On Sept. 19, solar-panel manufacturer Silfab Solar announced plans to invest $150 million and create 800 jobs at a new facility in Fort Mill. The disclosure was the culmination of a search process dating back to 2021. The deal captures the state of Charlotte’s industrial market, which is seeing growing interest from manufacturers.
The Charlotte region’s population boom, the economic growth that follows and its Southeast location make the area a natural target for a resurgence in U.S. manufacturing.
Projects like Silfab’s could represent an initial step in Charlotte’s accelerated push to diversify its economy.
“We’ve got a lot of fiscal stimulus that is helping drive investment in technology like the CHIPS (and Science) Act and then the Inflation Reduction Act,” said Mark Vitner, chief economist at Charlotte-based Piedmont Crescent Capital.
As of July, the region’s manufacturing employment totaled just under 110,000, according to the U.S. Bureau of Labor Statistics. That is slightly down from the July 2019 total of 112,000, despite a recovery of the jobs lost from the Covid-19 pandemic. But a surge in manufacturing employment is on the horizon.
In addition to Silfab Solar, semiconductor manufacturer Pallidus Inc. announced plans earlier this year to invest $443 million and create 405 jobs to move its operations to Rock Hill. The region has moved into pharmaceutical manufacturing as well with Eli Lilly & Co. (NYSE: LLY) under construction on a $1 billion manufacturing campus in Concord.
Federal legislation like CHIPS, Inflation Reduction acts in play
Michael Walden, a distinguished professor emeritus and economist at N.C. State University, said there is “a real possibility that we could be seeing a major turning point in U.S. manufacturing.”
While Charlotte’s employment numbers there have not surpassed peak 2019 levels, the national reshoring push could mean real gains in the Charlotte region.
Federal legislation incentivized companies such as Silfab to look harder at the U.S. It also created urgency, said Colliers International’s Grant Miller, who represented Silfab. The solar-panel company zeroed in on a few Southeast states, and several of its finalist markets satisfied the company’s labor needs. Silfab considered a location in Gaston County in 2021 before later pivoting to a 785,000-square-foot building at Rockefeller Group’s Stateline77 industrial park in Fort Mill.
The availability of power for the facility and the building timeline is what drove the deal, Miller said.
“A lot of this is tied to the Inflation Reduction Act,” he said. “With that legislation expiring in 2032, a lot of these groups do not have the time to go do the traditional build to suit. That is why they’re looking at these spec buildings that were maybe geared toward distribution but, for their purposes, they work for manufacturing.”
The Inflation Reduction Act, which was signed into law by President Joe Biden last year, offers incentives for a range of manufacturing uses. The legislation includes tax credits for electric vehicle makers and their suppliers. It also offers incentives for manufacturing of renewable energy production equipment, as well as for users that own carbon-capture equipment at their industrial facilities, according to an analysis by law firm Womble Bond Dickinson.
“The country is making a concerted effort, particularly vis a vis China, to become more independent in the manufacturing arena,” Walden said. “Whether that can be pulled off is yet to be seen. But if that shift in the policy and the money behind it really take hold, we could see not just a recovery of manufacturing from where it was pre-Covid but really a growth in manufacturing.”
Danny Chavez, chief business recruitment officer at the Charlotte Regional Business Alliance, said that over 74% of his qualified projects pipeline is industrial projects.
Electric vehicles, life sciences and clean energy among key sectors
Several of the region’s key wins in manufacturing recently could prove to be catalysts as the region has seen an uptick in interest from several key sectors. The Pallidus project is an interesting part of the EV supply chain, which accounts for a lot of the uptick, Chavez said.
North Carolina’s Triangle region has seen a major victory in that space with Vietnamese EV manufacturer VinFast’s $4 billion plant, which is under construction in Chatham County. Charlotte has not seen an EV-related investment of that size, but it is in the mix for projects in that sector.
“The broader Southeast is picking up the lion’s share of these opportunities,” Chavez said of EV-adjacent projects. “For us, we have seen EV be a huge uptick in the types of projects we’re seeing. We also see pharmaceuticals. Historically, a lot of that has looked up in the Research Triangle area. Now, we’re starting to see that as well.”
Vitner points to the Eli Lilly facility as a sign of the broader diversification of the kinds of manufacturing projects targeting Charlotte.
“Part of that just reflects the strong population growth and the fact that businesses are putting a real premium on locating in parts of the country that have rapid population growth because they’re worried about finding enough workers,” he said. “In Charlotte, they feel like they have a better shot of finding the workers.”
Eli Lilly’s operation is expected to create nearly 600 jobs at The Grounds at Concord. The former Philip Morris site was reimagined several years ago as an industrial park spanning more than 2,000 acres. Local leaders hoped to bring back jobs lost by the shuttered cigarette plant there.
The park has also attracted a major beverage manufacturing campus for Red Bull, Rauch North America and Ball Corp. (NYSE: BLL). The companies could invest nearly $1.5 billion and create over 630 jobs there upon full buildout. Carvana and GoldenHome International have established operations there as well.
York County has been an early beneficiary of several of the manufacturing projects of the future. It has done so while attempting to revive its own manufacturing employment base.
David Swenson, executive director of York County Economic Development, said the county was successful in winning projects like Pallidus and Silfab Solar for several reasons. One was the access to utilities — particularly power — that the county could offer. The other was the availability of completed buildings that could accommodate the investments.
Swenson said that, as of 2022’s fourth quarter, York County still had around 840 jobs lost in manufacturing from the end of 2019 level. He is now looking to capitalize on momentum from Pallidus and Silfab Solar.
“When we look at the data points and how things have come back, all have been very favorable,” Swenson said. “But the one that got hit the hardest was manufacturing. And they didn’t come back as strong. … We’re doing everything we can to make sure that we can bring those jobs back. That’s why we’re excited about these new projects that will soon come to fruition and hopefully more behind them.”
Location is not the only factor in manufacturers’ real estate decisions. Read more about the new priorities in industrial site searches and some of the key advantages in the Charlotte Region.
