Two companies promise to create nearly 4,500 jobs and invest almost $4 billion to produce electric vehicle batteries as part of economic development projects slated to receive a combined $1 billion in incentives, tax breaks and other state assistance.
Michigan Gov. Gretchen Whitmer and economic development officials announced the projects and corresponding incentives Wednesday.
“We are seeing real momentum in our state. In the last year, we have secured manufacturing projects building on our leadership on mobility, electrification, (semiconductor) chips and life sciences,” Whitmer said at an event in Grand Rapids hailing the investments.
“We’re proving that Michigan’s manufacturing industry is the best in the world. Our hardworking people and innovative businesses never stop adapting and growing.”
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Gotion, a Chinese manufacturing company, will build a nearly $2.4 billion plant in Big Rapids, about an hour north of Grand Rapids, projected to create 2,350 jobs. And in Van Buren Township in Wayne County, Our Next Energy will build a $1.6 billion battery manufacturing plant, which the state says will create more than 2,100 new jobs. The company is headquartered in Novi.
Gotion will receive a $715 million incentive package from the state. It includes three broad components, according to a memo from the Michigan Economic Development Corporation:
- A $125 million performance-based grant that goes directly to Gotion;
- An estimated $540 million in tax breaks by designating the site in Mecosta County as a “renaissance zone”;
- A $50 million grant to The Right Place, a west Michigan economic development firm based in Grand Rapids, to ensure the site in Mecosta County has the infrastructure necessary to support the new facility.
The incentive package for Our Next Energy, totaling around $236 million, includes:
- A $200 million performance-based grant through the Strategic Outreach and Attraction Reserve (“SOAR”) Fund;
- A $15 million loan through the Jobs for Michigan Investment Fund;
- A tax break through the State Essential Services Assessment Exemption valued at $21.6 million.
The projects are the latest approved by the GOP-led Legislature and Whitmer in an effort to use hundreds of millions in taxpayer dollars to entice large corporations to expand in or move to Michigan. In total, the two projects will bring $4 billion in investment to the state.
To justify the need for the sizable incentive going to Gotion, the MEDC memo notes electric vehicles are a massively expanding industry and says luring companies in the field is difficult.
“Gotion has considered Michigan for previous battery cell manufacturing projects but ultimately chose locations in other key competitor states based on incentive assistance offered by those states. Incentive assistance is necessary to ensure this project moves forward in Michigan, particularly in a highly competitive environment,” the memo states.
Michigan lawmakers recently sent $846 million to the state fund used to dole out incentive money. While the move received widespread bipartisan support, several key GOP state lawmakers opposed the deal. That included state Rep. Thomas Albert, R-Lowell, who resigned as chairman of the powerful House Appropriations Committee over how lawmakers wanted to use the money.
“Increased government spending has fueled inflation and played a major part in the economic struggles we face today. Additional spending would just make things worse. The measure the Legislature is considering today is reckless and irresponsible to taxpayers, and I will be voting against it,” Albert said at the time.
More:Ford could cut 8,000 salaried jobs — and still get $100M incentive from Michigan
More:Michigan Senate approves $100 million incentive for Ford, clearing last legislative hurdle
Whitmer and legislative leaders garnered criticism in the past for other economic development deals, including one that provided more than $100 million to Ford. The pushback intensified when Ford announced it planned to slash 3,000 jobs globally, with many of those cuts coming in Michigan.
The company is still in line to receive the public money even with the job cuts, because the incentive deal only mentioned creating hourly jobs and the company focused salaried employees.
Asked about comparable details in the newly announced deals, Whitmer and MEDC CEO Quentin Messer said money dispersed through the Critical Investment Fund is tied to performance from the companies, meaning Gotion — a company without the same Michigan footprint as Ford — and Our Next Energy will have to meet job creation benchmarks.
“That means before a dollar (from) Michigan taxpayers goes to the company, they have to perform. These are mutually agreed upon,” Messer said. “We expect success, but we want to make sure that we mitigate any downsides (and) risks to the 10 million-plus Michiganders who sacrifice and make sure that we have these resources.”
Contact Dave Boucher: dboucher@freepress.com or 313-938-4591. Follow him on Twitter @Dave_Boucher1.
Contact Arpan Lobo: alobo@freepress.com. Follow him on Twitter @arpanlobo.
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