Crain’s Detroit Business
Feb. 13, 2023
David Eggert
LANSING — Michigan’s economic development arm on Monday approved a big incentives package to secure a new $3.5 billion electric vehicle battery factory and 2,500 jobs in Marshall.
The agreement with Dearborn-based Ford Motor Co. includes roughly $1 billion in cash and tax breaks, with hundreds of millions more likely coming later to support the project.
A Ford subsidiary will own the plant about 95 miles west of Detroit, and its workers will build the lithium iron phosphate batteries using knowledge and services provided by China-based partner Contemporary Amperex Technology Co. Ltd., the world’s largest producer of EV batteries.
Jobs will pay between $20 and $50 an hour. The batteries will be used in several types of Ford vehicles.
“This project represents a once-in-a-generation economic opportunity,” Marshall City Manager Derek Perry told the Michigan Strategic Fund Board before it took three separate 10-0 votes. “It will create economic opportunities while allowing us to preserve our unique local culture, character and way of life.”
The incentives for the BlueOval Battery Park, a key for Ford’s plans to make 2 million EVs by the end of 2026, include:
- A $210 million Critical Industry Program grant from Michigan’s Strategic Outreach and Attraction Reserve Fund, known as SOAR. Lawmakers will have to OK the transfer, too.
- A Renaissance Zone tax exemption on real and personal property worth an estimated $772 million over 15 years.
- A $36 million loan for the Marshall Area Economic Development Alliance to buy, improve and convey land for the project. The loan will be repaid through a future Strategic Site Readiness Program grant from SOAR, which would need legislative approval.
The Michigan Economic Development Corp. said it anticipates also asking for site readiness program funds in the future to pay for additional land acquisition and site-development activities. While the agency declined to specify an amount, an official with knowledge of the state’s plan told Crain’s the extra funding may reach $800 million, bringing the total to $1.8 billion. Gov. Gretchen Whitmer last week proposed an immediate $800 million infusion into SOAR as part of her budget proposal.
The deal is the fourth in a year to support a new EV battery plant in Michigan, following the creation of the SOAR Fund in late 2021.
Josh Hundt, executive vice president and chief projects officer for the Michigan Economic Development Corp., said Ford considered multiple states and countries for the plant.
“Michigan’s ability to meet project timelines and provide a cost-competitive location were major factors in Michigan being the company’s choice for this project,” he said.
He estimated that the Marshall area will see an additional $30 billion in personal income from direct, indirect and induced jobs over 20 years.
Gabby Bruno, Ford’s director of economic development, said there have been “a lot of false narratives” about the factory. It is not a joint venture, she said, adding that a Ford subsidiary will have “full control” of the plant.
“I can tell you that there was no lack of competition for this project,” Bruno told the board. “Michigan competed against numerous states and countries to win this investment, in large part because of strong economic-development tools like the ones we are discussing here today.”
The auto industry is at a “critical crossroads,” she said, “which drives the necessity to focus on the most cost-competitive locations for future investment. Public-private partnerships like the one we are discussing here today are important to keep Michigan at the forefront of automotive manufacturing. The economic support you are considering for this project plays a key role in helping make the business case for Ford to expand its EV footprint here in Michigan.”
John Mozena, president of the Center for Economic Accountability in Grosse Pointe Woods, criticized incentives as “ruinously expensive failures” because Michigan has 185,000 fewer manufacturing jobs than 30 years ago.
“Please just stop. Please stop throwing billions of dollars in a shrinking industry that has done nothing but abuse the generosity of Michigan’s taxpayers for decades,” he said during the board meeting. “By approving yet another massive subsidy for a massive automotive manufacturer, the MSF board will continue to fail at its statutory responsibility quote ‘to promote economic growth and to encourage private investment, job creation and job upgrading for residents in this state’ unquote.”
EV battery factory packages authorized in the past year include:
- $824 million in state incentives and assistance for General Motors Co. to spend up to $4 billion converting its Orion assembly plant to build full-size EV pickups and, with joint-venture partner Ultium Cells LLC, to construct a $1.5 billion to $2.5 billion battery plant in Lansing. The agreement includes a $600 million Critical Industry Program grant to GM, a Renewable Energy Renaissance Zone exemption worth $158 million over 18 years and $66 million from the Strategic Site Readiness Program for electric, water and sewer upgrades. The projects will add between 3,200 and 4,000 jobs and retain 1,000 jobs.
- $715 million for China-based Gotion Inc. to build a $2.4 billion factory near Big Rapids and create at least 2,350 jobs. The deal includes a $125 million Critical Industry Program grant to Gotion — one of the world’s biggest battery manufacturers — a Renaissance Zone break worth $540 million over 30 years and a $50 million SSRP grant to support the purchase of land and infrastructure improvements.
- $237 million for Novi-based startup Our Next Energy Inc. to open a $1.6 billion plant in Van Buren Township and create 2,112 jobs. The agreement includes a $200 million Critical Industry Program grant to ONE, a tax exemption valued at $21.7 million and a $15 million loan.
Quentin Messer Jr., who chairs the Michigan Strategic Fund board and is president and CEO of the MEDC, said it is important to understand that a lot of the additional side-readiness funding that the state will seek for the Ford factory “would have had to happen for any project that was going to go (the) Marshall” mega-site. Other states and countries, he said, have been working to develop build-ready land for 10, 15 or 20 years.
“Literally in a year, we have significantly closed the gap,” Messer said. “When you do that, you have to pay dollars in one swoop. I think people sometimes lose perspective on that.”