Commentary: In Michigan, energy manufacturing industry plays critical role

The COVID-19 pandemic has brought attention to the value of domestic manufacturing like no other crisis in recent history. U.S. manufacturers have stepped up to repurpose facilities to produce PPE and other critical goods, and, as global supply chains undergo strain, having a local manufacturing base becomes even more essential.

Michigan’s strong automotive manufacturing base will play a central role in the state’s recovery. But a less-appreciated core part of Michigan’s manufacturing sector is in the advanced energy industry. These companies provide domestic manufacturing jobs at a time when employment is particularly sorely needed and are involved in making a wide range of things including components of renewable energy projects like wind turbine towers, batteries for energy storage, inputs used to make solar panels, electric vehicle charging infrastructure and much more.

The advanced energy manufacturing industry is an asset we can tap into at times like these, but it is important to realize that this industry is not here by accident. Building it up required many deliberate policy choices that were supported by the Michigan Energy Innovation Business Council (Michigan EIBC) and others over a number of years. In order to figure out how to move forward, it is useful to look back at what policies have facilitated the growth of the manufacturing industry in Michigan.

Everyone knows about Michigan’s prominence in automotive manufacturing, but the role of advanced energy as one of the most vibrant parts of the state’s economy has been a less-noticed story. This year’s Clean Jobs America report ranked Michigan fifth among the 50 states as of the end of 2019 in terms of the share of the workforce in “clean energy” jobs, which includes sectors like solar, wind and energy efficiency. Michigan was number one in the manufacturing-heavy electric vehicle (EV) sector, at over 24,000 jobs.

Like all industries, employment in these sectors is currently taking a huge hit with the COVID-19 crisis. The Clean Jobs America report found that just as Michigan is fifth-highest in clean energy jobs, it also had the fifth-highest job losses compared to other states in March.

But the growth in Michigan’s base of talent and infrastructure created by these companies will remain and be critical to helping the state bounce back.

For example, in March, Michigan EIBC member Hemlock Semiconductor, based out of Saginaw County, donated 15,000 masks, goggles, latex gloves, face shields and other pieces of personal protective equipment (PPE) to central Michigan health system Covenant HealthCare to help with the heavy burden healthcare providers are forced to carry through this pandemic. Hemlock is the country’s largest producer of polycrystalline silicon, used to make solar panel cells and various electronic devices.

As cited in Michigan EIBC’s report on “Economic Impact of New Energy Manufacturing in Michigan,” Hemlock has been one of the biggest contributors to Michigan’s growing advanced energy manufacturing sector. This report, one of Michigan EIBC’s first as an organization in 2011, caught the trend early and showed that energy-related manufacturing was becoming a major component of the state’s economy.

Since then, Michigan EIBC and the rest of the advanced energy community in Michigan have supported policies to help foster this growing industry. One of the most important steps was the creation of a renewable portfolio standard (RPS) for Michigan, which requires a certain amount of the state’s energy to come from wind, solar, biomass and other renewable energy sources.

The RPS attracted companies working in renewable energy to Michigan to meet this new demand. In 2016, Michigan EIBC participated in the successful effort to expand the requirements of the RPS, which includes a provision giving  bonus renewable energy credits for electricity generated from Michigan-made equipment.

Michigan is host to many manufacturing companies serving the renewable power supply chain. In addition to Hemlock, there is Ventower Industries in Monroe, which makes wind turbine towers. In Clare, Advanced Battery Concepts designs and manufacturers batteries that are often used to store energy generated by renewable sources so it can be deployed later.

Another indicator of the growing advanced energy industry in Michigan is the number of companies serving the electric vehicle (EV) and “smart” and autonomous mobility sectors. Beyond the Big 3’s increasing focus on EVs, there is a web of other players serving the market: HME Ahrens-Fox makes cabs and chassis used in all-electric fire trucks. Volta Power Systems designs lithium-ion battery systems used in a variety of transportation applications. Phoenix Contact USA, located in Ann Arbor, makes devices used to help EVs charge faster.

Once again, the industry cannot be separated from the policy that supported it. For the last three years, Michigan EIBC has been holding a series of convenings that bring together representatives of automotive companies, the advanced energy community and policymakers to talk about strategies to make EVs flourish. Michigan EIBC and other groups have supported the state’s investor-owned utilities in their efforts to create EV pilot programs that include rebates for charging infrastructure and special rates to charge EVs when they draw electricity from the grid.

Most recently, Michigan EIBC’s research organization, the Institute for Energy Innovation, published a report laying out ways to enhance the state’s procurement of EVs.

Recovery from the COVID-19 pandemic and accompanying economic crisis will be a difficult process. All businesses in Michigan, no matter the industry, have felt the effects in one way or another. As the state recovers and regrows, it will be essential to continue and expand the policies that have made Michigan a place where innovation and manufacturing in advanced energy invigorates the economy.