‘Voltage Valley’ Receives $12M Jolt from GM Tax Clawbacks

YOUNGSTOWN, Ohio – Four entities in the Mahoning Valley will share $12 million in financial commitments from General Motors that was negotiated as part of the company’s restitution for closing its Lordstown assembly complex in March 2019.

“This was a collaborative effort,” Lt. Gov. Jon Husted said during a press conference with Gov. Mike DeWine Thursday.  “We listened to all of the voices in the Valley,” as to where to make these investments. 

Most of the investments are geared toward supporting the region’s development as a hub for electric-vehicle manufacturing, Husted said. The money would be split among Youngstown State University, the village of Lordstown, Eastgate Regional Council of Governments and the Mahoning Valley Manufacturers’ Coalition. 

The money is part of a settlement between the state of Ohio and GM after it was determined that the automaker violated the terms of two tax credit agreements it signed in 2009 that pledged to keep the Lordstown plant open.  

The Mahoning Valley Manufacturers Coalition is slated to receive $1.5 million to support community workforce development initiatives, as well as bring awareness to advanced manufacturing efforts such as additive manufacturing and energy technology. 

“GM is going to be reinvesting in the community and we are certainly happy to be part of that reinvestment,” Jessica Borza, executive director of the MVMC, told the Business Journal Thursday.

MVMC will partner with America Makes in Youngstown and Brite Energy Innovators in Warren to focus on improving career guidance initiatives for area students and the existing workforce, Borza says. The groups will work with individuals who advise middle school and high school students, as well as post-secondary students, and “equip them with best-in-class assessment tools and information about modern manufacturing careers” to put students on career paths more aligned with their interests and aptitudes, she says.

“We’re envisioning that these resources will allow use to provide professional development opportunities to people who are already in those roles in the community,” Borza says. “We’re pretty excited about it. There’s a lot of work to do in this space and a lot of partners involved.”

Career guidance professionals who work with individuals looking to change their careers or receive additional training will also benefit from the partnership, she notes.

The $1.5 million sum has a two-year life to it, after which Borza expects the initiative will have created a “learning community” for career guidance professionals where they can work together and learn from each other “so we do the best job possible and getting really solid information out to students” and the community, she says.

Borza looks to quickly bring the partners together and, in short order, formulate a plan and goals for the next two years.

“We’re really excited about strengthening our relationships with America Makes and Brite,” she says. “With all of the economic activity related to those technologies, I think it makes a lot of sense to make sure that technology and those skills and career opportunities are infused into the work we’re doing and have a place in the career pathways as well.”

Under the agreement, YSU will receive $5 million dedicated to a workforce development partnership with Eastern Gateway Community College and YSU’s new Energy Storage Innovation and Training Center, Husted said.

The partnership will focus on talent recruitment, training and retention and help provide a skilled workforce to meet the needs of companies in the Mahoning Valley, including Ultium Cells LLC, Lordstown Motors Corp. and the new TJX distribution center, all under development in Lordstown.

“As we’re trying to build an entire new industry in the Mahoning Valley, we’re going to have a premier education and training facility right there with Eastern Gateway and Youngstown State,” Husted said. 

YSU President Jim Tressel said in a statement that the university intends to contribute significantly to the region’s transformation. 

“YSU and our many partners are committed to playing a major role in training, research, innovation, infrastructure and workforce development services in order to help transform the economic engine of our region,” he said. 

In addition, the village of Lordstown will receive $3 million to construct a second water tower to support ongoing development activity there, most notably the Ultium Cells LLC plant now under construction. 

“The village of Lordstown appreciates the consideration of $3 million for the improvements to our water system,” said Mayor Arno Hill in a statement. “This greatly assists us in preparation for current and future needs.”

Ultium Cells LLC, a joint venture between GM and Korea-based LG Chem, is building a $2.3 billion battery cell manufacturing plant in Lordstown. The company recently doubled its land holdings at its site along Tod Avenue, leading many to speculate about a potential expansion there. Production is expected to begin at the plant in the first quarter of 2022.

Eastgate Regional Council of Governments will receive $2.5 million, using the money to invest in local infrastructure improvements, including the development of a proposed Lordstown Smart Transit Corridor to enhance business sites surrounding Lordstown. 

In an application for a grant from the Department of Transportation, a coalition sought funding for an intermodal facility using autonomous vehicles, a smart fiber corridor extending from the village to downtown Warren and a mobility data center. The application was rejected in September.

The funding will also support battery, advanced energy, and electric-vehicle charging technology, furthering the “Voltage Valley” strategic initiative, and expanding broadband in the region, according to a news release from the Ohio Development Services Agency.

“Serving as the region’s Metropolitan Planning Organization, Eastgate is well positioned to leverage this GM investment for the benefit of the entire region,” said Jim Kinnick, Eastgate’s executive director said.  “Our near-term focus will be on enhanced infrastructure to support job growth and workforce development in the Lordstown region.” 

GM received tax credits worth $60.3 million in 2009 as the Lordstown plant was preparing to launch the Chevrolet Cruze. The credits were made available under the condition that GM Lordstown would remain open at least until 2024. GM shuttered the factory in March 2019 and officially closed the plant that October.

GM sold the plant to Lordstown Motors Corp., which is in the process of developing the first all-electric pickup truck. 

In June, The Business Journal and ProPublica first reported that the state determined GM stood in violation of the agreements and indicated it could pursue a clawback of the entire amount. General Motors countered that it shouldn’t repay all – or at least most – of the tax credits since market forces beyond its control led to the shutdown of the plant.

In late September, the Ohio Tax Credit Authority terminated the two agreements and determined that GM repay $28 million of the total tax credits and also provide another $12 million in community development assistance in the Mahoning Valley.  The company has until the close of 2022 to fulfill its obligations.

It is considered the largest clawback in U.S. history, according to development specialists.

The $28 million tax credit repayment will be worked out between GM and the Ohio Department of Taxation.

“This agreement provides investment in workforce, education, and infrastructure that will build on the Mahoning Valley’s strong manufacturing heritage,” DeWine said in a statement. “This investment will position the region for economic growth in the automotive industry and beyond.”

Husted noted that he expects GM’s longtime association with the Mahoning Valley to continue well into the future. 

“I think this agreement solidifies that,” he said. “It protects taxpayer dollars and invests in this new industry – the electric-vehicle industry.”

Pictured: General Motors headquarters in Detroit. Image via Image: paul (dex) bica from Toronto, Canada [CC BY 2.0])

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