Biden's clean car initiative, which aims to have 50% of all vehicles sold by 2030 be electric, is dramatically changing the U.S. automobile industry. Some automakers may see the shift toward electric vehicles as a setback, but this auto giant is using it as a new opportunity to pave the wave for the electric future -- and inadvertently helping small towns while at it.
In late September 2021, Ford Motor Company (NYSE: F) announced its plan to partner with SK Innovation to build a mega campus in the rural town of Stanton, Tennessee, in addition to twin battery plants in Glendale, Kentucky.
Meet BlueOval City
The campus, which Ford has dubbed the "BlueOval City,'' will be set on an almost 6-square mile long property in Tennessee and will cost around $5.6 billion to build with an additional $5.8 billion allocated to the twin battery plants and training program's $525 million required to recruit and train this new generation of electric automakers.
These new facilities will allow Ford to scale the electric vehicle production line to meet its increasing demand, creating the vehicles themselves as well as the lithium-ion batteries required to operate electric vehicles. This is a massive project that will take several years to complete before it's fully operational and is expected to bring 11,000 jobs to the two cities, which is great news for residents of Glendale and Stanton.
Forever changing these tiny towns
Glendale is home to less than 2,000 full-time residents, and Stanton is even less, with fewer than 500 full-time residents according to the latest data from the U.S. Census Bureau. Five thousand or 6,000 new jobs would undoubtedly change these tiny towns forever.
Studies conducted by the University of North Carolina and the University of Pennsylvania found that given the employment of 50 persons in a basic industry, the following secondary and tertiary effects may be expected from the given industry:
- Supports from 300 to 400 people.
- Requires 75 to 100 homes.
- Puts 200 children in school.
- Requires six teachers.
- Compels the purchase of 100 automobiles.
- Supports 10 stores with annual sales of $175,000;
- Enables eight professional people (dentists, doctors, lawyers, ministers, etc.) to live in the community.
- Pays about $175,000 annually for transportation.
- Buys the products of 1,000 acres of land.
- Provides a payroll of $65,000 to $85,000.
- Establishes a tax foundation of $ 800,000.
In other words, jobs means growth. Employees will need places to rent, live, eat, shop, or ship goods. Businesses will start showing up to meet this demand, which will draw residents to the area, even if they're indirectly serving the new electric plant. With more people residing or operating business there, the town earns more taxes, which can be reinvested into the area.
The good and bad news about Ford's plans
It's unlikely either town will see a boom in population directly. Both Stanton and Glendale lie within a 45-minute to one-hour drive from the bigger cities of Memphis, Tennessee, and Louisville, Kentucky, and even the smaller but still more established city of Elizabethtown, Kentucky. It's likely many workers will choose to reside in these areas commuting to work rather than live in Stanton or Glendale directly, but it's still likely to draw business and new opportunities for these tiny towns.
There are some challenges and risks that come with having a big corporation like Ford move into these areas, though. When the town becomes reliant on one employer, and the employer decides to leave the area, or goes bankrupt, the town, or even city, is greatly affected. Detroit is a perfect example of how the closing of an industry can literally bankrupt the city. But smaller towns like Huntsville, Alabama, Youngstown, Ohio, Muncie Indiana, and many others give better depictions of the risks and losses a town can suffer if a big business closes shop.
There are also growing pains that many small towns find themselves ill equipped to deal with, including lack of transportation, schools, housing, or increased traffic and highway congestion.
Ford is putting $7 billion dollars into this project, making it the largest manufacturing investment at any one given time -- and meaning it's unlikely Ford will just close up shop. The company clearly sees the potential of this investment and believes in the future of electric vehicles. BlueOval City will be designed to have net zero emissions and will have a zero landfill waste policy, which is great news when it comes to pollution and potential environmental risks to the residents of these towns. While there are definitely risks to consider, Ford's announcement is a cause for celebration for the 2,500 people that call these towns home.