Receiving $900,000 in taxpayer money will not prevent a Michigan electric vehicle manufacturer from closing two locations and moving 188 jobs out of state.
BorgWarner, an Auburn Hills-based automotive supplier, plans to close two Akasol Inc. plants in Hazel Park and Warren. Layoffs will take place from April 14 to July, according to a notice issued to the state under the federal WARN Act.
According to a news release from 2023, the factories test electric vehicle products such as battery modules and packs, direct current fast charging equipment, and microgrid control and operations.
In 2019, the Michigan Strategic Fund awarded the company $2.24 million in taxpayer funds for its Hazel Park plant, with the expectation of creating 224 jobs. The money would be distributed over a five-year period as the company met job creation milestones.
However, the state and the company amended the agreement in 2022. According to an annual report from the Michigan Strategic Fund, the company received $900,000 instead of the $2.4 million promised over five years. The company created 66 jobs, according to the MSF report.
BorgWarner will close the plants to focus on growth, according to Michigan Capitol Confidential.
“Consistent with those efforts, we have decided to shift all battery production from our Hazel Park and Warren, Michigan, locations to our existing plant in Seneca, South Carolina,” according to an email from the business. “We believe in our battery product portfolio and the opportunity for continued growth as customers increasingly require innovative eMobility solutions.”
Michigan officials have given various companies billions of dollars in taxpayer money in exchange for jobs, but only one out of every 11 jobs promised has been created over the last two decades, according to a new study by the Mackinac Center for Public Policy. The study examined front-page news stories about government grants to private businesses from 2000 to 2020 and discovered that these deals rarely achieve job-creation targets.
When the Michigan Economic Development Corporation’s job deals fail, the agency redefines success and declares victory, according to John Mozena, president of the Center for Economic Accountability, who told CapCon via email.
“The MEDC is supposed to be guarding the interests of Michigan’s taxpayers and holding companies accountable, but they act like their real allegiance is to the companies that are getting the free money,” Mozena said in an email. “That’s not surprising, given that the MEDC’s board is made up of people who benefit from these deals rather than anyone who might be a skeptic or whistleblower.”
According to Mozena, Michigan cannot subsidize the auto industry into prosperity.
“Whether it’s traditional cars and trucks, electric vehicles, so-called ‘mobility’ or whatever’s next, Michigan needs to tell the industry to stand on its own feet, pay for its own factories and stop expecting Michigan’s taxpayers to artificially inflate their balance sheets,” he tweeted.
Michigan lawmakers approved $4.6 billion in subsidies for select private companies in 2023.
“This deal is another reason lawmakers, taxpayers, and voters should exercise skepticism about corporate handouts,” Michael LaFaive, senior director of fiscal policy at the Mackinac Center, told CapCon via email.
“State government confiscates taxpayer money to subsidize a company it thinks is a real winner,” LaFaive said. “Then it issues a celebratory and self-aggrandizing press release announcing the alleged job creation. The announcement is dutifully reported, if not cheered, in the press, only to see that big corporate winner transform into a big loser in the marketplace.”
The company was awarded a $900,000 MBDP grant. According to Otie McKinley, the MEDC’s media and communications manager, the original budget was $2.4 million, but it was reduced to $900,000 after an amendment was approved by the Michigan Strategic Fund Board.
