Capital News Service

of the Michigan State University School of Journalism

Legislature mulls tax break for fifth battery maker

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By JORDAN TRAVIS
Capital News Service

LANSING – Any business hoping to claim a fifth advanced battery manufacturing tax credit will have until March 31, 2010, if Sen. Gerald Van Woerkom, R-Norton Shores, gets his way.

The lawmaker introduced a bill that would extend the deadline to apply for a credit of up to $25 million per year for four years. The bill, he said, was written with fortu PowerCell GmbH, a German battery manufacturing company, in mind.

A state program allows an eligible business to claim 50 percent of its capital investment expenses to construct a factory where battery cells will be made. To qualify, the business must create at least 300 new jobs in the state.

Van Woerkom said the company could create 300 jobs immediately and 750 in the long term.

Gov. Jennifer Granholm spoke with the German battery manufacturer during a trip to Europe.

The company said it would look at Michigan as a possible location for a new facility in the United States.

Van Woerkom said the tax credit would be only one of many incentives for the company to locate in Muskegon Township, including the location’s proximity to auto manufacturers and to Bayer CropScience, which the senator said produces chemicals fortu uses to make batteries, is another benefit.

Fortu has a similar arrangement in Europe with Bayer CropScience, he said.

The site is also near a rail line that connects to a deep-water port in Muskegon, he said.

Van Woerkom acknowledged that he was nervous about the bill’s fate since the state has already granted $400 million in tax credits for four other battery manufacturers, the maximum allowed under current law. However, he said he believes that other taxes paid by the employees will offset the lost revenue.

“If the jobs are created, those people will pay income tax, they’ll be purchasing goods in the state and paying sales tax, they’ll be living in houses and paying the property tax, and they’re good paying jobs at this factory,” he said. “I think that it’s a good investment.”

The tax credits are major tool in a strategy by the Michigan Economic Development Corp. to position the state as the “advanced battery manufacturing capital of North America.”

Battery tax breaks have been awarded to LG Chem-Compact Power Inc. for its $200 million battery plant in Troy, according to Granholm’s office.

Glendale, Wisc.-based electronics maker Johnson Controls Inc. and French battery manufacturer Saft Advanced Power Solutions also received the tax credit. The two companies will produce lithium ion power cells as a joint venture at their $220 million Holland plant.

The governor’s office said Midland-based Dow Chemical Co., Townsend Ventures and Lee’s Summit, Mo.-based Kokam America Inc. received a tax credit for their $665 million joint venture, KD Advanced Battery Group, in Midland.

A123Systems, Inc., a Watertown, Mass.-based battery developer and manufacturer, also received a tax credit for a $600 million plant in Livonia.

Van Woerkom’s bill passed the Senate 31-3, with Sens. Nancy Cassis, R-Novi, Jud Gilbert, R-Algonac and Alan Sanborn, R-Richmond, opposed. It’s awaiting action in the House New Economy and Quality of Life Committee.

© 2009, Capital News Service, Michigan State University School of Journalism. Not to be reproduced without permission.

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