Latest news with #HouseOversightSubcommitteeonCorporateSubsidiesandStateInvestments
Yahoo
22-05-2025
- Business
- Yahoo
Michigan House subcommittee interrogates economic development deals as companies fail to deliver
Rep. Steve Carra (R-Three Rivers), chair of the House Oversight Subcommittee on Corporate Subsidies and State Investments on May 21, 2025 | Kyle Davidson As Michigan Republicans continue to take a magnifying glass to economic development spending, the House Oversight Subcommittee on Corporate Subsidies and State Investments invited James Hohman of the free-market Mackinac Center for Public Policy to offer his analysis of the state's Strategic Outreach and Attraction Reserve (SOAR) Fund. Hohman, who serves as the Mackinac Center's director of Fiscal Policy, walked committee members through a collection of several projects through the state's critical industries program, comparing the number of jobs promised with the jobs delivered. As he broke down each agreement, Hohman repeatedly noted that these deals were structured to deliver short-term payoffs for companies, and were not tied to job creation, with many deals tying the bulk of their funding requirements to a company's capital expenditures, or money a company spends to buy, maintain or improve their assets. Additionally, not all deals move forward, with Hohman pointing to a $100.8 million dollar deal with Ford made in 2022 as an example. Hohman urged lawmakers and members of the public to bring more skepticism to these deals, noting they often fail to deliver on their promises. 'There's a massive difference between what gets announced and what actually happens when it comes to living up to expectations,' Hohman said. 'A lot of them wind up with no jobs at all. Some of them do meet [or] exceed expectations, but when you look at the rhetoric behind the deals, when they're getting made, there's rarely even an acknowledgement that deals might not deliver on their pledges,' Hohman said. If companies fail to create the jobs they promised, the state has to wait years before it can ask for its money back, Hohman said. If they eliminate jobs after the deal concludes, the state has no way of getting its money back, he said. Additionally when asked about the level of transparency offered into these deals, Hohman said they were meeting the minimum standard of transparency, publishing an annual report on how much money was offered, how much the company received and whether they created the jobs that were announced. However, the report's schedule leaves the status of most current projects unknown, while sometimes forcing people to wait 18 months to learn an agreement didn't move forward. Overall the state has allocated $1.46 billion in taxpayer funds to create 14,779 jobs, Hohman said. While lawmakers clearly had ambitious plans for the program, those goals have not panned out, he said. And while the companies receiving this funding will likely create jobs to fill the buildings they've built using state funding, the number of jobs they create will depend on an uncertain future, Hohman said. 'My major takeaway for you is that if you're going to continue operating the critical industry program, more of the deal needs to be based on actual job creation. When you have deals that consistently fall apart, that fail to deliver, you should not be paying them until they finally do the things they're obligated or that lawmakers expect them to do,' Hohman said. This would not require a change to the law, Hohman said, only a change in expectations for lawmakers, asking them not to approve projects based on capital expenditures rather than job creation. While there are a number of areas where the Mackinac Center believes these dollars could better benefit residents, Hohman offered his support for House Republicans' road funding plan, which draws the bulk of its funding by reallocating or eliminating funding set aside for economic development, including $500 million set for automatic deposits into the SOAR fund. Despite the issues with the program, State Rep. Laurie Pohutsky (D-Livonia) raised repeated concerns about ensuring criticism of the program was accurate. While some press releases may be disingenuous in promising to deliver jobs, SOAR funding that is allocated for site readiness should not be expected to create jobs. 'You can't put 2,000 jobs in a site that is not ready for 2,000 jobs,' Pohutsky said. While the SOAR program is not the best use of the state's money, there are enough flaws that are not based around promises made in press releases, she said. SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
Yahoo
08-05-2025
- Business
- Yahoo
Anti-Gotion activists speak out at Michigan House subcommittee as project remains on hold
Yahoo is using AI to generate takeaways from this article. This means the info may not always match what's in the article. Reporting mistakes helps us improve the experience. Yahoo is using AI to generate takeaways from this article. This means the info may not always match what's in the article. Reporting mistakes helps us improve the experience. Yahoo is using AI to generate takeaways from this article. This means the info may not always match what's in the article. Reporting mistakes helps us improve the experience. Generate Key Takeaways No Gotion Strategist Ormand Hook takes questions from the House Oversight Subcommittee on Corporate Subsidies and State Investments on May 7, 2025. | Kyle Davidson Opponents of the Gotion battery plant took the podium Wednesday before the House Oversight Subcommittee on Corporate Subsidies and State Investments, calling the efforts to establish a multi-billion dollar battery components plant in Mecosta County 'underhanded' and a 'surprise attack.' Days after the Detroit News first reported the existence of the project in September 2022, three local government boards in the big rapids area approved unanimous resolutions to exempt the plant from property taxes. Michigan Gov. Gretchen Whitmer announced funding support for the Big Rapids-area facility in October 2022, with the Legislature later approving $175 million economic development funding to support the $2.3 billion facility, which was projected to bring 2,350 jobs to the area. However, the project served as a magnet for controversy, as conservative politicians and local activists raised concerns on the project's environmental impact and its parent company's Chinese ties. While Gotion Inc. is based in California and was established in 2014, its parent company, Guoxuan High-tech Co., was founded in 2006 in China. The site in Mecosta County where a Gotion electric vehicle battery plant is slated to go. | Photo courtesy of Michigan Economic Development Corporation The company's Vice President, Chuck Thelen, has repeatedly pushed back against these arguments previously stating 'Despite what any current politicians might say, there is no communist plot within Gotion.' Asian