True cost unknown
The electric-vehicle hub that Ford and battery partner SK Innovation Co. chose to locate in Tennessee is a good example of how the full cost of an incentive package typically isn’t made plain to the public.
Blue Oval City, a six-square-mile site an hour’s drive northeast of Memphis, will house an assembly plant making the new electric F-150 pickup and a battery plant that together promise to create 5,800 jobs. Construction will generate 33,000 temporary jobs; once completed, the twin plants and their suppliers will support 27,000 direct or indirect positions, and add $3.5 billion annually to Tennessee’s economy, state officials have said.
When the project was announced, state officials disclosed a $500 million cash grant to be approved by the legislature. Local press reports later pegged the cost at $884 million.
In fact, contract documents obtained by Bloomberg show the value of the package is at least $2.4 billion, which includes tax breaks, donated land, infrastructure improvements and short-term wage subsidies from the federal government.
Even that figure is an undercount. It excludes an electricity subsidy provided by the Tennessee Valley Authority, the largest federal utility.
Tennessee officials said Bloomberg’s incentives calculation is “misleading” because some infrastructure investments were made years earlier, and some of the workforce training costs are estimates. They also argue that new property tax revenue, even at a reduced rate, is more than local governments would get without the project.
“Blue Oval City will be transformational for West Tennessee,” said Lindsey Tipton, a spokeswoman for the state’s economic development department. “For future projects, we will offer grant assistance, but at a much lower cost-per-job and more in line with a typical incentive package from our department.”
Ford said its decision was influenced by many factors beyond financial incentives.
“Public-private partnerships are essential for the U.S. to be a leader in the global transition to electric vehicles,” the company said in a statement.
Georgia and Rivian
Georgia, which has emerged as a big winner in the current investment surge, landed two $5 billion EV deals from Rivian and Hyundai that promise to create more than 15,000 jobs. The state offered incentives worth $3.3 billion to win the projects.
State economic commissioner Pat Wilson said Georgia competes by helping companies move fast with shovel-ready sites and limited red tape, rather than putting the most cash on the table. He called Bloomberg’s per-job incentives calculation “terribly misleading” because it includes tax breaks written into state law that aren’t discretionary.
“I view the incentives that we put on the table really as Georgia being part-investor in these projects,” Wilson said in an interview. “We know the payroll for those jobs and the benefits they provide are going to trickle out and benefit the health of communities and families all across the state.”
— With assistance from Sean O’Kane, Mark Niquette, Keith Naughton and Rob Golum.
