Kentucky considers upping incentives for battery plant
By Jack Brammer – jbrammer@herald-leader.com
State Rep. Rocky Adkins, D-Sandy Hook
FRANKFORT — The race to grab federal funding for an advanced battery manufacturing plant may get more expensive for Kentucky taxpayers.
State officials are trying to find additional incentives to bolster their chances against Michigan in a cut-throat competition for $2 billion in federal stimulus dollars to help fund proposed lithium-ion battery plants.
Kentucky pledged on Monday to invest about $200 million in a $600 million advanced car battery plant proposed for Hardin County by a non-profit consortium of more than 50 companies.
Michigan countered a day later by approving $555 million in tax breaks for makers of electric vehicle batteries to go along with money from the federal stimulus package. Battery makers plan to spend $1.7 billion to build four factories in Michigan.
Now, Kentucky is looking at offering more tax breaks to remain competitive.
House Majority Leader Rocky Adkins, D-Sandy Hook, said Thursday that state Energy and Environment Secretary Len Peters is reviewing recent energy legislation that contains tax incentives for renewable energy projects.
Adkins, who has been at the forefront of energy legislation in the Kentucky General Assembly, said using those incentives could show the federal government that Kentucky is “very, very serious about this project,” which could create as many as 2,000 jobs.
Peters acknowledged that he is looking at the incentives, but was not certain if the state could use them for the project.
“The question we will be asking is whether the DOE views batteries as a renewable form of energy,” he said.
Meanwhile, Michigan has “an early lead” in the race for the federal money because of its high unemployment rate and the technological knowledge of its workforce, an auto industry analyst said Thursday.
Michigan has an unemployment rate of 12.5 percent and is predicted to have lost 750,000 automotive jobs by next year, said Aaron Bragman, an auto industry analyst with HIS Global Insight, an international forecasting group in Detroit, Mich.
“That’s three times as many lost jobs from Hurricane Katrina,” he said. “The state has been in a recession since 2001.”
Kentucky’s unemployment rate in February was not much better. It was 10.2 percent.
Another edge for Michigan, Bragman said, is many of the state’s unemployed have technological knowledge of the auto industry.
“Michigan would have many workers ready to go on advanced battery projects,” he said, adding that the University of Michigan and General Motors are partners in creating a battery research lab.
Beshear announced last week that the University of Kentucky, University of Louisville and Argonne National Laboratory will create a battery manufacturing research and development center in Lexington.
Bragman also said Michigan’s incentives are more generous than Kentucky’s.
“If Michigan gets all the projects it wants with the federal dollars, it could produce 250,000 electric vehicles in a year,” Bragman said. “That would be sufficient for the market for the next five years.”
In addition, the proposed projects in Michigan also are tied to the Big Three automakers — Chrysler, General Motors and Ford.
None of the companies in the consortium for the Kentucky project, known as the National Alliance for Advanced Transportation Batteries, or NATTBatt, is tied with the automakers.
An unknown factor in the competition between the states is what role, if any, politics will play.
Michigan voted for President Obama in last year’s presidential election, while Kentucky sided with Republican candidate John McCain.
House Speaker Greg Stumbo, D-Prestonsburg, said “we in Kentucky probably believe everything has politics to it.”
Still, Stumbo said he does not think the federal government will put all of the available $2 billion for the battery projects in one state. “That would be foolish,” he said.
A big advantage for Kentucky, Stumbo said, is that the state has “a shovel-ready site” in Hardin County.
“That’s how we beat out other states to get the consortium to come here,” he said.
States must submit their applications for the stimulus money to the U.S. Department of Energy by May 19.
About the Author: John Stamper is the accountability editor for the Lexington Herald-Leader. A native of Monticello, Ky., he has been with the Herald-Leader in a variety of roles since graduating from Western Kentucky University in 2000. Reach him at jstamper@herald-leader.com
DC | Apr 16, 2009 | Reply
Dig as deep as needed to get this company to KY. Everybody talked bad about Martha Lane and Toyota, but look what it has done for the state.
Jim Anderson Stivers | Apr 17, 2009 | Reply
DC ,
I don’t agree with your statement “everybody talked bad about Martha Layne Collins and Toyota.”
The first to complain was Steve Beshear over the incentive package. He felt was wrong\illegal. He lost.
The second to complain was former Mayor of Lexington- Snotty Basler.
Yes- some did object because the old lingering JAPANESE FACTOR. That quickly faded.
There was an Asian Industrial Revolution taking place in the USA at that time and Kentucky, because of our work ethics, scored big during those days of Toyota and the Toyota sub suppliers.
It is my opinion the money would be better spent if the state and the colleges would cut a deal with Toyota on “new age batteries” of which Toyota, Honda, and a host of Japanese manufactures have been working on for many years. And with existing patent rights.
Its a shaky deal this big battery factory, but . . . due to hard times, the public will buy into it. And, that is not a bad thing, if they were properly informed.
There is much more, long range, forecasting that is needed before we commit to such a huge deal.
I bet cha, if someone would go to a Japanese\American auto maker they just might want to build such a facility in the USA and transfer technology the Japanese already own in this field.
When the Feds, Bill Clinton, approved the NAFTA deal that is when ASIA started to import factories and jobs to Japan, China, South America, and various no EPA no Labor Laws regions, of the world. China, as you know has been the big winner in this last Industrial Revolution.
In the days ahead there will be big trouble in CHINA as the difference between the HAVES and HAVE NOT is so huge, due to their population. And China’s abuse of its citizens.
As for this battery plan. It is a good idea but I think Commerce people need to look further into what is developing in others countries. It may be we could build a research center here, but the cost of labor in third world countries would make it hard to compete in the sale of a new product with a higher market cost.
If you think that does not matter, then look at the expansions by Fortune 500 Companies going on in China.
Caution . . . is what I would suggest.
Then, the Governor would not have a problem with incentives , especially in the neighborhood of one billion dollars.
Desperation . . . many times is a BAD TIME to make important decisions with such financial magnitude.
Jim Anderson Stivers
Bill Huff | Apr 17, 2009 | Reply
I agree with Jim Anderson Stivers…CAUTION IS THE
WORD!
Kentucky needs to consider reviving Farmer’s bill replacing state income tax and sales tax exemptions with tax on services…as an incentive for new jobs!
As part of their incentive package Ky should eliminate 20% of state tax expenditures, $100 million of bureaucracy, eliminate half billion of corporate tax shelters, reduce 3 tier tax sturcture to two by eliminating weight-distance tax revenues and enhancing motor fuels and truck registration fees by amount of weight distace tax revenues & collect all weight-distance, usage, u-drive-it and property tax evasion.
HaightAshbury | Apr 22, 2009 | Reply
It would be interesting to see a breakdown of the new jobs. Categorize them by skills, then for each skill list the number of new jobs in it and the hourly rate to be paid for each skill. Strictly talking full-time jobs, no part time and no indirect jobs either. I’d say that potential number of 2,000 would drop by several 100 easily.