(Bloomberg) —
Demand for carpeting lives and dies with the real-estate market, and that puts jobs in Dalton, Georgia, the self-proclaimed “carpet capital of the world” at risk whenever housing goes soft.
But instead of the blight and decline that’s come to characterize many rural US manufacturing towns, this city of 34,000 is on the upswing. After a successful push from state and local development authorities, Korean conglomerate Hanwha Group built a solar factory — the largest in the Western Hemisphere — in Dalton. It opened in 2019.
Solar may not seem an obvious fit for the region. Georgia doesn’t mandate clean-power installations, and few panels adorn rooftops in Dalton. “We’re not really into the whole solar thing,” says Diane Smith, a 64-year-old housewife in Dalton. But she’s pleased about the influx of jobs in a whole new industry. “We need something new — something besides carpet.”
Once a stronghold of the conservative South, Georgia has emerged as both a hub of so-called cleantech manufacturing and a political swing state. The two themes converged last year when Democrats Jon Ossoff and Raphael Warnock won the state’s US Senate seats, giving President Joe Biden’s party just enough votes to pass the Inflation Reduction Act. The landmark law features $374 billion in new climate-related spending — with a wave of new electric vehicle, battery and solar plants among the key beneficiaries — in part to reduce US dependence on Chinese supplies.
“Victory is not assured in this effort,” says Ossoff, a key player in the creation of the cleantech manufacturing credits in the climate law. “But what’s clear is that the Chinese domination of the solar-supply chain has become economically, strategically and ethically untenable.”
Next week, Georgians will once again play a pivotal role in charting the course of national energy policy, with a high-profile US Senate race pitting Warnock against Herschel Walker, a former football star endorsed by Donald Trump. The race could shift the balance of power in the closely divided Senate. Walker has taken a partisan line against the IRA, criticizing Warnock for “spending $1.5 billion on ‘urban forestry.’” Walker added in a tweet, “I have a problem with that.”
But a look beyond the Senate race points to a shift in the politics of clean energy. Georgia’s politicians are eager to associate with growing industries, and its green-jobs boom has been championed by Republican and Democratic leaders alike. As cleantech firms become reliable sources of local employment and political contributions, their priorities — including speeding the transition away from fossil fuels — may become more palatable even to staunch conservatives.
Tennessee, South Carolina, Ohio and other traditionally red states with automotive traditions have joined Georgia in vying for cleantech factories. “Red states are going to green up like the rest of the country. Their economic incentives are greater to do so,” says Kevin Book, managing director at ClearView Energy Partners. “For Georgians, climate policy might be a tough starter. But new jobs isn’t.”
Northwest Georgia is a deep Republican stronghold: Residents sent ultra-conservative Marjorie Taylor Greene to Congress with 75% of the vote. At the edge of Dalton’s downtown, Oakwood Cafe has a pair of campaign signs in the window for incumbent Republican Governor Brian Kemp and a note on the door explaining the recent 10% surcharge on all bills to help “offset the extreme inflation.”
Kemp has touted the surge in green jobs. There’s also SK Innovation Co.’s massive new battery factory in the city of Commerce that stretches a half-mile along the interstate northeast of Atlanta. Rivian Automotive Inc. is planning a Georgia factory, and Hyundai Motor Co. just broke ground on a $5.5 billion plant near Savannah.
The state’s leaders have a practiced sales pitch. Georgia is a strong logistics hub, with one of the world’s busiest airports, a port and a rail network. Electricity prices are relatively low. It’s a right-to-work state, which makes it harder for workers to unionize. Several technical schools promise a solid talent base, and the state offers workforce training. “I remember them saying they can train the burger-flipper at McDonald’s to work at your plant,” says Steve Jahng, director of external affairs at SK Battery America.
Even without a state-mandated quota for clean power, developers in Georgia have built massive solar farms, in part because big corporations are keen to buy the power. It’s now ranked seventh among US states in terms of solar-generating capacity. “We have a number of companies that have moved to Georgia in the last few years that want 100% renewables,” says Pat Wilson, the commissioner of the state’s department of economic development. “The utilities have facilitated it.” (Utility Georgia Power also has plans to add renewables resources).
It sounds like a laissez-faire dream. But manufacturing often depends on government help, and Georgia under Republicans or Democrats has long been eager to make it happen. Firms have taken advantage of property-tax abatements, site-clearing efforts, infrastructure improvements and other perks, mostly tied to the promise of jobs.
