HOLLAND — LG Energy Solution Michigan Inc. The planned $1.7 billion lithium-ion battery manufacturing expansion is poised to create new opportunities as the company taps new and existing suppliers to support the project.

As the state last week approved a variety of grants and incentives for the project, LG Energy Solution revealed plans to expand onto vacant land the company already owns.

The expansion requires several new facilities totaling 1.4 million square feet – five times the size of the company’s existing Dutch footprint – to support the manufacture of battery components for electric vehicles. The project includes a main fabrication facility, material storage sites and a dismantling laboratory.

Michigan’s Strategic Fund has approved $56.5 million in miscellaneous grants as well as a 20-year revival zone valued at approximately $132.6 million to support the project, which could create up to 1,200 jobs.

And while the 1,200 direct jobs are tied to the incentive program, the massive expansion will likely spur significant economic activity as LG seeks to build a supply chain to support the effort. The $1.7 billion price tag is more than five times larger than LG’s initial investment in the Netherlands in 2009.

“What I would expect is to start seeing businesses within LG’s supply chain wanting to either relocate and establish sites in and around Holland or expand their operations in the region” , said Amanda Murray, vice president of business solutions for the economic development organization. Lakeshore Advantagewho works with businesses in Allegan and Ottawa counties.

In fact, Murray and his team saw this scenario play out even before the expansion project. About a year ago, the organization worked with a company that produces sheets for LG batteries. The company was looking to establish a presence in Holland to be closer to LG’s growing footprint in the region.

While that specific project did not materialize, Murray said he underscored that suppliers would benefit from establishing operations near the giant battery maker.

Local first?

While LG’s massive expansion may attract outside businesses to the area, it also represents an opportunity for local businesses. LG Energy Solution has relationships with several local suppliers, including a commercial HVAC company based in Grand Rapids Quality air heating and coolingelectrical contractor based in the Netherlands Electrical Polarity and mechanical contractor Andy J. Egan Co.to name a few.

As LG Energy Solution’s supply needs grow, Murray said it wouldn’t be out of the question that the company would start looking into its West Michigan backyard.

“I don’t have a crystal ball, but just with the investment that LG is looking to make, manufacturers often look to local suppliers,” Murray said. “It helps (decrease shipping times) – they’re closer. We’re in a time where the supply chain is near the top, if not the biggest challenge, going on. Having these suppliers close by has become most important.

Lakeshore Advantage President Jennifer Owens said her organization expects to create about 600 secondary jobs as a result of the expansion. Owens was unable to go into detail on how many of them would be concentrated directly in Holland or western Michigan, indicating they could be scattered across the state and the Midwest. .

“We have a strong supply base and from a business perspective, in most cases they would want local suppliers,” Owens said. “It’s less time and less cost, so hopefully a lot of (the spin-off jobs) would be in West Michigan, but they have to make the decisions that are right for them and choose the best components for their plans.”

Mike Wall, automotive analyst for S&P Global Inc.formerly IHS Markit, pointed to the fact that LG’s expansion facility will be used for multiple purposes – manufacturing, hardware storage and dismantling – which means even more opportunities.

“It’s not just about assembling batteries,” Wall said. “You’re going to involve other disciplines and you can definitely see an opportunity for suppliers in some of the other roles to play a supporting role for LG in this whole process.”

“It can even be non-traditional providers – people we don’t even see in the region who are coming into the market to support this. This is a big win for the region and the region,” he added.

The COVID-19 pandemic has ravaged manufacturers’ supply chains, creating a variety of logistical headaches. LG’s expansion comes as manufacturers across the United States examine their supply chains and, in many cases, strive to keep their suppliers as close and accessible as possible.

This timing could be very beneficial for West Michigan-based companies that may be vying to support LG’s new expansion project.

“There’s a benefit to having a robust supply chain in your backyard,” Wall said. “When you look at how everyone is redesigning their supply chain and understanding the supply chain risks, I think there’s a benefit from a proximity perspective. But the upper Midwest or the general Midwest will definitely be also in the game.”

A “driving force”

While Holland’s vibrant advanced energy cluster makes West Michigan a viable candidate for future investment in this space, the region is not alone.

Other states have stumbled into similar megaprojects, like Ford Motor Co.. announced last year that he, along with his partner SK Innovation Co., will invest $11.4 billion and create 11,000 jobs in Tennessee and Kentucky to build facilities that manufacture both electric vehicles and batteries. A day after Michigan officials approved LG Energy Solution’s incentive program, the company announced a separate joint venture with Stellantis SA on a $4.1 billion battery manufacturing plant in Windsor, Ontario.

“There’s a benefit to developing a regional center of excellence around (advanced energy) and having an installed supply base that’s tailored to support it, but that’s happening in multiple states,” Wall said. . “There are a lot of states now bragging about the same thing. Still, it’s a big help for us.

While LG could anchor the advanced energy cluster of the Netherlands, the battery giant certainly has company with other energy and energy system manufacturers in Clarios LLC, DC LLC Battery Hub, Volta Power Systems LLC, Jolt Energy Storage Technologies LLC and Global Battery Solutions LLC. These industry peers could also benefit from the resources that LG’s expansion project will bring to western Michigan.

“We are truly grateful to see this continued investment in our region’s advanced energy cluster, solidifying West Michigan as a driving force in the industry,” said Jack Johnson, Founder and Chief Technology Officer of Volta Power. Systems in Holland. MiBiz. Volta provides OEMs in the RV, marine, trucking and other industries with energy storage systems to hybridize vehicle operation.

“LG’s expansion will also bring even more lithium-ion knowledge and talent to the Netherlands, which is a benefit for all of us,” Johnson added.