Intel CEO Patrick Gelsinger (C) speaks alongside Ohio Senators Robert Portman (L) and Sherrod Brown, during an event on the ongoing supply chain problems in the South Court Auditorium of the Eisenhower Executive Office Building on January 21, 2022 in Washington, DC. Gelsinger announced that Intel Corp would invest an initial $20 billion to develop a new semiconductor manufacturing plant in Ohio. | Chip Somodevilla/Getty Images
It’s not often you see Michigan salute Ohio for a big win, but it happened recently in the competition for economic development.
“Congratulations to our Midwest neighbor Ohio for landing an impressive $20 billion investment from Intel for leading-edge chip factories,” Business Leaders for Michigan, a group of CEOs from the state’s largest corporations, said in a Jan. 25 tweet.
That was the same day General Motors and state officials announced GM would spend $7 billion to build a battery plant in Lansing and expand its Orion Township electric vehicle operations in Oakland County. The investments are expected to create 4,000 jobs.
To be fair, BLM also acknowledged GM’s investment in a separate tweet. And the group does not consider Ohio to be among Michigan’s top 10 competitor states.
But Intel’s huge commitment to suburban Columbus could change that. And its investment there offers important lessons for what Michigan must do to compete for knowledge jobs in an increasingly technologically driven economy.
Intel plans to spend $20 billion to build two advanced computer chip plants on a 1,000-acre site in Licking County, east of Columbus. The plants are expected to create 3,000 jobs, many, if not most, of them requiring four-year college degrees and above.
Those jobs will pay an average $135,000 a year, roughly two-and-a-half times the average annual wage of the new jobs GM is creating in Lansing and Orion Township.
“They’re going for high-skill, high-education folk,” said Rob Moore, principal of Scioto Analysis, an economic and public policy research firm in Columbus.
Intel’s $20 billion investment in two advanced computer chip manufacturing plants is nearly $2 billion more than the sum of GM’s $7 billion investment in Michigan and the $11.4 billion Ford is spending to build an electric vehicle assembly plant and two battery plants in Tennessee and Kentucky.
The company also has pledged $100 million “toward partnerships with educational institutions to build a pipeline of talent and bolster research programs in the region.”
Intel will produce chips for its own products and for other customers, including automakers. The plants are expected to begin operations in 2025.
Ohio is giving Intel $2 billion in incentives, including a $600 million “onshoring” grant to offset the costs of building U.S. chip factories that are as much as 30% higher than in Asia, where most chip plants are located.
“Today we are burying the term ‘rust belt,’ Ohio Sen. Sharrod Brown said in a bit of hyperbole at the announcement of what is being called the biggest economic development project in Ohio’s history.
(I attended an event with dozens of top Michigan business leaders at The Henry Ford in the 1980s where Gov. James Blanchard also buried the Rust Belt. It dies hard.)
But Intel has tossed the Rust Belt back in a grave and thrown a few shovels of dirt over it with its Ohio investment and the prospect of an even larger commitment to the Buckeye State.
The company said its spending could grow to $100 billion and eight plants at the Ohio complex over the next decade, making it the largest semiconductor manufacturing operation in the world.
In an interview with Bloomberg TV, Intel CEO Patrick Gelsinger said Ohio offered a “large, flat location . . . one with great energy,” strong local government support and competitive labor costs.
“But more important than labor — talent,” he said, adding that “all the Midwest universities are within a couple of hours of the site we picked here.”
Talent, particularly the number of people with at least a bachelor’s degree, is an area where Michigan often falls short of its competitors. You’ve heard that about a million times from me and others.
Ford Motor Executive Chairman Bill Ford recently told Crain’s Detroit that the automaker “desperately” needs software engineers. Ford is spending nearly $1 billion to renovate the Michigan Central train station and build a “mobility innovation district” in the surrounding Corktown neighborhood.
Columbus, Ohio’s largest city, is at the center of a growing, talent-laden metro area. The city, with a population of 905,000, grew by an impressive 15% between 2010 and 2020.
Experts told me the growth is mainly a mix of people moving to the area from struggling Ohio communities, such as Akron and Dayton, and an influx of international immigrants from Southeast Asia, Africa and other regions.
Just under 38% of adults in the Columbus metro area have a bachelor’s degree or above. That compares to 32.4% of adults holding those degrees in metro Detroit and 33.4% in metro Grand Rapids.
(In a hopeful sign for Michigan, Gov. Gretchen Whitmer has proposed a 5% funding boost for the state’s universities and community colleges, the biggest increase in decades. But universities would have to cap tuition increases.)
Columbus is also known for its diverse economy and livability, assets that attract young talent. The Columbus metro area had the 10th highest concentration of millennials of any metro in the country in 2019, according to CBRE, a nationwide commercial real estate firm.
Intel’s Gelsinger said his company intends to transform the Columbus region into the “Silicon Heartland.” Michigan policymakers should be paying close attention.
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