Two Towns, Two Factories: How a $500 Billion Boom Exposes American Failures

One county gets 300 jobs making pet food; the other, 1,800 in high tech. What it means for the US middle class.

Story by Shawn Donnan

Photos by Jeremy M. Lange | Graphics by Christopher Cannon

August 14, 2023, 5:30 AM EDT

TO TOUR THE FACTORY that Nestlé Purina PetCare Co. will soon open in Rockingham County, North Carolina, is to see the future of pet food. Its brightly lit production floors, robot-controlled freezers and autonomous trolleys will produce hundreds of thousands of pounds of cat and dog chow.

Drive more than an hour south to Chatham County, North Carolina, and you’ll see the site of Wolfspeed Inc.’s latest project, where you can peer into a cement-floored pit big enough to house an aircraft carrier. There, over the next 18 months, the semiconductor company and its robots will begin 24-hour-a-day production of the raw ingredient for the computer chips essential to make electric vehicles and their batteries run longer and charge faster.

The two plants are emblems of a manufacturing boom in America. Factories are being built at a rate not seen in decades, a trend hailed from the White House on down as essential to reviving the middle class. But zoom in on a map to see where these operations are actually landing, and you’ll also see a familiar geographic pattern. It helps explain why some towns win jobs making pet food, while others become hubs for higher-paying work in computer chips and EV technology.

There’s no doubting the broad renaissance: Since President Joe Biden took office in January 2021, companies have announced about $500 billion in private investment in industrial projects. Billions of dollars in promised federal subsidies are driving a push to bring home, or reshore, production of EVs, solar cells, batteries and semiconductors—along with well-paying middle-class jobs—in the name of competing with China.

Eden's shut-down Spray Cotton Mills, which caught fire in January. — Eden’s shut-down Spray Cotton Mills, which caught fire in January.

Featured in the August/September issue of Bloomberg Markets. — Featured in the August/September issue of *Bloomberg Markets*. Illustration: Maxime Mouysset for Bloomberg Markets

This shift amounts to a remarkable pandemic-influenced turn in US economic policy, now supported by both major political parties in Washington. It began with President Donald Trump’s rise on the back of disenchanted blue-collar voters and his levying of tariffs on everything from Chinese-made pet food and handbags to European steel and Scotch whisky. Biden has turned those trade wars into subsidy wars via his forceful embrace of industrial policy—government intervention and incentives to prod businesses into alignment with national goals rather than rely on market forces.

The two new factories, both in central North Carolina, amount to hard-won victories for communities on diverging economic paths. One in five people in Rockingham County, which has battled deindustrialization for decades, live under the poverty line. One in five people in Chatham County, thanks to its proximity to the thriving Research Triangle region, earns more than $200,000 a year.

Sources: US Bureau of Labor Statistics and Census Bureau data compiled by the Federal Reserve Bank of St. Louis

The new industrial boom has the potential to widen this divide rather than close it. Rockingham’s pet food plant in Eden, a fading mill town of 15,000, will employ 300 people; Chatham’s, 1,800. On average, the Rockingham workers will earn $42,000 a year; Chatham’s, $78,000. Or consider the sheer industrial and economic impact of each employer. Nestlé Purina is investing $450 million, the most valuable economic development project in Rockingham County history. Wolfspeed is investing $5 billion, the most in state history. Again and again, the Rockinghams are falling behind the Chathams even when both win economic prizes.

All this factory investment has failed to live up to its billing as a way to fix the damage wrought by an earlier era of competition with China that began more than 20 years ago. Over the past decade, economists David Autor at the Massachusetts Institute of Technology, David Dorn at the University of Zurich and Gordon Hanson at the Harvard Kennedy School have documented what’s become known as the “China shock.” After China joined the World Trade Organization in 2001, cheap imports contributed to the loss of more than a million manufacturing jobs in the US. Declining populations of young workers, as well as lower pay, have persisted in Rockingham and other communities hardest hit by this China shock, the researchers found in a 2021 paper.

