Archives / 2019 - 2023 / 2024
November 2024
Impact of 2024 Elections on Electrical Contracting
Industry and Economy
CHIPS and Science Act
The Biden administration’s efforts to complete the remaining CHIPS & Science Act agreements have taken on new urgency following President-Elect Trump’s victory. On the campaign trail, Trump was critical of the CHIPS Act and Republican House Speaker Mike Johnson indicated that he and his colleagues would “probably” work to repeal the law if Trump is elected.
Repeal of the law would have major implications to Intel’s Ohio One project, which is critical to efforts to bring the semiconductor industry to Central Ohio. The establishment of the semiconductor industry is expected to reshape the Central Ohio region-- triggering a decades-long construction boom and helping to drive the region’s anticipated population growth. Intel’s recent financial woes had already cast doubts on the future of the semiconductor industry coming to Ohio.
However, experts and industry lobbyists are hopeful the program will survive--though changes are expected. Some factors that are contributing to the cautious optimism that the initiative will continue are:
The geopolitical pressures that led to the passage of the CHIPS Act are still major concerns.
Efforts to develop domestic semiconductor manufacturing continue to have broad, bipartisan support.
Senator-Elect Bernie Moreno said securing the Intel project’s future is a “high-priority” though he expects modifications to the CHIPS Act.
Ohio Governor Mike DeWine has repeatedly noted that delays in projects of this scale are not abnormal and said the administration would only clawback state incentives if Intel pulled the plug all together.
Earlier this fall, Intel landed two notable deals, a multibillion-dollar strategic collaboration with Amazon Web Services and up to $3 billion in U.S. government funding to produce chips for the military, which would provide critical revenue to support the company’s construction projects.
It’s unlikely that Republican reforms will materially alter the program’s funding but the rush is still on to finalize the outstanding agreements before the end of the year.
The Trump administration is likely to change some of the program’s application guidelines—starting with provisions the Republicans fought against during the Act’s initial passage.
Those related to project labor agreements, environmental and climate impact, and childcare programs, are likely to be the first on the chopping block.
Program and application changes, and the resulting delays in disbursing the funds, could have a significant impact on the organized electrical contracting industry.
To date, the U.S. Commerce Department has only announced one binding agreement, with Polar Semiconductor in Minnesota, though it has allocated more than 90% of the $39 billion in grants under the 2022 Chips and Science Act. Additional announcements are considered imminent as the agency recently notified Congress that at least three companies are close to receiving a final award.
Under the Chips Act, the Commerce Secretary must notify appropriate committees at least 15 days before making any deal over $10 million.
Taiwan Semiconductor Manufacturing Co. and GlobalFoundries Inc. are reported to be two of the companies whose agreements have been finalized. The two companies reportedly wrapped up negotiations a few weeks ago so the pending announcement is no surprise to industry analysts.
It’s unlikely that Intel, Samsung, or Micro Technology are the third company in the notification. As recently as last week, the companies were still working through “substantive” details of their contracts according to an unnamed source at Commerce.
Polar Semiconductor was the first company awarded CHIPS Act Funding in September. The federal funding is intended to transform Polar from a majority foreign-owned in-house manufacturer to a majority U.S.-owned commercial foundry.
Ohio
The next two years will prove interesting as Republicans jockey for front runner status for the 2026 gubernatorial election. Gov. DeWine, who is midway through his second term, is unable to seek reelection due to term limits. He will leave office Jan. 11, 2027.
September 2024
Intel’s Financial Woes Raise Concerns About Ohio One Campus;
But Site Progress and Other Project Indicators Garner Optimism
Recent Intel headlines—covering everything from ballooning operating losses and steep stock price decline to major workforce reductions and concerns about the reliability of its newest products—has raised concerns about the future of the Ohio One Campus in New Albany.
The future of the project may become clearer in the next few weeks. The company is working with its bankers to come up with a variety of options to help fix its flagging business and are expected to present these options to the board at its September meeting. It’s important to note that Intel’s stock rose 10% after the company shared that it was working with Morgan Stanley and other bankers to identify and present options to the board this month.