American leaders within the state have also raised concerns that the anti-China rhetoric aimed at the facility could place Asian Michiganders in increased danger of hate crimes and discrimination. In Green Charter Township, five members of the township board, including Township Supervisor Jim Chapman were recalled for their support of the project, with another two members of the seven-person board resigning ahead of the recall election. In nearby Big Rapids Township, Supervisor Bill Stanek was also recalled for his support of the Gotion Plant. Committee Chair Steve Carra (R-Three Rivers) told his fellow committee members that Chapman had initially agreed to testify before the committee, but had decided against it following threats of property damage. Carra said the committee would not condone those threats but that it would have been nice to hear his testimony 'because I know he does have a lot of information around this issue.' Chapman did not respond to a request for comment. Over the nearly hour-and-a-half long committee meeting, members heard testimony from three of the project's opponents: Lori Brock, whose horse farm would be adjacent to the development; Jason Kruse, the current Green Charter Township supervisor; and Ormand Hook, a strategist with the group No Gotion. Brock, who would later help lead the recall against Chapman, detailed her experiences learning about the project and advocating against it, repeatedly pushing back against claims that the project had strong support within the community. Audience members look on as Jason Kruse, president of the Mecosta Environmental and Security Alliance, introduces Vivek Ramaswamy at Lori Brock's farm. Kruse's organization was founded in June to oppose the development of the Gotion plant, Oct. 4, 2023 | Lily Guiney Brock repeatedly said Chapman refused to conduct a survey to gauge the community's support for the Gotion plant, telling the committee that a survey that she and a few hundred other community members conducted by going door-to-door showed nearly 88% of residents opposed the project. She further questioned why the area was chosen. 'Our community is a rural area. We're recreational. We are not an industrial zone. Why they would come there is beyond my belief, because there's Flint, there's Detroit. There's other areas that want the jobs, that need the jobs,' Brock said. On March 15, 2024 Gotion filed a lawsuit against Green Charter Township, arguing it had violated terms of a development agreement Chapman signed while serving as supervisor, with the township arguing the agreement is invalid because the previous board never approved the finalized document in a meeting open to the public. While the United States District Court for the Western District of Michigan issued a preliminary injunction requiring the township to abide by the terms of the agreement, it has since appealed the case to the 6th U.S. Circuit Court of Appeals, and will argue its case before the court on Thursday. Brock said she would like to see the state reimburse the township for legal fees, calling the decision to back the project 'a huge mistake.' When asked if she had any concerns about the company's $1 million donation to President Donald Trump's inauguration, Brock said they'd reached out to ask if the president would consider donating that money back to the community, noting Trump's opposition to the project. Kruse said the company's decision to take legal action against one of its host communities 'doesn't make sense.' While the charter township has since created its own zoning commission to hold greater oversight over projects like this one, the company has not submitted any application for necessary zoning changes on the site of the project, Kruse said, slamming the company for taking legal action against the township and noting that the legal fees have made it difficult to engage in some community projects. Kruse also accused Ferris State University in Big Rapids, which has supported the project, of pressuring him to take academic leave from his position as a tenured professor in the college's automotive program. Green Charter Township Supervisor Jason Kruse testifies before the House Oversight Subcommittee on Corporate Subsidies and State Investments on May 7, 2025. | Kyle Davidson 'Two years before Gotion was even mentioned to the public, the college's newly elected Dean, or hired Dean, rather, announced that, at a staff meeting, that the Automotive Department would have to discard our 69-year-old automotive service program and completely change to an electric vehicle battery and propulsion program. When the automotive staff asked for the reasoning and rationale for the change, we were answered in the meeting, 'Oh, you will see,'' Kruse said. Kruse told the committee that later in the month, the dean was the moderator for a Zoom meeting pertaining to Gotion and said that the university would later pursue a grant through the Michigan Economic Development Corporation to 'train students to work at the Gotion' facility. In response to a question from Carra, Kruse said it seems the university had advance notice of the project before it was announced to the public. Upon reviewing Kruse's remark, David Murray, the university's vice president of marketing and communications said Kruse had 'mischaracterized Ferris State University students and inaccurately portrayed events' in his testimony. '[Kruse] is a Ferris State assistant professor who requested to be placed on political leave, and this was granted in December 2023. That political leave was extended twice at his request. At no point was he pressured into this decision,' Murray said. 'Ferris State has one of the largest and best Automotive Technology programs in the state. Our mission is to work with industry partners to prepare students for rewarding careers. The university continues to train students to work with internal combustion engines as well as emerging sustainable transportation vehicle technology. Anything to the contrary is simply not true,' Murray said. Hook raised further concerns on Gotion's connections to the Chinese Communist Party, noting that its parent company's articles of association require it to 'carry out Party activities in accordance with the Constitution of the Communist Party of China.' Gotion did not respond to a request for comment. He also challenged the state's practice of providing corporations with subsidies. 'This is rhetorical, but why are there no corporate handouts to protect us from the government,' Hook asked. In closing out the committee, the Minority Vice Chair, Rep. Dylan Wegela (D-Garden City), asked Hook whether the same project of the same size and the same level of investment would earn the community's support if it was coming from a company tied to another country. 'Not that size and not sitting on a wetland that runs down into the river,' Hook said. SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
