Michigan has advantages to win EV plants, GM economist says

DETROIT — General Motors‘ chief economist is optimistic about the health of the economy and Michigan‘s position to win more business — including from GM.

That’s despite results of the Michigan Economic Outlook Survey, released last week, showing a declined sentiment among companies toward the business environment in Michigan.

“I think not only are we not in a recession now… but that we are seeing inflation declining and still strong economy and labor market and that the odds of a soft landing are looking better,” Elaine Buckberg said during a Detroit Economic Club event.

Buckberg also indicated that Michigan is a prime contender for more battery plants as the automaker makes the mammoth transition to electric vehicles.

“We have more assembly plants here than anywhere else, so it would make sense that we should have more battery plants in or near Michigan,” Buckberg told Crain’s Detroit Business, an affiliate of Automotive News, after the event. “Those decisions haven’t been made, but the proximity of battery plants to assembly plants is super important.”

GM has announced new battery plants in Lansing, Ohio and Tennessee, and another is reportedly planned in Indiana.

“It would be wrong to assume that’s the end,” Buckberg said. “There will be more battery plants, and I don’t mean one. There will be more battery plants, and there will be more EV assembly plants.”

Buckberg said Michigan has an advantage not only because of existing assembly plants, but also because of proximity to the supply base and a strong, engineer-rich workforce.

Buckberg’s thoughts were echoed by Michigan Economic Development Corp. CEO Quentin Messer, also featured in the discussion.

“Whether it’s site selectors, companies frequently looking at Michigan, (there is) this notion of team Michigan,” Messer said. “There’s this belief that … when it comes to the business environment, we’re collectively trying to figure out how to make that better.”

Buckberg and Messer maintained positive perspectives on Michigan’s economic future even as companies worry about a possible recession and the trajectory of the state.

The annual outlook survey, conducted by Baker Strategy Group, showed a decline in business sentiment through respondents’ answers to five main questions: whether Michigan is a great state for raising a family, a great state for young professionals, if it is business-friendly, if it has a strong, vibrant economy and if it is on the right track.

The biggest drop was in the business-friendly category, which slipped six points to 61 on a scale of 1-100.

Messer said he thinks there is an outdated perception of the state’s business climate. “People have very dated perceptions,” he said. “I think people had frozen Michigan in time.”

Buckberg said she thinks the results of the survey were influenced by overall negative feelings toward the national economy and that there is “at least 50 percent odds of a soft landing” as the Federal Reserve continues efforts to cool the economy and inflation.

“It also creates another issue that the last two recessions were so extreme,” she said. “If we were going to go into a recession in 2023, over 90 percent of economists think it would be short-lived.”

Regardless of economic challenges, Messer added, the state needs to do what is in its control to attract businesses as states to the south compete fiercely for a stake of the automotive future.

“We are in a global competition,” Messer said. “No one is giving anybody a home team discount, whether it’s Ford, GM, Stellantis … They have a set of shareholders for whom they have a fiduciary responsibility, and the onus is on us to understand that. We have a fiduciary responsibility to men and women who pay taxes. But we have to make sure that we compete.”

Michigan does have a home field advantage, though, at least in GM’s case, Buckberg said. Repurposing old plants and sites in the state would have huge economic advantages over building new elsewhere, such as Ford Motor Co.’s $11 billion of investments in Kentucky and Tennessee.

“Greenfield (plants) adds literally years and billions of dollars, so using our existing sites is tremendously powerful,” she said.

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