The concerns about Ohio One are understandable. In addition to the company’s recent financial hits, the Ohio project’s completion date has been delayed and its cost has increased to $28 billion, compared to the initial forecast of $20 billion. There’s also the possibility, as the date for the first disbursement of CHIPS cash nears, that some of the recent headlines and information could be part of a preemptive plan on Intel’s part. To receive the funds, Intel must meet the provisions of the preliminary memorandum of terms (PMT) that was part of an agreement reached between Intel and the Department of Commerce in March 2024. If the company were to be concerned about falling short of any of the requirements, a little saber rattling might buy them some additional flexibility.
Even with the recent news, Ohio’s elected officials and community leaders remain bullish on the future of the Intel project and company spokespeople have reiterated their commitment to Ohio publicly and behind closed doors. Their optimism might be warranted considering some of these factors:
Intel needs a US site outside of the Southwest to hedge against droughts, record high temperatures and similar climate-related issues. The two other big players in semiconductors, Samsung and TSMC, also have their U.S. manufacturing operations in the Southwest; Texas and Arizona respectively. A Midwest manufacturing site is important for all chip companies.
Ohio made the short list for their new fabs because of the state’s water resources. One fab requires 5 million gallons of water daily with the ability to recycle at least 95% of that water on site.
Originally site selectors were looking at Cuyahoga and surrounding counties to be close to Lake Erie because of their water needs. When TeamNEO, the economic development organization for Northern Ohio, couldn’t produce a viable site, they made the case for another Ohio site. One Columbus, working together with JobsOhio, pitched their site. Within 24 hours, Intel’s reps were on the ground in Ohio touring the proposed New Albany location.
The United States is eager to onshore leading-edge semiconductor manufacturing. Keep in mind that the CHIPS Act was primarily touted as a “national security” program.
The U.S. currently relies on chips manufactured in Taiwan and South Korea. Geopolitical factors in that region, particularly China’s continued threat of invasion of Taiwan, has created a tremendous sense of urgency to reshore chip manufacturing. The administration aims to have the country produce 20% of the world’s most advanced logic chips.
As Intel’s financial position took hit after hit, the company pulled the plug on at least one of its manufacturing plants outside of the United States.
Work on their Israel project, in line for $3 billion form the country’s government, has stopped and their employees have been transferred to Ohio One. It’s looking increasingly likely that the Germany project does not move forward. This would help the company right size its fab/foundry expansion plans in line with its current financial situation.
Another key piece of the CHIPS Act is the creation of two semiconductor industry clusters. From a resource and natural disaster resiliency perspective, Ohio makes sense for one of the clusters.
But several other key pieces that are necessary to have an industry cluster, such as a specialized workforce, R & D, and supplier ecosystem, are also well underway in Ohio. Intel now has 350 Ohio suppliers and the company has provided $17.7 million in education and research grants as part of a $50 million initiative just in Ohio.
“Too big to fail” is a recurring theme in off-the-record comments. “Too big” in terms of importance to the United States and “too big” in terms of the billions of dollars already invested to develop the site.
Without Intel seeing any cash from its $8.5 billion in CHIPS Act grant eligibility, the company’s New Albany site has already seen $4 billion in investment.
Approximately half of that is private investment, one-quarter is from their JobsOhio incentive package and another quarter is from a reshoring grant from the Ohio Department of Development. The clawback provisions of these incentive packages, which would require them to pay back the money, are a huge financial liability for Intel.
Other numbers tell a story of steady, if somewhat delayed, progress on Intel’s New Albany site.
As of Sept. 9, 2024 the project has seen 4.1 million man hours on the project; up from 3.9 million hours as of Aug. 19, 2024.
There are 2500 workers on the site and the company reports that they are adding about 100 each week.
The majority of workers are iron workers and carpenters as they focus on concrete and rebar work right now. The company reports that plumbers, pipefitters, and electricians will be the next skilled trades ramped up on the site.
