John Bazemore/AP Photo
Georgia Gov. Brian Kemp smiles as he stands next to a Rivian electric truck during a ceremony to announce that the electric truck maker plans to build a $5 billion battery and assembly plant east of Atlanta projected to employ 7,500 workers, December 16, 2021.
This article appears in the October 2023 issue of The American Prospect magazine. Subscribe here.
Since the passage of the Inflation Reduction Act, Georgia Gov. Brian Kemp (R) has remade the state into a premier regional hub for green investment. Over the past two years, Georgia has been the beneficiary of 22 clean-energy projects and almost 17,000 cleantech jobs, the second-highest for both totals of any state. Despite claiming to not think a lot about climate change, Kemp has courted green jobs, in large part by offering billions in tax subsidies to attract employers already flush with federal tax credits from the IRA.
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The red state’s green transition and manufacturing renaissance, however, has sidelined trade unions. Building trades groups haven’t managed to strike a single project labor agreement with a major new employer coming to the state, or gain a foothold in construction hiring. Labor leaders say many businesses won’t even return their calls.
One reason for that is employers’ resistance to a higher-wage labor force. But at several of the largest electric-vehicle sites coming into the state, Gov. Kemp’s administration has in fact secured economic development deals with these companies that award lucrative contracts for building out the factories to non-union construction firms. The selected companies are also donors to Republicans in the state, including the governor—the former owner of a non-union construction company himself.
This political favoritism speaks to the broader challenge for the goals of the Democrats’ signature climate policy achievements. While the president and national Democrats speak vocally about creating good-paying union jobs and reducing carbon emissions, the economic gains from the IRA are flowing disproportionately to red states or red districts, where local Republican officials are finding ever more creative ways to undercut collective bargaining.
In a statement to the Prospect, Gov. Kemp’s office responded to the charges of bid-rigging. “While President Biden uses federal funding to tip the scale in favor of his union donors and punish right-to-work states, in Georgia we don’t pick winners and losers but instead utilize a competitive bidding process,” said Garrison Douglas, a spokesperson for the governor.
NEW CLEANTECH EMPLOYERS ARE FLOCKING to Sun Belt states for the same reasons other companies have for decades: lax union laws and a less stringent regulatory environment.
These states are also using aggressive tax abatement packages to attract cleantech firms, supplementing the billions in tax incentives the federal government is already handing them. A report from the policy research organization Good Jobs First found that states and municipalities have awarded at least $13.8 billion in economic development subsidies to electric-vehicle and EV battery makers. The largest packages came from Georgia, North Carolina, and a handful of other Southern states.
Gov. Kemp is leading this tax subsidy bonanza, ponying up $1.5 billion to EV truck manufacturer Rivian and $1.8 billion to automaker Hyundai for new plants. They represent the two largest tax deals ever delivered to automakers in history. Total “mega-deals” in Georgia (defined as deals over $75 million) total $3.6 billion. The agreements only have limited conditions to ensure companies follow through on the wages and job totals they pledged to deliver.
The state has provided the usual cocktail of property tax breaks, sales tax exemptions, write-offs for workforce development, and other subsidies. But in three major deals with Rivian, Hyundai, and the U.S. subsidiary of South Korean battery manufacturer SK Battery, the state (in collaboration with local development authorities) has thrown in an additional sweetener. Through an obscure state economic development program called Regional Economic Business Assistance (REBA), Georgia will also foot the bill for initial construction at these plants, mainly the civil work and grading to level the property along with other site preparation.
As part of this provision, the state and local authorities effectively act as the general contractor for the initial construction phase on a private development project, and get to select their preferred firms.
Greg LeRoy, executive director and founder of Good Jobs First, has tracked state development deals for over two decades. He says the Georgia deals are highly unusual, though there are a handful of parallel cases. At Tesla’s Gigafactory in Nevada, for example, the state’s economic development board paid for additional road construction to extend out to the factory’s remote location, and selected the contractor for the project.
Perhaps the closest analogue to Georgia’s state grants for construction resulted in a massive bid-rigging scandal in New York during former Gov. Andrew Cuomo’s tenure. Multiple state officials were charged with corruption for awarding one of Cuomo’s top campaign donors a $28 million contract to build a SolarCity (now Tesla) site. Though the convictions were overturned by the U.S. Supreme Court on a technicality this year, the case points to the conflicts of interest that can arise from state development contracts for private companies.
This political favoritism speaks to the broader challenge for the goals of the Democrats’ signature climate policy achievements.
In Georgia, each of these state grants has been used to tilt the playing field in favor of non-union construction companies, according to building trades unions. The $45 million state development contract for the new Rivian plant outside Atlanta went to a large non-union firm named Plateau Excavation, owned by Sterling Infrastructure. And the $50 million grant for the massive $5 billion Hyundai plant outside of Savannah was awarded in 2022 to a joint partnership between two smaller construction companies and Barnett Southern, a notorious anti-union firm in the state. The same was true for a smaller $5 million state grant awarded last year at SK Battery’s $2.6 billion plant in Commerce.