Today’s manufacturing turnaround has so far largely bypassed these hardest-hit places, according to a Bloomberg analysis of data provided by the White House and the China shock authors. Only 16 of those 100 commuter zones most affected by the China shock have won even a single new manufacturing investment since 2021, the year Biden took office. They have accounted for just 11% of the announced investment. White House spokesman Michael Kikukawa says those zones represent only 4% of the US population, so the analysis understates their impact. “Bidenomics is investing in communities that have been left behind, with investments going disproportionately to lower-income and disadvantaged communities,” he says.

Comparing Chatham and Rockingham counties helps to explain why differences in education, transportation, infrastructure and available land make closing the gap so hard. The contrast also illuminates the politics of electoral battlegrounds such as North Carolina that will likely decide the 2024 presidential contest. It shows why some places buy into Trump’s populist, anti-global rhetoric more than others. In 2020, Trump won Rockingham by 32 percentage points. Biden took Chatham by 12 points.

Ever since Trump’s 2016 election, a debate has raged over competition with China and the need to bring factories home. It’s become a familiar refrain: Blue states and big coastal cities that win out because of globalization are clueless about its costs; angry red states and rural areas get left behind. Less discussed are the internal rivalries among communities, often in the same state, or how the industrial boom is following a familiar pattern, rather than altering it. Keith Debbage, an economic geographer at the University of North Carolina at Greensboro, has spent more than 30 years studying development in the state and says the Rockingham-Chatham divide illustrates a rule at the heart of his discipline: “It’s just a fundamental fact of economic geography. There are winners and losers.”

Sources: National Bureau of Economic Research, The White House

Economist David Autor and his co-authors have over the past decade documented what has become known as the “China Shock”, or manufacturing jobs lost to competition from cheap imports. Their work focused on commuter zones from 2000 to 2019. Here, the darker the area, the greater the impact of the shock.

The 100 commuter zones hit hardest by the China Shock include places like Rockingham County, North Carolina, where textile jobs have moved outside the US and factories have shut down. Typical of the most affected communities, it is a small rural county that lost its once healthy manufacturing base.

There’s undoubtedly a new boom in manufacturing investment in the US. By the end of June, the White House listed 308 announced projects worth nearly $503 billion since Joe Biden took office in January 2021.

But the new industrial boom has mostly bypassed the areas hit hardest by the China Shock. Just 16 of the 100 most affected commuter zones have been the sites of any newly announced projects over the past two years. These areas are projected to receive just 11.4% of the value of those projects, or $57.4 billion. And, of that sum, a lone IBM announcement accounted for $20 billion.

FOR ALMOST 100 YEARS, a whistle marked shift changes at the Karastan rug factory in Eden. Today the whistle sits in the front window of the local museum just down the road. The plant shut down for good in 2021. The building’s new owner leases it out as a warehouse space to tenants including the Dollar General discount store chain. Nearby, the remains of another century-old plant would have been turned into apartments, but then a fire swept through it in January. The 1994 North American Free Trade Agreement, increasing US trade with China and the decline of the tobacco industry have all punished North Carolina’s Piedmont region, in the foothills of the Blue Ridge Mountains.

Eden and the rest of Rockingham County wear the physical legacy of their industrial past heavily. While old factories can make for stunning lofts in big cities, they can get in the way in places searching for manufacturing jobs. Big companies prefer wide-open tracts for their operations. And in Rockingham, Leigh Cockram, the director of economic development, says the biggest undeveloped tract measures just 33 acres, enough only for a small factory.

Rockingham has attracted more than $1 billion in investment and 1,400 jobs since 2019, including the Nestlé Purina plant, Cockram says. Farmina Pet Foods, an Italian company, is building its own factory nearby. Belgium’s Ontex Group NV is expanding a diaper plant. The county isn’t relying only on state or federal money. It’s levying a sales tax to pay for a workforce development center going up at the local community college.