There are 28 cranes on site and the largest is just starting to arrive. The 17th Intel “superload” departs Adams County on Friday, Sept. 13.
Key partners are still committed and investing millions of dollars and thousands of man hours that would only necessary if the project continues to move forward.
After months of negotiation, AEP just recently agreed to build a $95 million electrical substation to power the plant and the PUCO approved the plan noting that Intel must “demonstrate ongoing commitment” to the project for the next 20 years.
The City of Columbus is building a fourth water treatment plant with $50 million provided by the state. The long-planned project—because of forecasted growth in Central Ohio-- was sped up because of Intel.
Right now, Intel’s financial position could be a significant cause for concern. But, based on other project indicators and factors, the Intel project’s future might not be as dismal as the doom and gloom headlines might lead one to believe. Some potential options floated off the record would have Intel spin off its foundry business or restructure the company’s divisions to better manage the current market conditions. A spin-off could allow the project to continue as is.
Even if Intel were to walk away from the project, there’s still a good chance that a semiconductor fab is constructed on the site; just not by Intel. Given the large amount of investment that was used to prepare the site for a semiconductor manufacturing facility, projects and funding for specialized workforce development, and grants to support industry R &D in Ohio, it could be a very attractive opportunity for another chip company that has a little more green in its pockets.
July 2024
STATE CAPITAL BUDGET
The Ohio General Assembly has wrapped work on the FY 2025-2026 State Capital Budget, a critical source of funding for projects at the state, county, and local level. The legislation included a total of $3.5 billion in appropriations.
Funding Priorities
K-12 Schools: $600 million
Funding for the construction and renovation of K-12 schools the Ohio Facilities Construction Commission’s Rebuild Ohio Schools Program to create modernized spaces for education and learning.
Higher Ed and Workforce Readiness: $397 million
Funding to improve higher education infrastructure across Ohio
Mental Health Support: $133.5 million
Funding for the renovations at the state’s six behavioral health hospitals and to support community-based recovery housing.
Youth Services: $130 million
Funding for the Ohio Department of Youth Services to build new, smaller juvenile correction facilities./
Ohio History & Culture: $63 million
Funding for construction and renovation at Ohio History Connection cultural sites to enhance visitor experiences and cultural education opportunities.
Ohio State Fair & Expo Center: $196 million
Funding for projects that include wi-fi enhancements, underground infrastructure work, parking expansion, renovations, and new construction.
Rehab & Correction: $255.1 million
Funding for necessary infrastructure repairs and facility upgrades to specifically support aging inmate population and those with mental health disorders.
Ohio Fire Academy: $23 million
Funding for the Ohio State Fire Marshal to be able to advance the future of firefighting and EMS training in Ohio including a search and rescue facility to provide a controlled, realistic training environment.
Local Jail Support: $50 million
Funding to support construction and renovation at local jails; particularly to provide/enhance spaces for programming, education, and training opportunities.
Ohio State Highway Patrol Crime Lab: $7 million
Funding for the design of a new state-of-the-art crime lab; current lab suffers from worn out infrastructure and does not have the capacity to handle the anticipated growth in toxicology cases related to drugged driving.
Ohio Parks & Natural Resources: $298.2 million
Funding will be used to modernize the state parks and make safety enhancements at various dams around the state.
Local Projects Receiving Funding
Specific projects of note, including earmarks for projects in counties within the Power Connect region, are included below. The amount of allocated funding for a specific project does not necessarily represent the estimated cost of that project. The capital budget may be one of multiple funding sources for a large project. Non-earmarked local projects may still receive funding via various departments and programs that received funding in the capital budget.
The full Legislative Service Commission report of projects by county can be found HERE.
