LIBERTY – Toyota will construct a battery plant at a facility to be constructed at the Greensboro-Randolph Megasite, an 1,825 acre property in Randolph County, and will invest $1.272 billion by the end of 2026, WRAL TechWire and have confirmed.

The project, which was named “Project Darwin,” according to WRAL TechWire’s earlier reporting on this story, was discussed at a meeting of the Randolph County Board of Commissioners on Monday.  At the meeting, officials described the project as “transformational,” and noted that it could bring more than 3,000 total jobs with average salaries of at least $62,234, about $28,000 more in annual salary than the current median annual wage in the county.

The total investment could also grow to more than $3 billion.  An official announcement is scheduled for later this afternoon at the site location in Randolph County.

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An economic jolt

The project is a significant one for the region, and for North Carolina, Dr. Henry C. McKoy, Jr., the lead entrepreneurship faculty and Director of Entrepreneurship at NC Central University in the School of Business, and a former assistant secretary of commerce at the North Carolina Department of Commerce from 2010-2012, told WRAL TechWire last month in a conversation about what a potential automotive plant would mean for the state.

“Though the state has experienced tremendous success in recent times related to technology and biotechnology locations and expansions, we have been less successful in large-scale traditional or advanced manufacturing locations,” said McKoy.  “We continue to lose to a variety of our Southern neighbors.  Being able to land this project would mean that the state is a contender for those types of deals.”

For example, Toyota had previously considered the site for a different project, according to reporting from the Triad Business Journal in 2018, ultimately selecting a site in Alabama to house a Toyota-Mazda manufacturing plant.

The megasite sits in Randolph Country, which moved from being considered a Tier 2 to a Tier 1 county in 2021, according to the North Carolina Department of Commerce.  Dr. E. Anne York, a professor of economics at Meredith College told WRAL TechWire that this designation meant that the county is now considered among the 40 most economically distressed counties in the state.

“The “economic jolt” of Toyota putting a battery plant in Randolph County will therefore have a much larger impact than if it was put in a county that was not economic distressed,” said York.

This investment, not just because of the more than $1.2 billion direct investment, can be beneficial to the region and to the state, said Kenan Institute chief economist Gerald Cohen, in an interview with WRAL TechWire on Monday.  Beyond the direct impact on the region through the number of jobs created and the amount of wages paid that could be spent in the local economy, said Cohen, these types of building facilities can create “network effects,” meaning that “parts of the supply chain or even the auto plants themselves, as well as other auto, battery, and related companies are more likely to invest in the region.”

For the Triad, specifically, the project is likely to result in a “significant economic infusion,” said economist Dr. Jeff Sarbaum, a professor of economics at the University of North Carolina at Greensboro, in an interview with WRAL TechWire on Monday.

“The project should bring an infusion of related industry to the Triad, and by putting money into workers pockets it will create a multiplier effect that supports the local economy across the board through increased expenditure and economic activity,” said Sarbaum.

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Jobs and the talent market

The jobs that will become available at an automotive plant, including this plant from Toyota, “are considered more consistent with traditional manufacturing sectors, which might send a signal to those out of the workforce that they already have some of the right skills to take on these jobs,” said McKoy.

“Many don’t know that our state used to have one of the highest percentage of its workers in manufacturing compared to other states,” said York.  “Until 2008, manufacturing was our major industry with the highest employment.”

According to York, North Carolina has a strong track record in manufacturing employment.  “As more manufacturers decide to build within the US, our state should continue to make a strong showing in site location decisions,” said York.

According to Dr. York, 42% of Randolph County residents have jobs outside of the county.  “A Toyota plant should be able to bring many of these workers back to working within Randolph,” said York.

Dr. Sarbaum told WRAL TechWire that it’s not just that the state has a history with manufacturing jobs: the Triad does.  But many of the region’s skilled manufacturing workers were pushed into retail or other lower-paying roles when manufacturing jobs were lost to overseas competition or the relocation of factories out of North Carolina.

“Toyota should have no problem attracting these workers, and with the projected growth of EV vehicles these jobs should create more regional employment opportunities and security,” said Sarbaum.  “The Triad has a real opportunity here, particularly with a global brand as well known as Toyota, to become one of the regional leaders in the EV battery space.”

