Howes: Mich. in bidding for 5K jobs from iPhone builder

Daniel Howes
The Detroit News

Mackinac Island — Gov. Rick Snyder’s about-face on costly economic development incentives isn’t an accident: he’s after several large prospects that could create thousands of jobs in Michigan, and he’s rushing to meet a deadline.

Gov. Rick Snyder speaks at the Mackinac Policy Conference on Thursday, June 1, 2017.

The governor and Detroit Mayor Mike Duggan are scheduled to fly to Japan this weekend, confirmed four sources familiar with the situation, possibly to meet with representatives of Taiwan-based Foxconn Technology Group. Foxconn assembles Apple Inc. iPhones in China and is the largest contract electronics manufacturer in the world.

At stake for Michigan is a $4.2 billion plant that would initially employ 5,200, according to a two-page document quietly circulating among Republican lawmakers and administration officials at the Detroit Regional Chamber’s Mackinac Policy Conference. It would build liquid-crystal display screens for automotive, avionic and defense industries, among others.

The move comes as a coalition of business, government and union leaders here are pushing the Good Jobs for Michigan legislation. It would entitle companies creating new jobs in the state to capture personal income tax revenue associated with new hires, subject to annual audits and sustained investment.

“There is some urgency to get this done,” the governor said Thursday about the jobs legislation that already passed the state Senate but is languishing in the House Tax Policy Committee. “We could lose some opportunities if we don’t get this done in the next month or so.”

Among those opportunities is an LCD plant that would be the first of its kind in the country, says the document confirmed by three sources familiar with the situation. The multiphase investment, which could begin unspooling with ground breaking for the first phase as early as the third quarter of this year, could total $11 billion and create 20,000 jobs.

A later phase for “advanced manufacturing factories” would invest another $700 million in multiple factories and create another 6,000 jobs, with an opening projected for the first quarter of 2020. Product lines would include precision machining, tool and die, and robotics and automation.

In interviews and a press conference on the Grand Hotel’s historic porch, the governor and ranking officials pointedly declined to name the prospects, citing non-disclosure agreements. The mayor’s chief of staff, Alexis Wiley, said she “can’t comment” on the mayor’s travel plans; the governor’s office declined comment; and Duggan three times told The Detroit News: “I’m not going to talk to you about that.”

But four sources close to the situation said the state’s highest-ranking Republican and highest-ranking Democrat are preparing to fly to Asia this weekend. And two other sources pointed to press coverage earlier this year reporting the intention of Taiwan-based Foxconn to invest $7 billion in the United States.

Two days after the inauguration of Donald Trump, Reuters reported the chairman of the electronics manufacturer with more than 1 million employees confirming Foxconn is weighing an investment in the United States. Already, according to a report in the Morning Call, officials in the Lehigh Valley region of central Pennsylvania are pursuing the Foxconn opportunity.

Senator Jim Stamas, (R-Midland) of Michigan's 36th State Senate District speaks at the Mackinac Policy Conference on Thursday, June 1, 2017.

A major investment in the American heartland by a key foreign cog in the global tech industry would blunt criticism by the Trump White House; could begin to reshape the image of Michigan as an autos-only state; and would give the governor a much-needed economic development trophy to burnish a can-do record marred by the Flint water crisis and increasing resistance from the right wing of his own party.

And the prospect of the investment could exert considerable leverage on recalcitrant House Republicans in Lansing whose free-market, tea party-fueled ideology resists government incentive programs subsidized with taxpayer money. Still, the governor several times signaled that time is short for the state to be able to take advantage of the kind of big-ticket economic development efforts that don’t come along often, especially for a Michigan struggling to shed its anti-business image.

State Rep. Jim Tedder, who chairs the House Tax Policy Committee, confirmed there’s “chatter” in Lansing of a major development opportunity that is fueling the push for action on the Good Jobs incentive package, a high priority for business leaders and economic development officials from Detroit and Grand Rapids to Saginaw and the Upper Peninsula.

“As I understand it, the company is in the tech field,” Tedder, R-Clarkston, told The News, “which would certainly bring diversity to what we do as a state in terms of industry. And it could create over 5,000 jobs.

“If what is being presented holds true, there’s certainly maybe a compelling argument to consider taking” up the Good Jobs legislation “sooner,” he continued. “But between the budget and discussions” teacher pension reform “we’ve got our hands full ... in what many speculate are two weeks left before break. The timeline is not friendly.”

A potential deal, however, could change the legislative calculations. If the investment landed in Detroit, it would be a boon to Duggan’s re-election chances and would add taxpaying jobs to a city badly in need of them. Should the Good Jobs legislation reach the governor’s desk, the government would reap the property and sales taxes associated with the jobs — even if the employer would be entitled to capture the personal income taxes tied to the new jobs.

Under the bills pending in the House, business investment that creates a minimum of 500 new jobs and pays 100 percent of the average regional wage would be entitled to half the income tax revenue for those new employees for up to five years. A business creating 250 new jobs but paying 125 percent of the average regional wage would be able to capture 100 percent of personal income tax revenue to up to 10 years.

Companies investing in Michigan and creating new jobs would not be entitled to capture the income taxes until minimum jobs and wages targets are met. And the legislation requires the numbers to be independently audited every year, a move intended to drive accountability into the process.

“This legislation … is about making Michigan competitive,” said state Sen. Jim Stamas, R-Midland. “This package is something that’s transparent. It is predictable. It’s the right balance of government working and government getting out of the way.”

Added the governor in an interview with The News: “There are several things out there we’re in serious consideration for. You need the tools to compete effectively in the global economy. We don’t have the tools to work on big deals. We don’t have the cash.”

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Staff Writer Jonathan Oosting contributed.