Michigan House panel OKs $101M cash incentive for Ford over some lawmakers' objections

Beth LeBlanc
The Detroit News

Lansing — Michigan House lawmakers on Wednesday signed off on a nearly $101 million incentive for Ford Motor Co. as some lawmakers voiced concerns over the reach of the investment and whether the state should make other economic changes before handing money to select companies.

The Michigan House Appropriations Committee voted 20-8 to approve the transfer of $100.8 million from the state Strategic Outreach and Attraction Reserve to accounts that Ford will tap into to help finance $1.16 billion in facility upgrades at several of its plants. 

The transfer still needs approval from the Senate Appropriations Committee, which is meeting next week to consider the proposal.

Some lawmakers questioned the impact of the investment outside of Metro Detroit and asked economic development officials what they would do to hold Ford responsible to its suppliers, who may benefit as part of the "broader ecosystem" of the Ford investment but, according to one lawmaker, are waiting 90 to 120 days for payments from the Dearborn-based automaker.

Pillars provide barriers in front of the Michigan State Capitol building in Lansing, Wednesday morning, Jan. 13, 2021.

Rep. Pamela Hornberger, R-Chesterfield, said the delayed payments are a "sticking point."

"We see a large company that is already making profits benefiting," Hornberger said. "They’re the people that benefit from this investment of dollars from the people of the state of Michigan and our suppliers down the line that are taking the most risk every day" aren't reaping the same timely benefits.

Ford spokeswoman Melissa Miller said Wednesday that suppliers are "important partners to our business" and that the company's automated system pays suppliers in an average of 47 days.

Rep. Jeff Yaroch, R-Richmond, voiced concerns about the state's push for incentives for specific companies. 

"There’s been multiple offers to Ford, GM, Chrysler to stay in Michigan and we pay the big fish to stay," Yaroch said. "Is this what we’re left with? That we’re going to have to pay companies to stay? Or in reality do we have an unfriendly regulatory structure, not a competitive tax rate, education?”

Other lawmakers celebrated the decision and argued the investment would have ripple effects in local communities and businesses. 

"These people will be spending money to go to and from the jobs, the 7-11s, the McDonalds, the small shops," said Rep. Timothy Beson, R-Bay City. 

Ford said the investment approved by the House Wednesday would "deepen our connection to Michigan."

"Our home state will continue to play a key role in Ford’s future as we lead the EV revolution and strengthen our portfolio of iconic vehicles that customers love," said Gabby Bruno, Ford's director of economic development.

Ford plans to invest about $1.16 billion to update five plants and create 3,030 jobs. The automaker has said about 65% of jobs created through the investment will be tied to electric vehicle manufacturing, said Josh Hundt, chief projects officer and executive vice president of strategic accounts at the Michigan Economic Development Corp. 

The plan includes the creation of 1,508 jobs and $450 million investment at the Rouge Electric Vehicle Center; 382 jobs and $475 million at the Michigan Assembly Plant; 650 jobs and $35 million investment at the new Monroe Packaging Center; 250 jobs and $160 million at the Rawsonville Plant; and 240 jobs and a $40 million investment at the Livonia Transmission Plant.

“Time is of the essence; competitive states or provinces are waiting,” MEDC CEO Quentin Messer Jr. said. 

Quentin Messer Jr., CEO of the Michigan Economic Development Corp.

“It truly is an unprecedented amount of activity," Messer added. "And this activity is not just concentrated in one part of the state but it’s across both peninsulas. It will have positive effects on small and medium-sized businesses as well as large companies.”

In order to meet the terms of the state incentive, Ford must make the full $1.16 billion investment by June 30, 2024 or the tax dollars can be clawed back.

The company must fulfill its hiring quota by June 30, 2025; the jobs, which have an average pay of about $55,000, must be created in addition to Ford’s current Michigan base of about 22,190 employees and sustained for at least 12 months.

“This investment by Ford will help secure future electric vehicle manufacturing in the state as well as continue to show investment for what remains their profit center, with the internal combustion engine manufacturing,” Hundt told lawmakers.