It was the states hardest hit by contractions in manufacturing industries years ago that began laying the groundwork to land green jobs and may now be poised for the biggest gains, depending on federal economic stimulus funding. Now two states, including Michigan, have announced huge alternative power industry investments, with one site being built on land once set aside to lure auto manufacturers.

Of the total $900 billion economic package before Congress there is more than $50 billion in energy-related incentives.

The goal of President Barack Obama is to double the use of renewable energy in three years, potentially placing states with established programs in a position to replace thousands of manufacturing jobs lost over the last decade.

Michigan created a $2 billion fund using tobacco settlement money to target four economic sectors, one being alternative energy. Now the state, which has lost more than 150,000 auto jobs over the past eight years, is retraining the unemployed and underemployed for green jobs.

Governer Jennifer Granholm has said. “Employers, if you come to Michigan, we will deliver trained employees to you…And employees, we will pay for your training, but the kicker is you’ve got to agree to be trained in an area that we know we have need in.”

The renewable energy industry, like many other industries, is being hammered right now by a wave of layoffs and bankruptcies. Without help from the government, analysts are forecasting double digit declines in business and installations.

The Federal proposals include $32 billion to upgreade the nation’s electrical distribution system, more than $20 billion in tax cuts to promote the development of alternatives to oil, and billions more to make public housing, federal buildings and modest-income homes more energy efficient.

Glen Andersen, of the National Conference of State Legislatures, said states began lobbying for green jobs long before it was known that Washington might sweeten the investment pot. “They definitely are just looking at their own interests and not considering the federal government,” he said.

Even though economic incentives could exceed $8 million, Larry Burkhardt, president and chief executive officer of Upstate Colorado Economic Development, said that plays a small role in luring companies like Vestas. Denmark-based Vestas Wind Systems said it would invest $680 million in Colorado and employ as many as 2,450 people in the state by 2010.

A trained work force and a transportation infrastructure to move raw materials are what launches a community to the top of a company’s list, Burkhardt said. “Incentives are just icing on the cake, and they usually are used to differentiate finalist communities,” he said.

Hexcel Corp., recently announced plans to build a facility next to a Vestas plant in Colorado. “We’re going to see continued inquiries,” Burkhardt said.

Pennsylvania, which was hit by a decline in the steel and manufacturing industries, began looking to alternative power companies long ago, and landed Spanish wind energy manufacturing giant Gamesa six years ago. Now, Gamesa has its U.S. headquarters in Philadelphia and facilities further west in Ebensburg and Fairless Hills, at a former U.S. Steel location.

Michigan is extending tax credits to suppliers of alternative energy companies as well.

“If they lure any of their supply chain into Michigan, we will give them a tax break in addition to the tax breaks we would give to the companies they’re luring,” Granholm said.

Hemlock Semiconductor Corp., which is building the giant manufacturing facility originally intended to lure an auto company in Tennessee, plans to spend more than $2.2 billion to expand solar operations in Michigan.

The initial $1.2 billion investment by Hemlock, a joint venture between Dow Corning Corp. and Japanese companies Shin-Etsu Handotai Co. and Mitsubishi Materials Corp., could become the largest industrial project in Tennessee history.

President of the local economic development council, James Chavez, said the 1,215-acre site near the Kentucky border was originally being groomed to lure in an auto manufacturer. Yet he and others were waiting and preparing for companies like Hemlock. “If communities are not already prepared for these types of projects, they’re probably going to be a long way from getting there,” he said.

Competition for green projects has only grown more competitive, said Fred Mondragon, New Mexico’s economic secretary. And it is likely to heat up considerably as the benefits to the early adopter states become obvious.

Image abandoned Packard Plant in downtown Detroit by Derek Farr ( DetroitDerek ) on flickr under the Creative Commons license