Fayette
$500,000 to support phase two of the Historic Washington Auditorium Project
Franklin County
$27 million for the Riffe Center renovations
$20 million for The Ohio Center for Advanced Technologies
$18.5 million for the Columbus Symphony Orchestra
$10 million for the Downtown Columbus Capital Line
$7.5 million for John Glenn International Airport Improvements
$2 million for Nationwide Arena Modernization: $2M
$1.5 million for Downtown Security Command Center
$1 million for Westland Mall Renovations
Highland County
$1 million to modernize computer at Southern State Community College
Jackson County
$32 million for the construction of a new county jail
Licking County
$23.7 million for the Ohio Fire Academy for building construction and equipment
$19.3 million for equipment and renovations to the Ohio Department of Agriculture building
$11 million to the Buckeye Lake North Shore Park and Pier project
$3 million to the Licking Memorial Health Systems Education & Event Center
$2.5 million to the Central Ohio Technical College
$1.7 million for the Ohio State University Newark Campus
Madison County
$600,000 to renovate the Tolles Cybersecurity Lab
$401,250 to complete phase one of the Depot at Public Square park project in Plain City
Marion County
$100,000 for engineering classroom and lab renovations at Marion Technical College
Morrow County
$4.3 million for renovation of the Morrow County Correctional Facility
Perry
$500,000 to expand the Perry County Community Access and Workforce Training Center
Pickaway County
$750,000 to enhance the City of Circleville’s Barthelmas Park
$500,000 to support the Ohio Christian University for Science
Pike County
$750,000 to support the Pike Emergency Operations Backup Power Project
Richland County
$500,000 for the Mansfield Theater
Ross County
$5 million to construct the Hopewell Regional Visitor Center
$500,000 to renovate Veterans Administration Memorial Stadium
$250,000 to construct the Paint Creek Youth Center Multipurpose Building
Union County
$24 million to the Transportation Research Center for upgrades to their Impact Lab
$1.6 million for classroom and building renovations at Marion Technical College
Wyandot County
$19.4 million to construct a new jail in Wyandot County
CITY OF COLUMBUS CAPITAL BUDGET
$170M For Columbus & Franklin County Municipal Courthouse
Construction on the 1.8 acre site could start as soon as next year on the courthouse, depending on the pace of the design of the project. The new building is expected to be between seven to 10 stories and up to 375,000 square feet. The construction cost is projected to range from $175 to $210 million depending on the final scope. Moody Nolan is the lead design firm and Aecom is part of the design team. The joint venture between Gilbane Smoot has been selected to be the construction manager at risk. Pizzuti Solutions, a division of the Columbus developer, is the owner's representative for the project.
SCHOOL PROJECTS
2025 Classroom Facilities Assistance Program
The Ohio Facilities Construction Commission gave conditional approval to its Fiscal Year 2025 Classroom Facilities Assistance Program projects in seven school districts, which are set to be paid for with $296 million in state funds and $268 million in local dollars.
The most expensive project to receive approval was in the Power Connect region. Groveport Madison Local School District's (Franklin County) $134.8 million plan to build three new middle schools and add on to its high school was at the top of the list.
Other school projects around the state include:
The Perry Local School District (Stark County) received approval for its $104.8 million plan to build a new middle school, demolish two schools and abandon one building.
Northwest Local School District (Hamilton County) can now move forward on its $101.7 million plan to build a new elementary school and abate and raze two buildings.
Tipp City Exempted Village School District (Miami County) intends to build a combined elementary and middle school building, renovate Tippecanoe High School and demolish four structures at a cost of $83.2 million.
Norwalk City (Huron County) earned conditional approval to move forward with a $70.5 million plan to build a combined elementary and middle school and raze five structures.
Monroe Local (Butler County) plans to build a new $37.3 million high school but must still raise 32% of the project's cost locally.
Eastern Local (Meigs County) intends to proceed with a $32.6 project to renovate its K-12 facility.
Appalachian Community Innovation Centers Program
Appalachian schools will receive $88 million in state funding to help nearly a dozen Appalachian school districts improve public health and enhance workforce development. The money is part of the Appalachian Community Innovation Centers Program, which aims to create full-serve centers for public education, community health services and career development.
Funding will cover expenses related to the construction of four new school-based community wellness, education, and career development centers in Mahoning, Jefferson, Noble, and Brown counties. Seven existing school-district sites will be renovated or expanded to provide services in Belmont, Carroll, Lawrence, Gallia, Perry, Trumbull, and Clermont counties.
