Insight: Biden's clean energy factory jobs may elude U.S. union workers

NFI

06/03/2023 13:26

By Nichola Groom
       March 6 (Reuters) - President Joe Biden has pledged that
fighting climate change will deliver millions of middle-class
jobs with good wages to Americans with union membership cards.
    But in the six months since passage of Biden's signature
climate change law, a large majority of the $50 billion of
announced investments in domestic manufacturing to support the
clean energy transition has been in states with laws that make
it harder for workers to unionize, according to a Reuters
analysis of corporate and state announcements. 
    Biden's Inflation Reduction Act (IRA) includes tax credits
for businesses that produce clean energy components in the
United States, and provides higher credits for developers of
renewable energy projects if they use products made
domestically. 
    Of the more than 50 EV battery, solar panel and other
factories announced since passage of the Act in August, 83% are
located in so-called right to work states, which bar companies
from requiring workers to pay union dues as a condition of
employment, according to a Reuters review of company
announcements. 
    Those facilities represent $43.5 billion in investment, or
88% of the total amount companies have said they will invest. 
    
    The situation marks a test for Biden's administration, which
is selling its vision of a decarbonized America by vowing that
the clean energy jobs will be as good as the ones eventually
lost at oil refineries and coal mines – workplaces that are
attractive to many workers because of their reputation for high
unionization rates, good pay and benefits.
    Right to work laws allow employees to work in
union-represented workplaces and be covered by collective
bargaining agreements without joining a union or paying dues. 
    There are 27 states that have such laws. Twenty of those
states voted for Donald Trump in 2020. Supporters say the laws
boost job creation and protect employees' rights to choose
whether or not to join a union.
    However, right-to-work laws are associated with both lower
unionization rates and wages, according to a 2020 study by
Georgia Tech researchers who analyzed thousands of collective
bargaining agreements struck over 18 years in five states.
    Last month, Biden visited a union training center in
Deforest, Wisconsin, which passed a right to work law in 2015. A
purple banner emblazoned with "Union Strong" hung from a
railing. American products, he vowed, would be made with union
labor.
    "Not 'labor.' Union labor. I mean it," he said.
    A White House official noted that just six months have
passed since the IRA was signed into law, and investments in
that time represent a fraction of what will ultimately stem from
Biden's economic agenda. Many of the jobs created will be union
jobs, the official added.
    
    WIN FOR LABOR
    The IRA is broadly viewed as a historic win for labor
standards because builders of energy-generating projects like
solar and wind farms must pay construction workers prevailing
wages and hire apprentices to capture the full value of the
law's tax credits.
    But the same is not true for the subsidies created for
companies building new U.S. factories that will make everything
from EV batteries to solar panels - which will provide jobs long
after construction has ended.
    A provision that would have created a $4,500 tax credit for
union-made vehicles, for example, was stripped out of the
legislation by Democratic Sen. Joe Manchin of West Virginia as
part of a deal to win his support. Manchin's right to work state
has a non-unionized Toyota Motor Corp  7203.T  plant that
employs 2,000 people, and his vote was crucial to passing the
bill in the Senate. 
    Two project siting experts said right to work policies are
among the criteria companies consider when weighing where to do
business.
    "There's a perception in C-suite that it is important," Josh
Bays, a senior partner at Dallas-based location advisory firm
Site Selection Group. "And because of that it does become a
factor in site selection."
    But they add other factors play a huge role in siting
decisions, including low power prices, access to highways and
ports and cheap and available land.
    Three large manufacturers contacted by Reuters - Toyota,
South Korean EV maker Hyundai Motor Co  0053800.KS  and solar
panel producer Hanwha Qcells - did not comment directly on
whether right to work laws were a consideration. They account
for about $11 billion of the projects announced so far. 
    Hyundai and Hanwha Qcells said they chose Georgia for their
manufacturing projects because of the state's access to
transportation, skilled labor and proximity to suppliers. 
 
    UNIONS PUSH AHEAD
    Some unions are concerned about the location of the first
wave of investments in states like Georgia and South Carolina,
where union membership among wage and salaried workers is at
4.4% and 1.7%, respectively.
    The national average hit 10.1% last year, an all-time low,
according to the Bureau of Labor Statistics. Union membership
peaked at about a third of the workforce in the mid-1950s and
has steadily declined due to deregulation, foreign competition
and improved worker benefits among non-union employers. 
    "It's not a favorable environment, but we can still
organize," Samantha Smith, senior adviser for clean energy jobs
at the AFL-CIO, said in an interview.
    Georgia has attracted nearly $12 billion in announced clean
energy manufacturing investment since passage of the IRA - more
than any other state - including from Hyundai and Hanwha Qcells.
    "Part of the equation across the South that is so attractive
for this rebirth of manufacturing is that there is a low
unionization rate," Pat Wilson, commissioner of the Georgia
Department of Economic Development, said in an interview.
    Union officials pointed to a surge in attention-grabbing
organizing efforts at places like Amazon warehouses, Starbucks
coffee shops and Apple retail stores as evidence of their clout.
    The United Steelworkers said they logged a win in a right to
work state last month in Anniston, Alabama, where 60 workers, or
98% of the eligible workforce, at New Flyer Industries unit
Carfair Composites Inc, which makes fiberglass components for
hybrid and electric buses, voted to join the union. 
    But labor representatives acknowledge that they are spread
thin, and organizing efforts may be better spent elsewhere.
    Jeremy Hendricks, political director of the Southwest
Laborers District Council, noted, for instance, that "it's going
to be a heck of a battle" to organize Tesla Inc's  TSLA.O 
factory in Texas, a right to work state, given the company's
anti-union stance. 
    Tesla did not reply to a request for comment.
    Tesla in January applied for a major expansion of its Texas
factory with an investment totaling $775.7 million, according to
government filings. Tesla CEO Elon Musk has criticized
California's regulations and taxes and moved large parts of the
company's manufacturing operations out of its home state.
    In Liberty, North Carolina, Toyota's $2.5 billion expansion
of its EV battery plant is being built with both union and
non-union labor after the Japanese automaker declined to enter
into a project labor agreement that would have given all those
jobs to unions, according to the local Ironworkers union.
    Toyota spokesperson Emily Wilemon-Holland said it is up to
employees to decide if they want to join a union.
    The Ironworkers hope to be hired for some of the permanent
jobs at the plant, but said it is difficult to compete with
lower-wage workers.
    "It's unfortunate that we've got to fight for it," said Dan
Segovia, business manager for Ironworkers Local 848 in South
Carolina.
    North Carolina, a right to work state, has the second-lowest
rate of union membership among states at 2.8%.
    Some union representatives said they are looking to the
nascent offshore wind industry for jobs. 
    Companies including Denmark's Orsted  ORSTED.CO  have struck
agreements with unions for planned projects, and the federal
government has encouraged those deals by offering developers who
work with unions a break on their lease payments. 
    Manufacturing facilities for huge offshore wind turbines and
other equipment are expected to follow suit, and unions have
their eyes on those jobs too.
    "That's a tougher nut to crack," Rick Levy, president of the
Texas AFL-CIO, said in an interview. "But we've got the
nutcracker out."

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 (Reporting by Nichola Groom; editing by Richard Valdmanis and
Claudia Parsons)
 ((nichola.groom@thomsonreuters.com;))