Ford Motor Co.'s decision to take its $11.4 billion electric vehicle investment and 11,000 jobs to the mid-South should jar Michigan to the reality that it's unprepared to achieve its dreams of dominating the automotive future.
Dearborn-based Ford said it picked Tennessee and Kentucky over its home state for the massive new battery and EV production campuses because of lower electricity costs and better weather.
Making batteries consumes five times the electricity of a traditional auto plant, Ford CEO Jim Farley said. Kentucky and Tennessee offer power rates that are roughly one-fourth cheaper than Michigan's, though that's largely because both states are still heavily reliant on coal-fired power plants, which have an uncertain future.
The warmer, more stable weather in those two states apparently are also more conducive to making batteries.
Michigan can't do much about its climate, except to harbor the ironic hope the global warming electric vehicles are designed to contain sharply raises its average temperatures.
Nor can it change its peninsular shape, which isolates it from states to the east and west and makes electricity transmission more costly.
But it can and should take other steps to improve its competitiveness for the next time Ford or another automaker is searching for an EV production site.
Factories this size will not only lure thousands of workers to staff them, but also bring thousands of construction workers to build these plants and the infrastructure to go with them. Losing this kind of investment can also mean more population loss, less representation and the further dilution of Michigan's influence.
Jason Hayes, an energy expert at the Mackinac Center for Public Policy, blames the state's regulatory environment for keeping electricity prices high. Michigan technically has energy choice, meaning customers can pick from multiple providers for their electricity and natural gas.
But the state limits choice to 10% of capacity, effectively maintaining the monopolies of DTE and Consumers Energy.
"We don't really have electricity choice because there's no competition," Hayes says.
Michigan also has a 15% renewable energy mandate; neither Tennessee nor Kentucky has adopted a renewable standard.
Trevor Lauer, president and chief executive of DTE Electric, doubts the regulatory climate was a factor in the decision by Ford, its largest customer, to go south. And if it was, DTE could have addressed it had it been given a chance, he says.
"We never had a project in which we weren't competitive," Lauer says. "The state never brought us in."
That Michigan's development officials didn't coordinate a broad effort to secure the Ford investment speaks to a larger problem and suggests the state's disadvantages go beyond energy costs.
Both Kentucky and Tennessee had large, shovel-ready development sites to offer Ford, and they aggressively marketed them. Michigan does have a development megasite near Marshall, but nothing anywhere close to the size of the 3,600-acre site available near Memphis, Tennessee.
The two states also reportedly dangled $250 million to $500 million in incentives, something Michigan has been loath to do to attract development.
DTE, under state law, wouldn't even have been able to offer Ford the economic development discount rate it once had at its disposable, under current state policy.
Kentucky and Tennessee will build out the road, sewer and water infrastructure for the sites at taxpayer expense.
Michigan is not ready to compete at that level.
It was galling to hear Tennessee Gov. Bill Lee crow that "West Tennessee will now lead the nation in the next industrial revolution."
That's not an overstatement. Farley cited the company's electric and autonomous vehicle investments when he said, "This is the future we're building, and we're building it today."
And that future may not be built here in Michigan.
