Can a Green-Economy Boom Town Be Built to Last?
The race to make electric vehicles is turning some places into winners. Normal, Ill., is one of them. But it has seen good times go sour in the past.,
Construction in progress at the Rivian plant in Normal, Ill. The electric vehicle maker has spent around $1.5 billion renovating a huge factory once owned by Mitsubishi.Credit…
NORMAL, Ill. — When he bought a construction contractor called Weber Electric in 2018, Josh Mosier inherited about 20 employees. By the end of the next year, he was up to about 100 employees. By the spring of 2021, the number was over 225.
“Because of this boom,” said Mr. Mosier, whose company often works on large building projects, “we’ve grown exponentially.”
The epicenter of that boom is an electric-vehicle maker named Rivian, which brought in Mr. Mosier’s company and others in the Normal, Ill., area to work on the city’s costliest construction project in decades: a massive auto plant.
As it prepares to deliver its first electric pickup trucks and sport utility vehicles this year, Rivian has spent around $1.5 billion renovating and expanding a factory once owned by Mitsubishi. On a typical day the 3.3-million-square-foot plant hosts several hundred construction workers alongside more than 2,500 workers employed by the company, which expects to eventually double its local head count.
The effects are hard to miss in Normal and nearby Bloomington, a metropolitan area of about 170,000. Hotels are frequently booked up, pandemic or not; hundreds of housing lots are being developed; and many employers looking to hire a full-time plumber are basically out of luck.
“At Rivian, we’ve heard they’re hiring a lot of licensed plumbers,” said Lori Stickling, who operates a plumbing company with her husband. “We’ve had a post up for months with no qualified candidates.”
In recent years, makers of electric vehicles and their components, like Tesla, Lucid Motors and Lordstown Motors, have collectively spent billions building or renovating factories in Nevada, Texas, Arizona and Ohio.
The challenges are enormous, given that few of these companies have brought a vehicle to market. But if some succeed, the impact could be many times greater than the thousands of manufacturing jobs they create directly.
They could transform places like Normal, a university town where high-paying blue-collar employment lagged until the late 1980s, when Mitsubishi partnered with Chrysler to build a factory. The plant, which employed over 3,000 at its peak, and its suppliers attracted workers from across central Illinois. The resulting economic activity helped fill the city’s coffers and fund redevelopment.
When the plant scaled back production in the 2000s and closed in 2015, around the time of white-collar job cuts, Normal felt the pinch. Suppliers decamped, and many workers left in search of new jobs. Uptown, an elegant, brick-accented district with a restored 1930s theater and a pair of suddenly too-big hotels, became a monument to the city’s fading prosperity.
Local politicians and business leaders embraced Rivian, which is based in Michigan and has locations in other states, Canada and Britain, as a way to fill the vacuum. But in a place that has endured such changes of fortune, residents can be forgiven for wondering how long today’s good times will continue.
The Transition to Electric Cars
- How Long Until Electric Rules? A new car sold today can last a decade or two before retiring. With more electric cars being sold, how long until they rule the road?
- G.M.’s Electric Car Goals: The car manufacturer plans to sell only zero-emission vehicles by 2035.
- What Can the Power Grid Handle? Four key things that need to happen before the U.S. power grid can handle a surge in electric vehicles.
- Benefits of Electric Cars: They benefit both the environment and your wallet.
- A Guide to Buying Electric: Shopping for an electric car can be exciting and bewildering. Consider what kind of car you want and need and where you will charge.
Electric vehicles require fewer workers to make than gasoline-powered ones. And while Rivian’s prospects appear strong — it filed for a public stock offering in August, seeking a valuation of roughly $70 billion — the company could be overwhelmed by a growing list of competitors. At some point, the spending spree will end, and the local industry will rise or fall on whether Rivian can build a sizable customer base.
The initial froth is already dissipating. After reaching more than 200 employees earlier this year, Weber Electric is down to about 100. “We kind of rolled it back a little bit,” said Mr. Mosier, the owner, adding that he hopes to add workers again as the plant green-lights more construction.
In this way, the electric vehicle boom is something of a microcosm for the larger transition to a low-carbon economy: As governments and investors funnel hundreds of billions of dollars into green industries, there is certain to be an initial jolt. But will it last?
‘It’s Really Saved Their Bacon’
Not everyone in Normal has a connection to the Rivian plant, the company’s only production facility; it just feels that way sometimes. Sitting in a lobby at the plant one afternoon in June, Katy Tilley, who helps oversee workplace operations like site design and dining, said her younger sibling, who had just left the Marine Corps, was starting at the company the next week.
“My younger brother works in the battery department!” her colleague Laura Ewan, a community relations employee, chimed in. “We were so different, our parents would have never expected us to work in the same place.”
Hiring began in 2016, when Rivian kept on a handful of former Mitsubishi employees who had been maintaining the shuttered factory, but it has accelerated in the last year and a half. The company hired about 100 people a week in June and July.
