come into play: the quality, size and cost of the local workforce, proximity to future customers, the ability of local officials to woo manufacturers, and whether there are other related production facilities close by. For instance, Stellantis NV is building a battery plant in Kokomo, Ind., in large part because it already has a plant there that produces vehicle motors (gasoline and hybrid for now, electric in the future).
While the Battery Belt will need a trained workforce, it won’t be as reliant on workers with elite educations as the Silicon Valley economy was. In the four counties in Georgia where battery plants exist or are being built — Jackson, Bartow, Coweta and Bryan — the percentages of adults with at least a bachelor’s degree are 23.5 percent, 19.8 percent, 33.3 percent and 33 percent, respectively. That compares with 50 percent for the main two counties encompassing Atlanta: Fulton and DeKalb.
Reading through press releases and articles with details on the plant announcements, a different role for government officials also stood in contrast to the internet and tech economy that we’re used to. We think of Apple as the company that was started in a garage, and Facebook being started in a college dorm room, and that’s contributed to the cult of the founder. Only if a community is lucky enough and suitably “cool” enough to attract young and talented people might it become the place where the next hundred-billion-dollar company is founded. The governor of California in the 2000s had very little to do with Facebook moving to California, even if in prior decades the government played an important role in creating and shaping Silicon Valley.
The Battery Belt isn’t like that. Once a community has enough of the above key factors, the question of whether it gets a billion-dollar plant comes down to whether its governor and economic development officials can work out a deal with manufacturing companies like Stellantis, Hyundai Motor Co., General Motors Co. or Ford Motor Co.
It’s perhaps noteworthy that Georgia and Ohio, with their more restrained Republican governors, have had more success in winning battery plants than the bombastic, attention-seeking governors of Texas and Florida. This should shift the priorities of both voters and politicians toward being more grounded and pragmatic rather than ideological and emotional.
It’s still early days in this trend; Battery Belt is a term that’s only caught on over the past several months, and most of these plants have only recently been announced or started construction. But it looks like the economic center of gravity in America, after being overly concentrated in communities full of college graduates, is finally broadening out as we set out to build the industrial economy of the future.
Conor Sen is a Bloomberg Opinion columnist. He is founder of Peachtree Creek Investments and may have a stake in the areas he writes about.
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