July 12, 2024 | This Week in Government: Feds Provide $657M in Grants for MI EV Plants

Top officials announced the allocation of $657 million from the Department of Energy to give factories in the state the tools to transition to electric vehicle manufacturing and support manufacturing wages on Thursday.

The millions come from Domestic Manufacturing Conversion Grants from the Biden-Harris administration on the Electrified Vehicles program, providing grants for American production of hybrids, all electronic and hydrogen fuel cell electric vehicles.

“Today’s investment from the Biden-Harris administration’s Inflation Reduction Act will build on Michigan’s economic momentum as we compete to lead the future of advanced manufacturing,” Whitmer said in a statement. “These grants will help us retool our existing factories to build electric and hybrid vehicles right here in Michigan. We must be proactive if we are going to keep building the cars and trucks the people rely on in America, and I am proud that Michiganders are ready to roll up their sleeves and get it done.

A large chunk of the money is heading to General Motors to upgrade the Lansing Grand River plant with $500 million, which the press release stated would preserve 650 jobs and create 50 new ones while integrating the production of EVs.

The Marysville Facility for ZF North America will also receive $157 million plus another $10 million matching fund for advanced manufacturing through the Make it in Michigan Competitiveness Fund.

These plants are two of 11 across the country receiving funds as part of a $1.7 billion fund towards EV manufacturing.

In a separate statement, U.S. Sen. Debbie Stabenow and U.S. Sen. Gary Peters said this funding, which was part of the Inflation Reduction Act, will result in critical upgrades to the automotive industry.

“This funding announcement will be transformative for our state and ensures that Michigan will continue leading the way in production of vehicles that are safer, cleaner, and more efficient than ever before,” Peters said in a statement. “I was proud to fight to secure this funding, which will help modernize our auto facilities, support union jobs, and grow our state’s economy as we build the vehicles of the future.”

Stabenow said in the statement Michigan will continue to lead the way in the transitions to electric vehicles and a “clean energy future.”

U.S. Rep. Elissa Slotkin (D-Holly) said it is essential to economic and national security that electric vehicles, batteries and components are made in America.

“The funding announced today will also protect existing jobs and generate new ones while driving economic growth in the area,” Slotkin said in a statement. “It’s a clear win for Lansing.”

U.S. Rep. Hillary Scholten became the first member of Michigan’s U.S. House delegation to call for President Joe Biden to step off the Democratic ticket for president on Thursday, but Biden continued to insist he will remain his party’s nominee.

In a statement, Scholten praised Biden’s lifetime of public service but said it is “essential that (Democrats) have the strongest possible candidate at the top of the ticket” – and that candidate isn’t Biden.

“President Biden has spent his life serving our nation and building the next generation of American leadership,” Scholten said. “For the good of our democracy, I believe it is time for him to step aside from the presidential race and allow a new leader to step up.”

In a Thursday evening press conference, Biden appeared to stumble over some questions and mistakenly referred to Vice President Kamala Harris as “Vice President Trump,” shortly after he similarly mistook Ukrainian President Volodymyr Zelenskyy for Russian President Vladimir Putin. Despite questions about his age and fitness prohibiting him from winning reelection or being able to handle the stressors of the presidency in his mid-to-late eighties, Biden remained adamant that he wants to finish what he’s started in his first term and answered a number of questions in detail.

“I think I’m the best qualified to win,” Biden said. “But there are other people who could beat Trump too. But they’d have to start from scratch. We talk about money raised, and we’ve put $220 million in the bank. We’re doing well.”

Biden was at times forceful and defiant, firing back quickly when pressed about reported concerns from United Auto Workers President Shawn Fain about his viability as a candidate. “The UAW endorsed me,” he fired back. He insisted that his decision to continue his campaign “isn’t about legacy” and said he would only step aside if his advisors could show him proof that he will be unable to beat Trump.

He also spoke highly of Harris, praising her prosecutorial record and her readiness to assume the presidency were he unable to continue on. Several high-ranking Democrats have floated the idea of Harris assuming Biden’s spot on the top of the ticket.

“I wouldn’t have picked her unless I thought she was qualified to be president,” Biden said. “From the very beginning, I made no bones about that. She is qualified to be president.”