Left:Top: A real-time auction by e-commerce company ReVend at a former Lucky Strike plant in Eden. Right:Above: Richards, one of the former cigarette plant’s new owners.

Left:Top: A real-time auction by e-commerce company ReVend at a former Lucky Strike plant in Eden. Right:Above: Richards, one of the former cigarette plant’s new owners.

In nearby Reidsville there’s hope again below the old smokestack bearing the words “Lucky Strike.” The cigarette plant, once the town’s biggest employer, closed for good in 2019. It now has new owners: Evans Richards, a 30-year-old e-commerce entrepreneur, and his partners. His company, ReVend, sells Lego sets, Star Wars memorabilia and superhero collectibles. It’s setting up video-streaming studios around the building to do real-time online sales. ReVend occupies several floors. Richards and his co-investors are leasing out space to a warehouse company, in which he has a stake. Another part of the complex is slated to be rented out to a small manufacturer or data center. “An ecosystem,” Richards calls it.

Rockingham County, NC

Population

91,957

Unemployment rate

4.1%

College degree

15.6%

2020 presidential election results

Trump: +32.1%

Median household income

$46,993

Jobs announced since 2019

1,400

Stacey Kalilimoku is delighted. She spent 12 years working alongside her husband in the old cigarette plant. Now she and three of her four daughters work at ReVend. “It’s creating a stable income for people,” she says. “I hope we’re busting at the seams in a few years.” But it won’t be like the old days. At its peak a half century ago, Lucky Strike employed 3,600. At best, Richards says, hundreds will work at ReVend one day.

At its new plant, Nestlé Purina, a unit of Swiss food giant Nestlé SA, will also be hiring at that scale. It’s moving into a former MillerCoors brewery that shut down in 2017 and once employed more than 1,000 people. Everything at the pet food plant is designed for efficiency and automation. According to Will Steiner, the plant manager, raw ingredients coming into it will be stored in freezers and handled only by robots. Around the plant, squadrons of autonomous vehicles that Steiner likens to industrial Roombas will ferry around finished products. The jobs remaining are in great demand. A recent posting for production positions drew 4,000 applicants, he says.

Steiner in front of the soon-to-open Nestlé-Purina pet food factory.

To Neville Hall, Eden’s mayor, the Purina plant is a welcome addition. But he also has his eyes on a 3,500-acre industrial plot known as the Berry Hill megasite just across the state line in Virginia. It offers the promise of many more jobs, but local officials have yet to find a taker. “They’re going after the big fish,” Hall says.

Torrey Easler, a Baptist pastor, has watched Rockingham County’s efforts to draw investment for more than a decade. To date, none has stemmed a slow decline. As a result, members of his own congregation increasingly commute to faraway jobs in search of middle-class wages. His own wife drives almost an hour each way to hers, managing a practice for an oral surgeon. It’s a similar story for his adult son.

“Manufacturing has come back somewhat, but it’s still not on the level that it was,” Easler says. “Sometimes we want to put on the rose-colored glasses, because we don’t want to see the widening gap between the upper class and the lower class or the lower middle class.”

IF YOU WANT TO UNDERSTAND why Chatham County has followed a different economic trajectory, visit Chatham Park in Pittsboro. It’s an emerging suburban colossus that extends for almost 11 square miles. Its 25,000 apartments and houses will one day hold some 70,000 people, almost doubling Chatham County’s population. It will include schools, medical facilities, offices, restaurants and even a swim and pickleball club named Paddles with a $1,500-a-year membership fee. Town houses go for $400,000; custom four-bedroom single-family homes are listed for around $1 million.

In a US plagued by housing and labor shortages, Chatham Park helps the county make its pitch to manufacturers: We have open land for your companies, homes for your employees and every amenity they could want. Senior executives scouting industrial sites “all come here,” says Vanessa Jenkins, executive vice president of Preston Development Co., which markets the project.