These construction firms are represented by the Associated General Contractors of Georgia, a trade association that’s donated over $1 million to Republican candidates across the state over the past two decades, including $30,000 to Brian Kemp’s re-election bid in 2022. The association supported one of the state’s most aggressive anti-union laws, which was passed in 2013 and constrains project labor agreements among state contractors.
The individual firms that received state funds at Rivian and Hyundai both have financial ties to state Republicans as well. Barnett Southern is run by Ames Barnett, the former Republican mayor of Washington, Georgia, who currently sits on the state workforce development board, a position he was appointed to by Gov. Kemp. Barnett has contributed $54,300 in campaign donations, entirely to Republicans, since 2015, along with $17,500 in total to both of Brian Kemp’s gubernatorial campaigns, according to documents compiled by Follow the Money. As a company, Barnett Southern contributed $38,500 to Kemp’s re-election and nearly $67,000 in total to Republican candidates in Georgia since 2014.
Over the past decade, Plateau Excavation gave $34,050 to Republicans, along with individual contributions from its top executives to Brian Kemp’s campaign, according to Follow the Money.
Barnett Southern and Plateau Excavation did not respond to a request for comment. The governor’s office says Kemp did not get involved in the local selection process for the contracts.
UNION CONTRACTORS IN GEORGIA say they were cut out from the bidding process for state construction contracts at Rivian and Hyundai. Even among the unions that knew about the bids, labor leaders told the Prospect they were caught in a byzantine application process favoring larger firms, or in some cases were dissuaded from applying by local and state authorities. Though the grants come from state funds, the selection process is handled by joint development authorities, which are consortiums of municipal development agencies across multiple counties and frequently staffed with members of the local chambers of commerce.
“There was an illusion of equal opportunity [for these state contracts] when in fact it was cosmetic,” said Brett Hulme, the political and communications director for the Southeastern Carpenters Regional Council who also sits as a committee chair on the Savannah and Southeast Georgia Building Trades Council.
Randy Beall, the business manager for the Atlanta and North Georgia Building Trades, told the Prospect that his team only learned about the state grant at the new Rivian plant months after it had been awarded. This came as a surprise, not only because it’s rare for the state to be a general contractor on a private company’s project, but also because state infrastructure projects, for instance, are usually announced in a public notice. Neither Randy nor any of the other building trades groups ever saw an official public notice for the Rivian construction site.
“It seems to us that the only companies that knew that this bid was taking place were the large open shops,” said Beall.
According to the building trades, several contractors did consider pursuing bidding for the Rivian and Hyundai sites, but were met with obstacles. For one, the window to submit a bid at the Rivian plant was around a month long, far shorter than what’s typical for a large state contract.
Two separate petitions were submitted to the joint development authority in Morgan County, home of the Rivian facility, asking to extend the deadline, given the narrow open application period for bids. One petition was granted and one denied, according to public records. Other contractors were discouraged from applying by the joint development authority in Morgan because of financial requirements in the contract favoring a larger firm size in order to qualify.
This objection was unusual, since it’s not uncommon for several smaller private contractors to form joint ventures to meet the threshold for a project. That’s what Barnett Southern did to secure the contract for the Hyundai plant.
At the Hyundai site, Brett Hulme says the number of administrative hurdles led many of the contractors he works with to drop out of the application process. In several cases, the development authority’s web page hosting the application would have technical difficulties.
“They just made you jump through all these hoops and it takes a toll when you’re a small contractor,” said Hulme.
Rivian and Hyundai did not respond to a request for comment. The joint development authority departments involved in the decision-making around the Rivian and Hyundai plants declined to comment on the details of the bidding process. Public records for the Joint Development Authority of Morgan County show that only one other Georgia-based construction company was considered for the Rivian project, along with one out-of-state firm. Both of them were non-union.
While the state contracts are only for limited site preparation work, union representatives emphasized that it’s crucial to secure early contracts with employers. It can lead to trust and getting a foothold on other construction projects on the site that come later.
The building trades also believe that, without the state’s involvement favoring open shops, the unions might actually have had a better chance at securing the contracts. Rivian in particular has expressed interest in working with the local chapter of the International Brotherhood of Electrical Workers, because of a labor shortage across the state for a trained workforce in construction.
Kenny Mullins, the business manager at the IBEW Local 613, told the Prospect that the union has been in talks with Rivian’s management about setting up an official meeting to pursue a deal. Though the talks are still in early stages, it shows that based on current economic forces, employers may actually have given the unions a shot.
“It certainly doesn’t help when the state puts their thumb on the scale to pad the pockets of their buddies at our expense,” said Beall.
The Prospect’s reporting on the implementation of the Biden administration’s industrial policy is supported through funding from Omidyar Network.
