GM agrees to reduced tax breaks as part of $3.5B investment in Michigan
Detroit — General Motors Co. has reached an agreement with Michigan to reduce and cap tax breaks as part of a deal that will require the automaker to invest $3.5 billion in the state in the next 10 years, including at its Detroit-Hamtramck Assembly plant.
Under the agreement announced Wednesday by the Michigan Strategic Fund board, the value of the GM's maximum tax credit will be reduced by $325 million to about $2.28 billion. The new agreement also adds annual caps for the remaining decade of its 20-year Michigan Economic Growth Authority tax credit agreement that ends in 2029.
GM previously said it will invest $3 billion at Detroit-Hamtramck, which had been targeted for closure before recent contract negotiations with the United Auto Workers union.
The investment at Detroit-Hamtramck will make it "the future home of of a recently announced battery-electric truck and other electric vehicles," according to the Michigan Economic Development Corp. Although GM hasn't said what it plans to build there, one possibility is an electric Hummer pickup truck to be marketed under the GMC brand.
"Overall, this will solidify the company’s continued to commitment to growing in our state as well as Michigan's uncontested leadership in automotive design and manufacturing," Michigan Economic Development Corp. CEO Jeff Mason said Wednesday.
In return, the automaker can be more flexible with staffing.The original terms of the 2009 agreement allowed the automaker to claim only 6,750 Jobs at the GM Technical Center in Warren and did not allow it to claim credit at its Renaissance Center headquarters.
"We agreed to the amendment because it would create more flexibility for GM to manage its business and manpower and sets the stage for the company to continue investing in our Michigan facilities in the coming years," GM spokesman Dan Flores said in a statement.
The Detroit-Hamtramck plant is expected to employ more than 2,000 at full capacity. About 800 work there now. The plant will stop building Chevrolet Impalas in February so that it can be retooled for the next vehicles.
Through the amendment, GM agreed to increase the average weekly wage from $650 to $1,300 statewide for the remaining credit term. The amendment added language to the agreement requiring GM to maintain 34,750 employees in Michigan in order to receive 100% credit for the remaining credit term. GM currently has 48,000 employees in the state.
"The approved MEGA amendment sets the stage for us to continue our significant commitment and investments in Michigan," Flores said. "Over the past decade, the Michigan MEGA has helped enable GM to invest more than $10 billion in its Michigan facilities."