On September 27, the Ford Motor Company announced it would be investing nearly $6 billion in Kentucky to build a plant in Hardin County that would produce the batteries needed to power electric vehicles. As part of a partnership with SK Innovation, the company will build Blue Oval SK Battery Park — twin battery plants employing 5,000 people to supply Ford’s North American assembly plants with batteries for its electric Ford and Lincoln vehicles.
“This is a transformative moment where Ford will lead America’s transition to electric vehicles and usher in a new era of clean, carbon-neutral manufacturing,” said Ford Executive Chair Bill Ford in a statement. “With this investment and a spirit of innovation, we can achieve goals once thought mutually exclusive — protect our planet, build great electric vehicles Americans will love and contribute to our nation’s prosperity.”
A rendering of the Blue Oval Battery Park planned to open in Glendale, Kentucky, in 2025.
And while the plant will have an economic impact on the state, economists say it is neither a game-changer nor a long-term sure bet as an economic engine. The economic impact will be most felt at the local level, they said.
“I think when you think about a plant, like this one … in terms of the state as a whole, this is going to be a relatively small share of employment,” said Michael Clark, director of the Center for Business and Economic Research and an associate professor of economics at the University of Kentucky’s Gatton College of Business and Economics. “But if you look at the Hardin County area, this is going to be a pretty large employer given the population size that they have. So, depending on what kind of geographic area you’re talking about you get really a different type of effect.”
Business leaders could look to Georgetown and the Toyota plant built in the 1980s to get a sense of how these localized impacts might be felt, said Kenneth Troske, economics professor at Gatton specializing in labor economics.
“It’s had a pretty significant impact on the community,” Troske said. “Obviously, the Georgetown community is a much different community because of that; Lexington is a much different community because of that. There are some businesses that have located here because of that … Kentucky is the leading auto parts-producing state in the union. That’s where we really fit into the auto manufacturing industry, and [the Ford plant] is going to continue to add to that.”
Just like adding Toyota’s 4,300 jobs did in the ’80s, Ford’s pledge to add 5,000 jobs to the local economy will have a significant impact, Clark said. The question is whether or not the plant will grow like Toyota did. The X-factor in the equation, he said, is what the plant was producing.
“There’s a lot more uncertainty, I think, with a battery plant,” Clark said. “With Toyota, one of the things we got was a really good company and a really strong brand. And so, we’ve been very fortunate that the total plant has continued to grow over time… With battery plants, there’s a lot of uncertainty about the long-term growth. There’s still a lot of questions about where the automobile industry is going to go in terms of fuel.”
The plant will include solar arrays and numerous amenities to help improve its energy efficiency and minimize its environmental impact.
While Ford seems to be preparing for electric vehicles to be a significantly larger part of the market, he said, there’s still uncertainty about whether the industry is going to go in that direction.
In May, Ford announced it would be investing $22 billion in electrification through 2025 as part of a plan to o.er electric versions of its Mustang, F-150 and Transit lines. The company has also pledged to o.er only electric vehicles in Europe by 2030, and to make significant reductions in the company’s greenhouse gas emissions globally, including by new vehicles sold, by 2035.
Research into other power sources and in other technologies may provide automobile manufacturers with other options though, the two economists said. Additionally, the battery being built at the newly announced plant is a lithium ion battery, which could prove to be unstable — like the batteries in the Chevy Bolt that were recalled — or could prove to be unsustainable to produce as the lithium and cobalt needed to make the batteries remain difficult to source, they said.
Still, the plant will provide jobs to the area, pulling labor in from all over the Central Kentucky region, Troske said, with people commuting in from rural counties and smaller towns along the I-65 corridor. Existing Ford workers, trained to work at the battery plant, would likely also move into the area, as would others from inside and outside of the state.
The employees who move to the area will be looking for housing, as well as businesses that will provide clothing, entertainment and dining options, he said.
But while the battery plant will add jobs, it will not be something that will transform the state’s economy, Troske said.
“This is more blue-collar production jobs,” he said. “This is not Nashville announcing it’s the new Amazon World Headquarters, right? ... This is not going to change the average level of education of people in Kentucky. And it’s probably not going to have that big of an impact on the average household earnings in Kentucky.
“It’s going to have an impact. It’s going to bring in some additional jobs and it positions Kentucky to continue to participate in the automotive industry but not at a completely different pace that we’re participating at right now.