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Tuesday, April 23, 2024

Project plans: North Carolina speeds its efforts to attract major investments on massive megasites

This is first in a series of stories on key economic development issues in North Carolina.


 

Diesel fumes roil up from trucks ferrying construction materials to the mammoth building rising in Ellabell, Georgia, a half hour west of Savannah. It’s the site of the pending $5.5 billion Hyundai auto assembly plant.

By all appearances, the site could be in Moncure, about 30 minutes south of Raleigh, where VinFast plans its $5 billion electric-vehicle factory.

The two sites are the front lines of the high-stakes economic development struggle as states battle for billions of investment dollars and tens of thousands of jobs.

Not far from the 2,100-acre Triangle Innovation Point megasite, where VinFast says it will someday employ 7,500, is the 1,400-acre Chatham-Siler City Advanced Manufacturing Megasite. Durham-based Wolfspeed says it will invest $5 billion and generate 1,800 jobs at a chip making plant there.

Chris Chung

But North Carolina has a tenuous standing in the megasite race. “We have 12 projects we’re pursuing, all with at least $1 billion in capital investment,” says Chris Chung, CEO of the North Carolina Economic Development Partnership. “We only have five megasites now.”

Chung praises Gov. Roy Cooper and Tar Heel legislators for a 2023 budget that includes nearly $100 million for the Megasites Readiness program. It will help expand the state’s inventory of thousand-acre-plus sites from five to seven, and kick in $10 million to help find as many as 15 sites smaller than 1,000 acres.

“We need to work to stay ahead so we don’t find ourselves with nothing to sell and an empty cupboard,” Chung says.

Georgia has eight sites of 1,000 acres or more, A spokeswoman for the Georgia Department of Economic Development says her state places less emphasis on the size of sites than their “shovel-ready” nature, or being ready for prospects to get down to business.

Chung says acreage is often less important than availability of rail and highway access, topography and an available labor force.  He and Adam Bruns, editor of Site Selection magazine, say megasites now dominate how states battle for projects. That’s particularly true for electric vehicles and their batteries, which have shattered investment and job-creation records in recent years.

Plants announced for North Carolina, Georgia, Tennessee, South Carolina and Kentucky in the past five years will create $83 billion in investments and 95,000 jobs, Standard & Poor’s reports. That amounts to two-thirds of the national total, compared with 25% for Midwestern states.

Megasites don’t come easily, with development costs of as much as $100 million, Chung says. Sites such as a 1,300-acre Person County project offers electricity from two utilities and a large water supply, and the 1040-acre International Logistics Park near Wilmington, with access to the state’s main port 18 miles away, require lots of money with no guarantee of a return. 

States rarely luck into what developers call brownfield sites, such as the 2,100-acre former Philip Morris campus in Concord. Alevo Group, a now-bankrupt Swiss auto-battery maker, paid nearly $70 million for it in 2014. It is now owned by a private investment group, which has landed a $740 million Red Bull beverage bottling plant, and $1 billion Eli Lilly & Co., plant that is under construction.

Chung says the state’s universities and community colleges  frequently partner with megasite developers to let potential prospects know tailored training is available. For more than a year prior to Toyota’s announcement of its 2021 battery plant, N.C. A&T engineering school officials worked secretly to help the company map out training and research. “They were key,” says Randolph County Commission Chair Darrell Frye.

Megasites can cause resentment in rural areas, where residents often complain their concerns are often ignored. Landowners sometimes contend they are underpaid for their property. The VinFast plant is taking about 30 homes, convenience stores and other businesses. The U.S. Supreme Court in 2005 ruled that under eminent domain law, states could seize private land for industrial parks that would benefit the public.

Chung is optimistic about North Carolina’s position in the megasite race. “Companies like Toyota are looking not only for sites, but skilled workforces, training, clean energy and with a competitive rate structure,” he says. “We won’t win every deal, but we’ll almost always
be in the conversation.”

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