Taxpayer-funded dream turns to nightmare in Big Rapids as Gotion goes away

When Michigan gave a Chinese company $175 million in 2022, officials said the money would create 2,350 jobs in a $2.4 billion factory that would build electric vehicle components. Three years later, Gotion Inc. has failed to create the jobs, and Michigan is trying to claw back $23 million.

The Michigan Strategic Fund approved $715 million in taxpayer subsidies for Gotion, a wholly owned subsidiary of Hefei Gotion High-Tech Power Energy Co., Ltd. The grant included a $125 million critical infrastructure program grant through the Strategic Outreach and Reserve Fund for a local job creation requirement; tax exemptions and abatements worth $540 million; and a $50 million performance-based grant from the Strategic Site Readiness Program.

Still, plans to develop the plant failed.

This wasn’t the ideal outcome, Danielle Emerson, Michigan Economic Development Corporation public relations manager, told Michigan Capitol Confidential in an email.

“While this is not the outcome we hoped for, we recognize the tremendous responsibility we have to the people we serve to make sure their hard-earned tax dollars are spent wisely and appropriately,” Emerson wrote. “Because milestones were not met, none of the $125 million (critical infrastructure program) grant to Gotion, Inc. was ever disbursed to the company. We will actively pursue repayment by Gotion of the $23.6 million in (Strategic Site Readiness Program) grant dollars that went to toward reimbursing the purchase of the land. The remaining $26.4 million SSRP dollars were not spent and will return to the state.

“We continue to focus on securing advanced manufacturing investments, especially across (internal combustion engine), (electric vehicles) and hybrid vehicles to position Michigan at the forefront of the mobility revolution as it evolves and adapts to market conditions within this decade and beyond. We will continue doing all we can to bring good-paying jobs and economic opportunity to Michiganders everywhere.”

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Gov. Gretchen Whitmer welcomed the deal in 2022.

“Today, we’re bringing home over $4.1 billion in investments to Michigan, creating more than 4,600 jobs across Big Rapids, Van Buren Township, and Ottawa and Muskegon counties,” the governor said in a press release. “This is yet another historic day for Michigan this year as we continue to secure generational opportunities in our manufacturing and engineering workforce, grow a sustainable economy, and make critical infrastructure improvements to support the state’s robust agriculture industry.”

An Oct. 14 press release from Whitmer gave the governor credit for securing 36,000 automotive jobs since 2019.

“Since I took office, we’ve worked across the aisle to win every possible auto project, securing more than 36,000 auto jobs,” Whitmer said. “Thanks to partners like Stellantis and our massive network of auto suppliers, we will continue to dominate the auto industry and bring supply chains home even as we face national economic uncertainty.”

Whitmer’s announcement included promised jobs as created jobs. But the actual number dropped in July when a proposed Sandisk factory failed. Gotion’s failure takes away another chunk of promised jobs.

State Rep. Tom Kunse, R-Clare, welcomed the news that Michigan will try to claw back taxpayer money from the failed project.

“This is yet another example of why corporate welfare doesn’t work,” Kunse said in a press release. “Taxpayer-funded incentive deals often fail to deliver on promises, leaving our communities with broken commitments and wasted public dollars. Promises of jobs and investment mean nothing if companies cannot meet their obligations.”