The federal push for American-made cleantech supplies predates Biden’s election. A small but committed band of populists and protectionists as well as some unions, solar-panel makers and steel interests, found a surprising ally in the Trump administration, which was eager to escalate trade tensions with China.
China controls more than 70% of global capacity across 12 segments of the clean-energy industry, according to BloombergNEF. While there are plenty of jobs for solar panel installers in the US, by the time Trump took office, almost all of those panels were being manufactured overseas.
About a year into his term, Trump imposed new solar duties, contributing to the decision of Hanwha unit Qcells to build its first US plant in Dalton. (The US has long been a key market for the manufacturer.) Today that factory produces 12,000 panels each day, has three production lines and employs 750 people, almost all of whom are new to solar. Qcells is one of the biggest employers in the Dalton area and still growing, with a new facility on track to open within a year and eventually employ nearly 500 workers.
“For this town to be the leading producer of solar panels in the United States really speaks to what its role in the US and global economy is going to be,” says Scott Moskowitz, head of market strategy and public affairs at Qcells.
The new spending measures enacted by the midpoint of Biden’s term in the White House may prove to be the country’s biggest industrial policy since the 1950s. It’s not just the climate package that’s putting billions of dollars behind the clean-energy transition — there’s also the 2021 bipartisan infrastructure law, with support for power grids and electric vehicles, and the 2022 semiconductor act. It’s enough to bring a Dalton-style diversification to more local economies across the country.
That many of the states vying for new cleantech plants are, or were, Republican strongholds may have long-term implications for energy policy and climate politics. Not a single Republican supported Biden’s climate law but, like many issues in American politics, it hasn’t always been politically polarizing. The Environmental Protection Agency was established by President Richard Nixon, for example, and politicians have proven plenty flexible on energy policy.
Just as Democrats from oil-producing states such as Texas often supported favorable policies in Washington, there are plenty of Republicans in windy Midwest states who have backed tax credits for building wind farms. This bodes well for solar, battery and electric-vehicle technologies that are now being made in purple and red states.
In Georgia, “left or right, for economic-development purposes and manufacturing purposes, both sides of the aisle have been extremely supportive of our business,” says SK’s Jahng, who is often in touch with representatives for the governor and senators. “It’s an open dialogue.”
Driving to Commerce from Dalton takes about two-and-a-half hours, passing along orchards that hug the Appalachians. Trump got 60% of the vote here in 2020, and the region hasn’t sent a Democrat to Congress since 1993. Signs in the storefront window of local radio station WJJC 1270 AM read “Blue Lives Matter” and “Herschel for Senate.”
SK opened a three-person office in Commerce in the summer of 2019 and conducted drive-through interviews for prospective hires early in the pandemic. Now there are more than 2,000 employees at its 1.5-million-square-foot factory. Most Saturdays there are jobs fairs, as the company to hire 100 people — GEDs, PhDs, and everything in between are welcome — each week. The goal: 2,600 employees by year-end.
“It’s driven up wages across the board in our area,” says Commerce Mayor J. Clark Hill III. “When you start getting into paying people $20 to $25 an hour to start — a high school student, non-skilled — those people really have the opportunity to have a decent life.”
SK’s plant relies on humans and robots to manufacture battery cells for automakers including Ford and Volkswagen. Engineers at the facility design and manage the process. Another Korean company, Enchem, supplies electrolytes needed for the batteries at a nearby facility. A second plant at SK’s Commerce site will more than double capacity. Mass production is expected to start early next year.
Trade tensions, human-rights concerns and pandemic-era supply snarls have underscored the value of domestic manufacturing. But the new federal support doesn’t guarantee long-run success in the effort to wean off Chinese suppliers. China President Xi Jinping has made cleantech manufacturing a core focus. “China is just years ahead of the US — decades ahead,” says Jenny Chase, head of solar analysis at BloombergNEF.
Back in Dalton, new kinds of jobs and technologies are winning the day. “Everyone is trying to move forward,” says Wayne Lock, who spent several years in carpeting and is now a quality engineer at the Qcells plant. “If we don’t change what we’re doing, we’re going to get left behind.”
–With assistance from Jennifer A Dlouhy, Dan Murtaugh and Brett Pulley.
To contact the author of this story:
Brian Eckhouse in Los Angeles at beckhouse@bloomberg.net
© 2022 Bloomberg L.P.
