Janesville, once a symbol of the Great Recession, becomes AI data center battleground

[00:00:00] Speaker 1: AMNA NAWAZ: A.I. is fueling stock market highs, economic growth and a construction boom across the country. But it's also igniting fierce local debates about the benefits, the costs and, in many cases, whether the data centers that power A.I. should be built at all. Economics correspondent Paul Solman looks at how one of those battles is playing out in the Midwest right now. [00:00:21] Speaker 2: PAUL SOLMAN: George Cullen has been in Janesville, Wisconsin, for quite a while. Which is the oldest, continuously-owned Chinese restaurant in America. [00:00:33] Speaker 3: PAUL SOLMAN: In all of America. PAUL SOLMAN: In all of America. PAUL SOLMAN: The family construction business, J.P. Cullen, has worked on some of Wisconsin's most famous structures. [00:00:41] Speaker 2: J.P. Cullen: We've been here for six generations and have been proudly building here all that time. In fact, we built the original tractor factory that was then turned into being the GM site. [00:00:51] Speaker 3: PAUL SOLMAN: Once the economic cornerstone of Janesville, the giant GM plant, in its heyday, employing 7,000 people. PAUL SOLMAN: But when the plant idled in 2008, unemployment soared to 13 percent, and the town became a nonpartisan symbol of the Great Recession. The promise of Janesville has been the promise of America. [00:01:16] Speaker 4: PAUL SOLMAN: Hello, Janesville, and hello, Wisconsin. We love Wisconsin. [00:01:20] Speaker 3: PAUL SOLMAN: Even I was dispatched to the plant to cover the economic catastrophe. But almost a decade later, says Cullen, who also heads Janesville's Chamber of Commerce: [00:01:30] Speaker 2: PAUL SOLMAN: Amazingly, we have replaced a number of jobs since that GM plant closed. It was hard and it took a lot of time. But we do have positive momentum here. [00:01:40] Speaker 3: PAUL SOLMAN: Positive momentum that could finally revive 250 acres of empty lot, where GM's plant used to sit, and possibly revive the city's budget with a data center. [00:01:50] Speaker 2: PAUL SOLMAN: There's nothing there. Our taxes are not being offset by a large user providing their property taxes. Those property taxes will help our schools, help our technical college, and help our city. [00:02:04] Speaker 3: PAUL SOLMAN: What was your initial reaction when you heard a data center might go there? [00:02:08] Speaker 2: PAUL SOLMAN: With that site having sat empty as long as it has, the positive nature that somebody was interested to put a new building on that site. PAUL SOLMAN: That's good. PAUL SOLMAN: That's a positive. [00:02:19] Speaker 3: PAUL SOLMAN: Especially since no one would fork out some $30 million to clean up the contaminated site once GM's plant was demolished eight years ago. Then, last year, a Colorado-based developer offered to buy the lot, remediate, and build [00:02:35] Speaker 5: an $8 billion data center campus. PAUL SOLMAN: I think if there's an opportunity to bring some industry back that could really add to the tax base and employ a bunch of people, I'd love to see that being used. [00:02:45] Speaker 3: PAUL SOLMAN: Electrician Garrick Harwick is a business manager for IBEW Local 890. With data centers blooming nationwide, unions are reporting new, significant demand for their members. Janesville's data center proposal came with the promise of hundreds of permanent jobs and at least 13,000 during construction, a major plus. [00:03:06] Speaker 5: PAUL SOLMAN: It could be Joe the plumber up the street that gets a job because this comes here. PAUL SOLMAN: And that kid goes to school with your kid, and it's just -- it affects the whole community. PAUL SOLMAN: And then, of course, there's the case for data centers in general. [00:03:18] Speaker 4: PAUL SOLMAN: My administration will use every tool at our disposal to ensure that the United States can build and maintain the largest, most powerful, and most advanced AI infrastructure anywhere on the planet. [00:03:31] Speaker 3: PAUL SOLMAN: So, last year, an executive order to fast-track environmental reviews and return sites like GM Janesville to "productive use" as "expeditiously" as possible. PAUL SOLMAN: But now, given the nationwide groundswell against data centers, you're not going to be surprised to hear that some in Janesville aren't sold. [00:03:55] Speaker 6: PAUL SOLMAN: I'm not against economic development. I just want it to be reasonable, thought out, done in a way that is not going to put people in danger and harm the environment. PAUL SOLMAN: You see the power plant there? [00:04:09] Speaker 3: PAUL