By Jeremy Portnoy
Topline: Michigan’s plan to rely on a Chinese company to create American jobs is dead in the water. The state pulled out of an agreement to give Gotion, Inc., $715 million in subsidies for an electric vehicle battery plant, but there’s no guarantee Michigan will recoup the $23.6 million that was already paid.
Key facts: Michigan agreed in 2022 to give Gotion up to $175 million in grants and $540 million in tax breaks to help fund the $2.4 billion plant. It was projected to create 2,350 jobs.
Progress was slow and opposition came quickly. Then-Senator Marco Rubio and other top congressional Republicans raised concerns, claiming that the company’s founder and top shareholders had ties to the Chinese Communist Party. Local voters in Green Charter Township recalled the officials who approved the plan and replaced them with new ones who sued Gotion to try and stop the plant.
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On Sept. 17 this year, the state privately told Gotion that it was in violation of the grant agreement because Gotion had made no construction progress in 120 days. The state claimed Gotion “abandoned” the project and had 30 days to resume its work. A response letter from the company’s attorneys said that was “utterly false” and local opposition “due solely to racist and ethnically charged stereotypes” was causing the delays.
Local media did not yet know about the dispute, and in early October, the state told the news outlet Bridge Michigan that the battery plant was still on track to be successful — a claim that now seems to be a lie. Michigan publicly announced on Oct. 23 that it was pulling out of the deal.
The Michigan Economic Development Corporation said it will try to claw back the $23.6 million it gave Gotion to buy land, but no specific plan has been released. No other public money was dispersed.
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Critical quotes: Rich Studley, former president of the Michigan Chamber of Commerce, told Bridge Michigan he has “zero confidence” the $23.6 million will be returned to taxpayers. State Rep. Tom Kunse, who represents Green Charter Township, said, “This is yet another example of why corporate welfare doesn’t work. Taxpayer funded incentive deals often fail to deliver on promises, leaving our communities with broken commitments and wasted public dollars.”
Summary: Even well-planned corporate tax breaks are of questionable benefit to taxpayers, but public funds should not be handed out to companies that cannot deliver on their promises.
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This article was originally published by RealClearInvestigations and made available via RealClearWire.
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