EV battery maker gets $189M in corporate welfare, lays off 170 employees
Mass layoffs come less than two years after incentive package
LG Energy Solutions announced this week plans to lay off 170 employees at its Holland plant. The news comes after Gov. Gretchen Whitmer announced in March 2022 the state’s commitment to give up to $189 million in corporate welfare to the electric vehicle battery maker. Whitmer touted the company’s commitment to creating up to 1,200 jobs.
This week was not the first time the company announced layoffs after taxpayer money was awarded.
“Thanks to LGES’ continued investment in our state – which spans more than a decade – Michigan’s leadership role in battery manufacturing will only get stronger as the automotive industry moves toward an electric future,” Whitmer said at the time.
The declaration is similar to a green energy campaign championed by former Gov. Jennifer Granholm. Her economic policies, now being mimicked by Whitmer, resulted in hundreds of millions of taxpayer dollars spent on jobs that were announced but never created.
LG Energy Solutions was created in 2020 through its parent company, LG Chem, which originally received subsidies during the Granholm administration’s push for green energy.
LG Chem was touted by Granholm as a leader in the green energy movement that would help make Michigan the EV battery manufacturing capital of the world. CapCon previously reported that LG Chem was awarded $250 million in federal and state subsidies in 2010, with projections to create 400 jobs.
The company created only 34 jobs by 2014 and had not produced a single battery. A federal audit revealed employees were being paid to watch movies and play cards. In time, though, the parent company recovered, and by 2018, or eight years after Granholm’s announcement, it had created more than 400 jobs.
It is unclear whether LG Energy Solutions created any new jobs after Whitmer’s March 2022 press release. The company did not respond to an email seeking comment. The governor’s office did not respond to a request for comment.
James Hohman, director of fiscal policy at the Mackinac Center, questioned the effectiveness of the strategy. A breakdown of the $189 million corporate welfare package is pictured below:
“Michigan’s economic fortunes do not rely on the governor writing big checks to the companies she likes,” Hohman said. “The companies rarely live up to the job announcements made when they are awarded favors from the state.”
Hohman criticized the lack of reporting from the Michigan Economic Development Corporation, the agency responsible for awarding taxpayer subsidies.
“You would think that when the state officials hand out cash for jobs, they’d be forthcoming with important information about what people got in return,” Hohman said.
Hohman said the public should know how many people are working at the facilities, how much taxpayers paid for the jobs, and whether the companies fulfill the projected employment numbers officials cited to justify taxpayer-funded subsidies.
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.