A Revival We’ve Seen We’ve seen a version of this movie before in the Southeastern part of the U.S. In the 1990s, many high-tech, finance, and automotive industries started migrating to the Southeast. Although this migration started as a slow trickle, it eventually swelled into a flood of inbound investment.
During the last three or four years, in particular, the booming electric vehicle industry has been blanketing the Southeast with dozens of new EV and EV battery factories. (To learn more about how to play this all-American megatrend, click here.)
As a result, 10-year GDP growth in the core EV hub states of Tennessee, Georgia, and South Carolina has been growing 20% faster than the overall U.S. economy.  Partly, the Rust Belt’s revitalization is taking place organically, due to basic economic considerations like the cost of land, labor, and transportation. However, government policy is also contributing to it… Making of a Silicon Heartland Two years ago, for example, Intel Corp. (INTC) announced it would be making the single largest private-sector investment in Ohio history. The semiconductor company pledged to spend $20 billion to build state-of-the-art foundries on a 1,000-acre site in Licking County, Ohio.
To advance this project, Intel is not only leaning on its own balance sheet, but also lobbying for funds from the $52-billion CHIPS and Science Act. The company hopes its massive investment in Ohio will help create what it calls a “Silicon Heartland” that will establish a new regional economic cluster for U.S. chipmaking and become an epicenter of leading-edge technology.
As Al Thompson, Intel’s vice president of U.S.-Canada Government Affairs, explains… Powered by the promises of the CHIPS Act, Intel is doubling down on research and development (R&D) that will fuel new, leading-edge chip manufacturing facilities to power today’s advanced technologies and tomorrow’s transformative innovations…
In just one year, the CHIPS and Science Act sparked more than $200 billion in private investments for U.S. semiconductor production, and more than 50 new semiconductor ecosystem projects have been announced across the U.S. Intel expects to receive its multi-billion-dollar allocation from the CHIPS Act within weeks.
As dollars from both the private sector and the government pour into the new Silicon Heartland, economic prosperity should follow. Will History Rhyme? The resulting economic revival in the Rust Belt could begin to resemble a different sort of technology-driven boom that took place more than a century ago, when Henry Ford converted 2,000 acres of family farms in Michigan into a massive factory known as the “Rouge Plant.”
In 1915, Henry started buying up small farms along the Rouge River in Dearborn, Michigan, until he had acquired a contiguous 2,000-acre parcel. Over the ensuing five years, the Ford Motor Co. (F) converted that land into a sprawling, state-of-the art auto component factory.
The Rouge Plant even included a massive power plant that supplied all its energy needs, as well as a 30-acre foundry that was the world’s largest at that time. With all the pieces in place, the Rouge plant started cranking out engine blocks, cylinder heads, and every other automotive part needed to mass-produce Model-Ts at the nearby assembly plant in Highland Park.  Source: Autoweek.com In 1928, when Ford began assembling Model A’s at the Rouge, the plant became a fully integrated “ore-to-assembly” marvel.
Not surprisingly, Michigan became one of the fastest-growing states in the nation between 1910 and 1930. I’m expecting history to rhyme, as a growing number of technology companies put down roots in the Upper Midwest.
In fact, the new boom may already be underway. Economic growth in Michigan and Illinois has outpaced overall U.S. growth during the last two years.
This insight does not point to any specific investment opportunity, but it does point to a trend that bears watching. If the Rust Belt revival continues to gain traction, it could provide a healthy tailwind to the U.S. companies operating in the region. Regards,  |
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