K-12 school districts, joint vocational school districts, regional councils of government, or other political subdivisions located in Ohio’s Appalachian counties may apply for funding to support new construction, renovation or expansion of facilities that support public education, behavioral healthcare, and job-related programming.
State and federal programs specifically designed to benefit Appalachian Counties can be a valuable source of project information. Nearly half of Ohio’s 32 Appalachian Counties are in the Power Connect region. The 13 are: Adams, Coshocton, Guernsey, Highland, Hocking, Jackson, Muskingum, Perry, Pike, Ross, Scioto, Tuscarawas, and Vinton Counties.
March 2024
One Columbus Construction Industry Briefing
One Columbus President & CEO Kenny McDonald and Matt Sloan, from Deloitte’s Research Center for Energy and Industrials, presented an overview of the region’s project pipeline and the construction industry. The highlights are noted below.
Key Takeaways:
Central Ohio Pipeline: The pipeline is still robust but decision making is taking longer.
95 active projects; 306 days is the average project lifespan with a third of the projects being in the pipeline for at least one year.
Manufacturing and attraction projects continue to dominate the pipeline with international projects making up nearly half of the pipeline for Central Ohio.
54% of the projects are manufacturing
58% of the projects are attraction with the remainder primarily comprised of expansion projects for existing businesses.
43% are international; countries in order of prevalence are Japan, South Korea, Canada, Germany, China.
Notable industry drivers include:
Semiconductor related (15%) and EV, battery storage and solar projects (9%)
More than half of the fixed investment in the pipeline is EV (30%) or data center (27%).
Workforce: The workforce pinch in the region is unlikely to ease as Central Ohio continues to outpace the country in construction job growth (30% nationally vs. 49% Central Ohio region).
Deloitte believes prioritization of worker safety and competitive compensation and benefits are two talent strategies for E&C firms which set us up well.
CHIPS Funding Update
Federal CHIP grants likely to be announced by the end of March; but possibly sooner if done so in conjunction with President Biden’s State of the Union address on March 7, 2024.
Progress on Intel’s Ohio fab continues but it has been slower than originally projected. CEO Pat Gelsinger has stated the grants will determine how quickly Intel progresses with its expansion projects.
But, development does continue. The site is again making headlines as the first of many massive transports began this week in Adams County with plans to deliver industrial gear to the Intel site in New Albany and also a small amount to Hebron. Due to the massive size, ODOT predicts the 115 mile trip will take anywhere from 8-15 days and require rolling road closures and roadblocks.
Solar Energy, Other Renewables Get State Lawmakers Attention
Ohio state legislators will likely have renewed interest in renewable energy generation and infrastructure following a grid outlook report released by PJM Interconnection, a regional transmission organization (RTO) that coordinates the movement of wholesale electricity in a 13-state region which includes Ohio.
PJM’s report concluded that demand is increasing but supply is decreasing so Ohio needs to act quickly to ensure adequate energy generation.
The Ohio Manufacturers’ Association said shortfall risks should be taken seriously but raised concerns this could be a way to justify expensive new investments that utility companies will then pass on to manufacturers.
Interest in renewables is growing but concerns remain about reliability. One lawmaker noted battery storage is crucial to the new energy economy.
Power Connect will continue to actively monitor this space and keep you abreast of important developments. Click HERE for news coverage of this issue.
Solar Panel Manufacturing in Central Ohio
A Central Ohio company, Illuminate USA, has begun operations at what it calls “one of the nation’s largest advanced solar panel manufacturing facilities.” Located in Pataskala, the company states it is one of the nation’s largest advanced solar panel manufacturing facilities.
The new 1.1 million-square-foot, 1,000-employee facility was expected to start rolling American-made solar panels off the assembly line by the end of February. Illuminate USA said it will produce 9.2 million advanced solar panels annually when it reaches full capacity by the end of 2024.
