Honda and the Korean company LG are planning a $4 billion electric vehicle battery making factory in the US, and there are strong indications that it may end up in Ohio. This comes eight months afterIntel announced a $20 billion computer chip making plant that could grow into the world’s largest semiconductor manufacturing facility.
If the Honda/LG plant comes to Ohio, it would be the second big economic development for the state this year, after the Intel announcement in January. But the projects may not have anything to do with one another.
“It's a happy coincidence,” said Ned Hill, a professor of economic development at the John Glenn School of Public Policy at Ohio State University.
With more demand for hybrid and electric vehicles, carmakers are starting to downsize plants making internal combustion engines – and Honda’s largest such engine plant is in Anna in Shelby County in western Ohio. And Hill noted Honda is partnering with GM, which plans to make electric vehicle batteries, possibly in Lordstown.
“It's my guess that this was a competition between Indiana and Ohio because there are two Honda assembly plants in Ohio and one in Indiana,” Hill said. “Battery plants are going to be determined by the cost of hauling the battery. They're heavy and also how important they are in the assembly process.”
Zach Schiller with Policy Matters Ohio, which does research on labor and manufacturing from a progressive perspective, said he also wouldn’t be surprised if Ohio gets the Honda/LG project.
“It's not as if they're only in Ohio, but it is very much the center of their operations that they are highly familiar with and have operated in for many decades. So why not?” Schiller said. “I think it hardly takes a marketing campaign to tell Honda what Ohio is all about.”
But Ohio seems likely to win the project because of other factors too, said Ron Starner with Site Selection magazine, which covers corporate expansions.
Starner said like it did with Intel, Ohio can quickly and seamlessly assemble large parcels of land, offers generous incentives, a well trained workforce and access to water, and has a competitive economic development organization structure in JobsOhio.
“There's really no other state in America that has all five of these in place right now to the degree that Ohio does,” Starner said. “And so personally, I'll be shocked if LG and Honda don't pick Ohio.”
But in an election year, both Republicans and Democrats have thoughts on what role state policies did and didn’t play in these companies looking at Ohio.
Starner said he doesn’t think ideology plays as much of a role for companies as financial policies like tax structure and whether a state is a so-called “right to work” state, which Ohio is not.
“Everything else being equal, a right to work state is going to get a closer look than a non right to work state,” Sarner said. “And then on tax policy, yeah, obviously they're going to look at things like the corporate income tax rate, the personal income tax rate, property taxes, sales and use taxes, inventory taxes, or the lack of any of these.”
But Schiller said both the Intel facility, which could grow to $100 billion and the world’s largest, and now potentially the Honda/LG plant show that “right to work” isn’t a deal maker.
“Someone who argues that that is the crucial factor in attracting these companies is obviously dead wrong,” Schiller said. ”I think that you can talk about other things, but I don't see how that argument stands up in the slightest. It's completely wrong headed.”
But it’s uncertain whether other legislation could affect a high tech workforce. A Morning Consult survey conducted for Bloomberg in July found 44% of workers were either somewhat or very willing to move from states with strict abortion restrictions. Ohio has a ban on abortionafter about six weeks of pregnancy.
Ned Hill at Ohio State is curious about what the future holds on that.
“I do think that the social policies that the legislature is looking at putting in place is going to have an impact on college graduates and where they look for work. Now, whether the job and the rate of pay and the opportunity overcomes the way they perceive the social policies in the state, that's something a large number of industrial states have to value,” Hill said. “So this is one where, as an academic economic development specialist I'm saying, man, I can't wait to see the data.”
There’s been no confirmation that Ohio is the site for the new project. Republican Gov. Mike DeWine’s office said in a statement: “We are working with Honda and LG to ensure that they choose Ohio for this new electric battery plant." But his lieutenant governor Jon Husted tweeted out the initial story from the Wall Street Journal early Monday morning, adding: “More to come soon on this.”
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