News Story

State handouts to Ford could be jeopardized by company’s investments elsewhere

Company agreed to ‘make best efforts to keep jobs in Michigan’

Michigan lawmakers were shocked when Ford Motor Co. announced in 2021 that it would be opening a new battery complex in Tennessee and Kentucky. Michigan’s economic development officials stated they had not been asked to try to match the tax abatements, infrastructure assistance and taxpayer money the other states were offering. The company’s decision could jeopardize the hundreds of millions of payments the company collects from Michigan taxpayers.

The company has an agreement with the state to receive refundable tax credits through the Michigan Economic Growth Authority program. The company receives 4.25% of what it pays its employees in the state.

As part of the agreement, Ford agreed to “make best efforts to keep jobs in Michigan when making plant location and closing decisions.”

It’s unclear whether the company made its best efforts to see if Michigan would respond. Gov. Gretchen Whitmer said the state was not asked to present its case and the special favors it could provide to companies. “I’m always looking to make Michigan more competitive and always eager to put solutions on the table, but we need a real opportunity to do that,” Whitmer said, according to an MLive account. “And that really wasn’t the case here.”

Ford CEO Jim Farley told The Detroit News that the other sites were superior to Michigan locations. “We didn’t do it state by state. We literally did it site by site, and we scored all the sites. We went and looked at them. It was a very thorough, arduous process with things that we never considered before like energy costs. And that’s what we got,” he said.

It is unclear how much would be at stake if lawmakers were to stop the credits. The amount the company collects has been considered to be confidential, despite the company collecting hundreds of millions more in credits than it has in liabilities. This means the company receives money from the state, paid for by other taxpayers.

The state reports that just 15 companies were awarded MEGA tax credits in 2023. Revenue estimators expect the companies receiving MEGA deals to collect roughly $500 million more in credits than they owe in tax liabilities for the current fiscal year. In other words, a little more than a dozen companies will receive half a billion dollars of other taxpayers’ money, and taxpayers cannot be told how much each company will collect.

Ford’s announcement that it would locate its Blue Oval City project outside of Michigan sent lawmakers scrambling to create new programs. Legislators have authorized $6.3 billion in corporate welfare since then.

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.