February 15, 2024
Richland Area Chamber & Economic Development 2024
Economic Outlook Breakfast:
Glenn Richardson, Managing Director for Advanced Manufacturing and Aerospace and Team NEO’s Research Director Sondra Palivoda shared some noteworthy region-specific information.
5-year Performance Snapshot for Richland County:
22 Projects which generated 869 new jobs and $35.M in new payroll.
$173.7M in new investment
Sector Distribution:
16 Manufacturing
3 Logistics & Distribution
2 Office
1 Military/Federal Installation
JobsOhio reported the following industry sectors and trends are ones to watch for Richland County:
Mega project supply chain
Solar panels and components
Sustainability
Building products
Advanced air mobility
Commercial space
• New estimates show Richland County growing in some key working age groups:
Millennial Generation Age Groups
40-44 years: 7%
35-39 years: 9%
30-34 years: 16%
Gen Z Generation Age Groups
25-29 years: 2%
20-24 years: 8%
15-19 years: 8%
Affordability and availability of housing in Richland County was another bright spot in the outlook. As shown in the chart below, the county’s median house value, monthly rent, and rental vacancy rate are very competitive with similar communities.
February 1, 2024
Price Named New Leader of Power Connect
Power Connect, a consortium representing the Central Ohio electrical contracting industry, has announced Jennifer Tisone Price as the organization’s new leader.
Price will serve as Director of Power Connect, working with the organization’s partners to strengthen and grow the Central Ohio economy. Power Connect’s members build the infrastructure improvements and electrical technology developments that are vital to the region’s continued success.
“Jennifer’s broad knowledge of economic development and track record of success quickly stood out. Her passion for our mission and desire to use her expertise to make an impact in the region put her at the top of the list.” Ron Becker, Vice President of Strategic Planning at Mid-City Electric/Technologies and Co-Chair of Power Connect’s Board of Directors, said.
Price echoed that sentiment. She noted two of Power Connect’s goals; creating long-term economic opportunities and cleaner, more energy efficient communities, were of particular importance to her.
“Power Connect does just that--we connect the region’s most well-trained and educated electrical workforce with some of the most important and technically advanced projects in the Greater Central Ohio region. These connections are more important than ever given the growing regional and state demand for energy and the rapidly changing electrification economy.”
She explained that Power Connect members are part of the electrical construction industry which brings power, light, and communication technology to buildings and communities. They help end users, which includes everything from large scale renewable energy producers and heavy industrial users to car owners who need EV charging stations—adapt to and benefit from technology advancements and policy changes.
“The national energy transition to clean, renewable sources is well underway and our workforce is highly trained and quickly deployable. From energy storage and microgrids, to commercial scale solar farms, and the electrification of our transportation systems, Power Connect contractors and electricians have the most advanced training and certifications in the industry.”
The consortium brings together the electrical contracting firms that are members of the Central Ohio Chapter of the National Electrical Contractors Association and an in-demand workforce of 4,000 electricians and technicians who are represented by IBEW locals in the region. Brian McPeek, Business Manager of IBEW Local 688 and Co-Chair of Power Connect’s Board of Directors, pointed out the group puts top electrical talent to work. Becker added that companies looking to locate or expand here can tap into this experience and expertise which helps make projects happen.
“Our workforce represents the most highly-trained, top-skilled electricians and technicians and also the most dependable workforce.” McPeek said. “Through Power Connect, we are partners in the success of these projects.”
According to Price, Power Connect prioritizes strategic partnerships to enhance the region’s competitive advantage and help secure that advantage for all of the region’s communities. She will work closely with economic development organizations, academic institutions, business advocacy groups, utility companies, and elected leaders.
“This is truly an opportunity to think globally and act locally,” she said. “My role at Power Connect will allow me to work in a way that has a direct impact on the people and places in my community.”
Most recently Price served as the President & CEO of the Ohio Economic Development Association. She is a graduate of Leadership Columbus and a Business First “Forty Under Forty” honoree. She brings nearly three decades of association executive, public policy, and communications experience to Power Connect. She and her husband live in New Albany, Ohio.