The ramp-up has made labor, already in short supply during the pandemic, even more scarce. A branch of the International Brotherhood of Electrical Workers, which has helped contractors like Mr. Mosier staff up, says it has fully booked the roughly 280 licensed union electricians in the area.
To meet the demand, the union brought in a few hundred electricians from elsewhere in the country this year.
A nearby community college started a program this fall to train electric vehicle technicians, and Illinois State University, which abuts Uptown, is building an engineering school partly in response to Rivian.
The boom has also sustained the local travel and hospitality business. Last October, after a four-year hiatus, Delta Air Lines resumed a nonstop flight to Detroit.
The visitors, including contractors, suppliers and Rivian employees from other locations, have helped keep the city’s restaurants and hotels afloat during the pandemic. “It’s really saved their bacon,” Mayor Chris Koos said. One indication of their reliance on Rivian: The company runs a shuttle service to and from a stop near the hotels from 6 a.m. to 8 p.m.
In principle, a factory like Rivian’s should provide a more lasting boost than a solar or wind farm, which creates a flurry of construction activity but requires relatively few employees to operate. An automobile factory could also provide a bigger stimulus than an e-commerce warehouse because its workers tend to be more productive and can therefore be more highly paid.
Such factories also attract more suppliers, said Willy C. Shih, an expert on manufacturing at the Harvard Business School.
Despite this potential, new factories don’t benefit all cities equally. When a factory opens where much of the population is already employed, the net gain to the local economy can be muted, according to research by Timothy J. Bartik, an economist at the W.E. Upjohn Institute for Employment Research in Michigan.
But in an area like Normal that is suffering industrial decline, a factory’s effect on employment can be up to three times as great. The benefits can last for decades — if the factory survives.
“When the employment-population ratio is going up, it drives up earnings, and that goes on for 20 years,” Mr. Bartik said.
A Virtuous Cycle
In 2010, about 65 percent of working-age people in the Bloomington-Normal area were employed, according to the Census Bureau, far higher than the national average of 57 percent. By the eve of the pandemic, however, the local employment rate had fallen just below the national average, which had recovered to about 60 percent.
One contributor to the decline was the shuttering of the Mitsubishi plant, originally known as Diamond-Star Motors. The 2015 announcement blindsided workers, some of whom were hired only weeks before, and took a financial toll on veteran production workers, whose hourly pay had once been in the upper $20s.
The closing also wiped out suppliers and squeezed local restaurants and retailers. “We had restaurants close by,” said Bob Dobski, who owned several McDonald’s franchises in the area. “We definitely saw diminished traffic.”
Around the same time, State Farm, whose headquarters is in Bloomington, was shrinking its local work force. The real estate market wilted.
In 2016, an auction company was preparing to sell the Mitsubishi plant in pieces. After executives from Rivian came to scout equipment, the company’s 38-year-old founder, an M.I.T. Ph.D. named R.J. Scaringe, decided that the plant itself was the real find. “It was like, ‘How much for the whole thing?'” Mr. Scaringe recalled.
The company barely had a website, much less a product. When it asked for tax subsidies before it completed the $16 million purchase, local government officials were not entirely convinced that the company was for real.
“We gave them a list of things we need,” said Mark Peterson, then the city manager. The list included such rudiments as the names of board members and a photo of a prototype. The company responded to roughly half the requests, Mr. Peterson recalled. (Both he and the company said Mr. Scaringe later provided more information at a Town Council meeting.)
The city and other local authorities approved a package of tax abatements and grants worth up to $4 million in any case, realizing it had no other option for reviving the plant, but the skepticism lingered.
In 2019, however, the company raised nearly $3 billion from the likes of Ford Motor and Amazon, which also ordered 100,000 electric delivery trucks. That fall, Rivian held a public curtain raiser in Normal for its $70,000 trucks, which it says can accelerate to 60 miles per hour in about three seconds.
“To a lot of people in the community, it was the first solid touch they’d had with Rivian,” said Mr. Koos, the mayor. “There was a lot of excitement.”
Workers at the nonunion plant start at $20 an hour and top out at $23 after three years — less than what veteran workers earn at unionized plants owned by General Motors and Ford, but more than the typical wage in the Bloomington-Normal area, where most of the new hires have come from.
“I was about to start sending out applications,” said Becky Skeen, a longtime Mitsubishi employee facing limbo before Rivian hired her in 2017. “I was really grateful.”
For the local economy, the suppliers attracted by Rivian may be as important, part of a virtuous cycle that can pull in workers from the margins of the labor force.
A few could end up at a recently revived industrial park near the Rivian plant. More than a decade ago, a civil construction firm called Stark Excavating took over an unfinished 500,000-square-foot structure there after the developer ran into financial problems.
But last year, Stark Excavating sold the building to a real estate investment firm, which finished construction and leased it to Rivian, then began work on a second 500,000-square-foot building that could be used by suppliers or Rivian itself.
“That’s all attributable to Rivian — they’re driving this town,” said David Stark, Stark’s president. “It reminds me of when Diamond-Star Motors built that original car plant that was taken over by Mitsubishi. It’s what made Bloomington-Normal grow.”