Volkswagen's off-road brand Scout Motors studied 74 different parcels of land across the U.S. last summer as it hunted for a place to build a $2 billion assembly plant.
It quickly eliminated almost all of them. In one case, they learned it would take six years to build a needed rail link. Others lacked access to clean power - crucial for a project for "green" electric vehicles. Some did not offer enough nearby skilled labor.
"We were hitting a deadline," said Scott Keogh, Scout's CEO, so they settled for a parcel in South Carolina that has all their desired features but is a bit smaller than they initially wanted - 1,600 instead of 2,000 acres.
Scout's scramble highlights a challenge facing dozens of global manufacturers. Fueled by a combination of hefty government incentives, a transition to new transportation and energy technologies, and national security concerns about relying on distant suppliers, especially in China, there's a factory-building boom taking place across the U.S.
But all that new construction has a real estate problem. More specifically, a "megasite" problem. While the U.S. has plentiful land, there are not that many places to quickly plunk a billion-dollar-plus factory.
The factory renaissance could soon hit a barrier because of the scarcity of ready-to-go megasites, according to 25 economic development groups, state and local officials, utilities, and companies interviewed by Reuters.
That would be a problem for the Biden administration, which has pushed through legislation to fuel the developments. Corporations have announced dozens of projects since the passage of the Inflation Reduction Act and the CHIPS Act last year.
A White House official said it was a "high-class problem" to have, adding: "Folks are finding places to build. I don't think I've heard of one company abandoning plans to go forward because they're not able to find a site."
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