SOLMAN: Pastor Roy Jewell lives less than a mile from the site, where his dad worked for 30 years. Among his concerns: excessive water use, noise and light pollution. PAUL SOLMAN: This is right in the middle of a residential area. PAUL SOLMAN: And, of course, he's worried about energy prices. The nation's largest electrical grid operator recently announced it will add more than $6 billion in costs to consumers over the next three years, because of power demand from data centers. While the developer in Janesville declined an on-camera interview, it vowed the data center would minimize its impact on residents and the environment. PAUL SOLMAN: And Jewell is, well, skeptical. PAUL SOLMAN: What's existing now across the country, they can't prove it. PAUL SOLMAN: So, he's part of what's become a wave of data center opposition. According to a recent Gallup poll, 70 percent of Americans oppose the construction of an A.I. data center in their community. [00:05:05] Speaker 7: J.L. One thing about A.I. and its involvement, its impacts on people's employment prospects in the future, as well as the way they see the world in general, that has people especially riled up about these projects. [00:05:18] Speaker 3: PAUL SOLMAN: J.L. Holtzman reports on the A.I. data center backlash for climate website Heatmap. It's a uniquely unifying topic, she says, bringing together both those on the left. [00:05:28] Speaker 8: While the American people are suffering, big tech continues to demand more. More data centers, more energy, more data collection, more American jobs replaced by AI, all on the feet of the American people. [00:05:42] Speaker 3: And on the right, Tucker Carlson, for example. [00:05:45] Speaker 5: And the future that AI promises is worse for the overwhelming majority of the people, but it empowers and enriches a tiny percentage of the population. Like, that's so crazy. [00:05:58] Speaker 7: There are so many political constituencies, movements that have found common cause here, as well as, you know, the climate movement. And so altogether, you have honestly a pretty cosmic gumbo of politics. [00:06:12] Speaker 3: According to a recent report by Data Center Watch, opponents delayed or blocked at least 75 projects worth $130 billion across the country in the first three months of this year alone. [00:06:25] Speaker 9: We organized around a set of arguments that ultimately convinced Microsoft, in this case, and our village board to say no thanks. [00:06:36] Speaker 3: Former bank executive Prescott Bouch came out of retirement when Microsoft offered to build a data center in his small Wisconsin town, Caledonia. Were you leery of data center development at first? [00:06:50] Speaker 9: I was not. In fact, if anything, I'm on the opposite side. I made a healthy living using them. I would be hypocritical to say that we should stop building them now that I'm retired. [00:07:00] Speaker 3: The state of Wisconsin passed a sales tax break in 2023 to lure data centers and enhance economic development. But having now crunched the numbers for many projects, Bouch says the promised windfall isn't nearly what it seems. Moreover, small communities might be betting on a bubble. [00:07:20] Speaker 9: The volatility of the industry, the fact that it likes to disrupt itself all the time, that it's constantly changing. The risk is if something happens with that revenue stream, it's the current residents that end up having to pick up the tab on short notice. [00:07:34] Speaker 3: Bouch's skepticism has resonated in Janesville. This spring, two opponents of the data center were elected to its city council, which promptly ended the agreement with a developer. Even the Chamber of Commerce withdrew its support. [00:07:47] Speaker 9: I think the mere scale of them, particularly in smaller communities, has woken people up. If it's something that big and that grand and that impactful, you have an obligation as civic leaders to step back and say, we are going to bring the community along to get them to agree that this is the right idea, or we're not going to do it. [00:08:11] Speaker 3: The developer, however, says it's hoping to revive the project. But Janesville has stalled the deal for now, still looking for an economic engine to drive its future and clean up those 250 acres. Data center cash seemed an offer a city just can't refuse. Turns out, some can. For the PBS NewsHour, Paul Solman in Janesville, Wisconsin. For the PBS NewsHour, Paul Solman in Janesville, Wisconsin. [00:08:37] Speaker ?: For the PBS NewsHour, Paul Solman in Janesville, Wisconsin. For the PBS NewsHour, Paul Solman in Janesville, Wisconsin.