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State claws back $28M from GM

Automaker also must invest $12M in Valley for breaking promise

Staff photo / R. Michael Semple Construction is in full swing in Lordstown for Ultium Cells LLC — a joint venture between GM and South Korea’s LG Chem on Tod Avenue.

LORDSTOWN — General Motors must refund the state $28 million for breaking job creation and retention tax-credit agreements the automaker received in 2008 to retool its former Lordstown assembly plant.

The Detroit-based company also must invest $12 million in the Mahoning Valley in education and training, community programs and / or infrastructure.

Those are the conditions of an agreement the Ohio Tax Credit Authority approved Monday with GM, which had faced the prospect of refunding the entire $60.3 million in credits it was awarded to upgrade the plant to produce the second-generation Chevrolet Cruze.

The partial repayment and investment was the result of “considering the effect of market conditions on the grantee’s project and the grantee’s other operations in Ohio,” John Werkman with Ohio Development Services said.

Both the repayment and community support payment must be made by Dec. 31, 2022. If not, the tax credit authority can revisit the matter for further action.

Monday’s action “protects taxpayer dollars, while also allowing for continued investment in the local community,” said Lydia Mihalik, Ohio’s director of development and chair of the tax credit authority.

GM was awarded a 75 percent, 15-year job retention tax credit worth about $46.1 million to retain 3,700 workers through 2028.

It also was given a 75 percent, 15-year job creation tax credit worth about $14.2 million to create 200 new jobs at the facility by 2010. The company exceeded the commitment by creating 800 jobs, but did not maintain operations through 2037.

GM violated the agreements in March 2019 when it shuttered the plant, ending 53 years of GM automaking in Trumbull County.

The state notified GM earlier this year of its intent to recoup the money and terminate the agreements.

GM argued it should be spared from refunding the money, contending doing so was inconsistent with the spirit of economic development and its significant presence in Ohio, where it has several plants that employ nearly 4,000 people and investments of $3.3 billion since 2009. It also pointed to the under-construction $2.3 billion electric vehicle battery-cell plant it and LG Chem of South Korea are building in Lordstown.

“We appreciate the Ohio Tax Credit Authority recognizing GM’s substantial manufacturing presence across the state of Ohio, including our significant investments in the Mahoning Valley, when making a decision on the Lordstown tax credit issue and the Ultium Cells LLC job creation incentives application,” GM spokesman Dan Flores said.

The tax credit authority also Monday awarded the battery-cell plant a 1.95 percent, 15-year job creation tax credit worth about $13.8 million on new payroll of about $45 million.

Discussions on the matter involving GM, Gov. Mike DeWine and Lt. Gov. Jon Husted, DeWine has said, were less about recouping the money and more about GM making further investments in Ohio.

“Ohio has a long and proud history with General Motors,” Husted said. “When I spoke with GM on Friday to confirm their commitment to Ohio, I emphasized our desire for Ohio to be the place where they invest in their future and that we would be a reliable partner in providing the workforce and business environment they will need to compete and succeed.”

The company announced later Monday it plans to invest $39 million at its Toledo transmission plant and $32 million at its Defiance casting plant, enabling it to retain 240 manufacturing jobs.

The Toledo investment will be used to upgrade and enhance the production of GM’s eight-speed rear-wheel-drive transmission and the Defiance investment will be used to prepare the facility for future engine casting components work, according to the company.

Attorney General Dave Yost, who was calling for GM to repay the full amount, said it was good news to hear GM would repay some of the financial incentives and thanked DeWine and his administration “for staying on top of this business relationship and holding them accountable.”

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