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

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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.

The Michigan governor pushed through the tax credit legislation quickly in order to give battery manufacturers a better chance at obtaining some of expected federal stimulus package funding, which turned out to be $2 billion for advanced battery research and development.

“We’re hoping that the credits will provide these partnerships and the automakers with some leverage when it comes to the Department of Energy awards that will be coming out in the next few months,” said Bridget Beckman, a spokeswoman for the Michigan Economic Development Corporation.

The four projects promise to inject some much needed life into the state economy.

Michigan’s unemployment rate in March was 12.6%, the highest in the country. That was 5 percentage points higher than a year earlier. Unemployment in the state has grown faster in the last 12 months that in any other 12-month period since 1980.

“In the next 10 or 20 years, this industry could create as many as 30,000 to 40,000 jobs,” Beckman said. “Certainly the world’s and the U.S.’s energy needs demand that alternatives to petroleum-based fuel are researched and developed and commercially available.”

The actions “will allow the development of the advanced battery industry to develop exponentially.”

A growing Michigan-based automotive battery industry will bring the obvious jobs, but it could also help bolster the Big Three automakers’ development of greener vehicles, such as the Chevy Volt. And that, Granholm suggested, could assist General Motors’ and Chrysler’s bids for federal funding.

The incentives for advanced-battery manufacturers are part of a larger program in Michigan to attract green technology called Centers of Energy Excellence, which brings together alternative energy businesses, universities and government to create more jobs in the sector.

The state has also encouraged the renewable energy sector. Last October, the legislature passed a law calling for the state’s electric utilities to obtain 10 percent of their power from renewable energy sources.

Since then, several wind turbine and solar panel manufacturers have announced expansions and openings in Michigan – Mariah Power, Global Wind Systems, Cascade Swift Turbine, Uni-Solar, Hemlock Semiconductor, and Dow Corning.

As the governor said in announcing the latest agreements with the advanced battery manufacturers:

"The depth and scope of these projects demonstrate that Michigan has exactly what companies are looking for as they choose where to locate and grow their business – an aggressive economic growth strategy, a competitive business climate, innovative economic development tools and an outstanding workforce."

"This is part of our effort to rebrand Michigan, going from rust to green."


See also:

Michigan Governor Nurtures a Budding Green Economy

Electric Cars and Energy Independence, Part II

Federal Loan Rules Stymie Innovation by Shutting Out Small Businesses

Plug-in Hybrids Forcing Utilities to Get ‘Smart’

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