Johnson Controls Inc. will repay the state of Michigan $3.75 million and its tax exempt status is revoked as a result of not creating enough jobs at its Holland, Mich., lithium-ion battery plant.
JCI, based in the Milwaukee suburb of Glendale, Wis., which operates its automotive experience business unit out of Plymouth Township, has received $75 million in incentives from a state program created in 2009 designed to spur automotive advanced battery investment in the state.
However, while JCI invested the $175 million to open its Holland lithium-ion plant, it was projected to fall short of the target to create 400 jobs, said Josh Hundt, director of business incentives for the Michigan Economic Development Corp.
To maintain the relationship with the state, JCI notified the state it would not create those jobs and negotiated with the MEDC to repay a portion of the incentives, Hundt said.
In addition to the repayment, JCI is also losing its Renaissance Zone tax exempt status at the plant, which will result in additional state tax revenue of $125,000 annually, the MEDC said in a memo.
The MEDC has since amended its previous agreement with JCI, which now calls for additional job creation and/or investment. As part of the amendment, JCI must maintain its current 225 employment level at the plant through 2018 or pay back an additional $8.75 million or invest $22.5 million by that time, whichever comes first.
JCI's Holland plant was originally authorized to receive $100 million from the Cell Manufacturing Incentive program launched by the state in 2009. The funds, including a Renaissance Zone tax exempt status and another $48.5 million in state tax credits, were used as part of JCI's opening of a then-proposed $220 million battery plant in Holland. The plant was originally operated as part of a joint venture with French battery manufacturer Saft Groupe SA, before the groups decided to end the JV in 2011.
In 2012, the state amended the agreement, reducing JCI's tax incentive to $75 million from $100 million on the grounds that it create 400 jobs.
But JCI fell short of that total after the lithium-ion battery industry failed to catch on, affecting production.