The site location could be an important one, too, given its geographic location and its potential to attract workers from a variety of regions, whether rural or urban, said McKoy, who added that given the location there’s “a good chance that the workforce will be available by the time the factory would open.”

McKoy told WRAL TechWire that it is a “certainty” that the community college system has been a part of the discussions between economic development officials and the company.  And these job roles in automotive manufacturing are familiar roles to the average worker, which could mean that the jobs available at the facility will be even more attractive and thus “easier to fill,” said McKoy.

“By the time it would be ready to come online, there would likely be local talent or those that drive from surrounding counties to fill the positions,” said McKoy.

The location is also near the geographic center of the state, and allows greater connectivity to both more rural parts of the state as well as the urban centers in Charlotte, the Triangle, and the Triad, said McKoy.  That could make working at the plant more attractive, especially as a newly proposed interstate in central North Carolina takes shape.

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Economic incentives – are they worth it?

There’s clear benefit to announcements such as the one expected later today, said McKoy.  That includes the creation of “thousands of hopefully living wage and family sustaining jobs for these billion dollar deals,” he noted.  “However, there are real costs to these such deals that must be balanced against things like future taxes and revenue to the state.”

Economic incentive deals can reduce the total overall taxes paid to the state, and those taxes pay for things like schools, roads, social services, and other infrastructure, said McKoy, though noting that not all of which is a direct tradeoff when a job is created.

“Perhaps even more costly from a negative standpoint is that these deals can and do create bigger racial disparities,” said McKoy, “since none of these deals are generally connected to companies owned or led by historically underrepresented minority populations.”

There’s no doubt that the willingness to offer or increase economic incentives while reducing corporate taxes, as is included in the recently passed North Carolina state budget, is a combination that is attractive to corporations, said McKoy.

One key to evaluating the project will be the “size and scope of any-awarded JDIG package,” said Professor John Quinterno, visiting professor of the practice in the Sanford School of Public Policy at Duke University, and also the founder and principal of South by North Strategies Ltd., a research consultancy specializing in economic and social policy.

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“To the extent that the firm would locate in the Triad anyway, any subsidy provided by the state really is wasted money and represents a transfer of resources that would be available to the public at large for the benefit of one particular private-sector firm,” Quinterno said.  “The fact that the JDIG program doesn’t even relate to the taxes paid by the particular company and instead rebates a portion of the personal income taxes paid by the employees back to their employer continues to be a problematic feature.”

“The size and scope of these awards continue to become more and more extreme,” said Quinterno.  In 2021, the state has announced economic incentive grants for projects like Apple’s planned expansion in the Triangle, Google’s engineering hub in Durham, FUJIFILM Diosynth Biotechnology’s new facility in Holly Springs, and Amgen’s planned Holly Springs facility, among others.

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A validation for North Carolina

Yet announcements like the ones noted above, and a potential announcement from Toyota, can be validating for a region and for the state, said Brooks Raiford, president of the North Carolina Technology Association, NC TECH.

And that can spark additional investments or additional projects, some of which may not require economic incentive grants in order to be secured, Raiford noted.  “For example, when Google announced a billion-dollar data center in western NC, other major companies followed with similar or larger data center projects in the region,” said Raiford.

“It’s common for large plants to attract investments from suppliers/vendors who need proximity to their large customer, so there is typically a multiplier effect in employment and economic activity when a large facility becomes operational,” Raiford explained. “A Toyota announcement will likely cause North Carolina to have a higher profile when other manufacturers consider expansion.”

The current state of North Carolina’s economy is such that economic development leaders and elected officials in rural or urban-adjacent areas have real opportunity to prepare mega sites to be ready for opportunities, said Raiford.

North Carolina could be poised to be an important state, a reliable state with a centralized geography along the east coast of the country, coming out of the global SARS-CoV-2 pandemic, said Dr. York.  “I think that businesses will reconsider supply chains that are too far apart geographically and how risky their supply chains are,” said York.  “With our strong labor market history in manufacturing, a generally friendly political climate for employers, and our temperate climate that isn’t given to extreme weather events compared to some other states, NC will be seen as a reliable state in which to keep the supply chain running smoothly.”