Michigan's Tax Credits Lure 4 Advanced Battery Makers, 6,700 Jobs

While Michigan struggles with the highest unemployment rate in the nation, it’s governor has been putting in a foundation for next generation technology that is beginning to draw green businesses and the promise of thousands of new jobs.

This week, the state announced that a set of new tax breaks totaling $543.5 million had lured four manufacturers of hybrid and electric car batteries.

The four companies will invest $1.7 billion and create nearly 6,700 jobs in Michigan; the state will also help them seek some of the $2 billion in federal stimulus money that has been set aside for advanced battery research.

Gov. Jennifer Granholm had declared in her State of the State address back in February:

“We want the batteries here. We want those electric cars researched, designed and assembled here. And we want other kinds of alternative energy jobs.”

She's getting them. But the competition is also heating up.

Forward-thinking governors and mayors across the country are working to partner with innovators and help them – with the promise of future production plants and job opportunities – secure a share of the billions of federal dollars set aside for clean tech research and development.

Los Angeles Mayor Antonio Villaraigosa, who talked in his state of the city speech earlier this week about luring solar, wind, battery and other clean tech companies to his region, yesterday unveiled a CleanTech LA alliance with three California universities and the city's business groups to compete for research money and "make this city the global capital of clean technology."

Kentucky, which last week announced that it has landed the new national Battery Manufacturing Research and Development Center for developing advanced battery technology, this week unveiled a new partnership with the National Alliance for Advanced Transportation Batteries to build a $600 million advanced battery production center. The project hinges on federal grant money. If the money comes through, the state will invest $200 million and expects a return of up to 2,000 new jobs.

In Michigan, Granholm's quick action in crafting new tax breaks for clean tech is already bearing fruit. Under the agreements announced this week, the four battery developers plan:

• A $665 million investment by KD Advanced Battery Group, which will open an 800,000-square-foot battery manufacturing facility employing 885 people.
• A $600 million plant by A123Systems, which is making the batteries for Chrysler’s first electric cars next year. The new facility will create 5,000 new jobs.
• A $220 million advanced-battery manufacturing facility producing almost 500 jobs by Johnson Controls-Saft Advanced Power Solutions.
• A $200 million manufacturing facility for lithium-ion batteries by LG Chem-Compact Power, producing more than 300 new jobs.

Missouri Gov. Jay Nixon was quick to point out to his own state's legislature the value of those tax credits. One of the companies in the KD Advanced Battery Group, Kokam America Inc., is based near Kansas City. “To put it simply, we could’ve been in the running for these jobs” had Missouri lawmakers passed a bill to provide additional tax credits, Nixon said.

Granholm, a close ally of President Obama, in January had signed into law three kinds of tax credits for battery manufacturers that create at least 300 new jobs and open a plant. The four companies announced this week received in the range of $125 million-$150 million in tax credits over 15 years.