Lansing Math: Michigan pays $340,000 per (promised) job at Gotion factory

New $175 million round of corporate welfare brings state’s tab for Mecosta County project to $800M

Michigan lawmakers last week gave another $175 million to the unpopular Gotion battery project in Mecosta County “to serve increasing demand in the battery production industry.”

Some lawmakers, anyway.

Because the Legislature had already moved $846 million into the Strategic Outreach and Attraction Reserve fund, which Michigan uses to grant corporate welfare, only a legislative transfer was required. Not a full vote of the House and Senate. So only about one-third of lawmakers partook — those on the House and Senate appropriations committees.

Gotion, a division of China-based Gotion High Tech, will receive $175 million from the SOAR fund, bringing the state’s portion of the $2.4 billion project to one-third of its costs, or $800 million.

While Michigan politicians describe this as an investment, the state takes no ownership share in the company. This is corporate welfare.

James Hohman, the Mackinac Center’s director of fiscal policy, noted that most of the giveaway is “absolution from taxes in the future,” but the $175 million “is just a gift.”

Of that, $125 million will fund creation of a campus for the project, while $50 million will fund infrastructure upgrades.

The Gotion factory will create up to 2,350 new jobs, the company claims. That tab means each new job will cost Michigan taxpayer more than $340,000. The per-job cost will be higher if fewer jobs are created.

That the plant will boost EV battery production is in line with Gov. Gretchen Whitmer’s goal of getting two million EVs on Michigan roads by 2030, years after she leaves office. There were only 17,500 EVs registered in Michigan in 2021.

Whitmer’s plan entails giving subsidies to buyers of EVs and paying to install charging resources. It also includes exempting EV chargers from peak-hour pricing. The federal government has thrown in additional subsidies for buyers and charging resources.

Whitmer’s largesse toward a company headquartered in the Jiangsu province bucks a recent national trend toward caution in doing business with communist China and skepticism about that totalitarian state’s increasingly aggressive behavior at home and abroad.

Earlier this month, President Joe Biden signed a law declassifying origin reports on COVID-19, a law that specifically mentioned a lab in Wuhan, China, as the possible source of the outbreak.

Lawmakers and governors across America have taken action to limit the spread of TikTok, a social media app whose parent company is based in China. While Whitmer carved herself an exemption, she did take action to ban TikTok on state-owned devices.

Big Rapids residents and Michigan lawmakers held a large protest against the project Saturday, repeatedly emphasizing the Communist Party of China’s ties to Gotion and communist China’s adversarial posture toward the United States.

But neither Whitmer nor SOAR administrators have addressed national security concerns — though the state describes the battery project as a “critical industry program.”

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.