Johnson Controls Inc. has agreed to repay the State of Michigan $3.75 million as a result of failing to create at least 400 jobs at its lithium ion battery plant in Holland, Mich., according to the Michigan Economic Development Corp. It also had its tax-exempt status revoked.
Milwaukee-based JCI has received $75 million in incentives from a state program created in 2009 to spur automotive advanced-battery investment in the state.
JCI invested $175 million to open its Holland lithium ion plant, but it was projected to fall short of its jobs target, said Josh Hundt, director of business incentives for MEDC.
JCI notified the state it would not create those jobs and negotiated with MEDC to repay a portion of the incentives, Hundt said.
JCI also is losing its Renaissance Zone tax-exempt status at the plant, which will result in additional state tax revenue of $125,000 annually, MEDC said in a memo.
MEDC has since amended its 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 originally was authorized to receive $100 million from the Cell Manufacturing Incentive program launched by the state in 2009. The funds, including the 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 originally was operated as part of a joint venture with French battery manufacturer Saft Groupe SA, and was once thought to be on track to create 550 jobs. The two companies ended the partnership in 2011, leaving JCI in control of the Holland plant.
In 2012, the state amended the agreement, reducing JCI’s tax incentive to $75 million, with a target of creating at least 400 jobs at the facility.
But JCI fell short of that after sales of electric vehicles and lithium ion battery demand failed to take off, leaving its plant well below production forecasts.