Scholten was the first Democrat in a swing district from a battleground state to request the president step aside. She said, though, that if Biden remains on the ticket, he will have her full support.

“Ultimately this choice belongs to the president and the president alone,” she said. “I will respect his decision if he chooses to remain in the race, and I will still vote for him, as a clear and necessary alternative to Donald Trump, who will sow chaos and destruction if he were to return to the Oval Office.”

Scholten handily won her seat in 2022 with 55% of the vote, but she’s also the first Democrat to represent Grand Rapids in the U.S. House since the 1970s. Republicans would love to flip the seat back, though the area has become much more Democratic than it was. However, Biden won the district by 8 percentage points in 2020 while it was a virtual tie in 2016 between Trump and Democrat Hillary Clinton.

If Biden is indeed trailing Trump in Michigan – as U.S. Rep. Elissa Slotkin (D-Holly) told her donors recently is the case – then the margin in Scholten’s district could look a lot more like 2016, far from a decisive Biden 2020 win or the runaway Governor Gretchen Whitmer enjoyed in 2022.

It remains to be seen whether Scholten’s public statement will open the door for other members of the Michigan delegation, and those in similar swing states, to call for Biden to step aside. Several Michigan representatives have voiced support for Biden staying on the ticket, including U.S. Rep. Shri Thanedar (D-Detroit) and U.S. Rep. Haley Stevens (D-Birmingham).

U.S. Rep. Debbie Dingell (D-Ann Arbor) has appeared more reticent, at times endorsing Biden heartily and at others saying she wished he had begun the task of convincing voters he’s fit for a second term earlier in his campaign.

“There is only one person that could address what happened (during the presidential debate), and he needs to show the American people that he has the stamina and the energy to stay in this race, win this race and run the country,” Dingell said in a July 9 interview with WJR-AM.

U.S. Rep. Rashida Tlaib (D-Detroit) has remained tight-lipped about her thoughts on the matter, striking a contrast with some of her progressive colleagues, like U.S. Rep. Ilhan Omar (D-Minnesota) and U.S. Rep. Alexandria Ocasio-Cortez (D-New York), who have come out in support of Biden staying on the ticket.

The Biden-Harris campaign sent an update on the race on Thursday, acknowledging “increased anxiety since the debate” but maintaining that there are still several paths to victory for the Democratic ticket. The main strategy identified by campaign chair Jen O’Malley Dillon was through Midwest swing states Michigan, Wisconsin and Pennsylvania, three states that were critical to Biden’s 2020 win. Trump won all three in 2016.

“We maintain multiple pathways to 270 electoral votes,” O’Malley Dillon said in the email update. “Right now, winning the Blue Wall states — Michigan, Wisconsin, and Pennsylvania — is the clearest pathway to that aim, but we also believe that the sunbelt states are not out of reach. The consensus across internal and public polling is that these states largely remain within the margin-of-error.”

Some Michiganders don’t seem confident in Biden’s ability to carry the state, though.

Slotkin found herself in a tight spot yesterday when The New York Times obtained a clip from a private call with donors to her U.S. Senate campaign, where she said internal polling has shown Biden lagging behind Trump in Michigan, potentially harming down-ballot Democrats. A spokesperson for Slotkin’s campaign did not return requests for comment from the Times or Gongwer News Service.

U.S. Sen. Gary Peters (D-Bloomfield Township) and U.S. Sen. Debbie Stabenow (D-Lansing) both confirmed their support for Biden staying in the race on Wednesday.

Whitmer, who has continuously reiterated her belief that Biden is the best candidate to beat Trump in November and is a national co-chair of his campaign, admitted Biden’s debate performance deserved questioning from voters in an interview with the hosts of WWPR’s “The Breakfast Club” in New York City on Thursday morning.

“We all watched that debate, and you know, it was bad. That’s an understatement,” Whitmer said. “It was really bad, horrible, and it shook a lot of people, and people are asking questions. And I don’t have a problem with that. You should ask questions; you should demand that your leaders are up to the job. I believe that Joe Biden is.”

Biden is set to arrive in Detroit Friday afternoon and will visit Texas and Nevada next week.

“In our polling, we have seen that when we remind voters what Trump has done and said — bragging about overturning Roe v. Wade, saying that there has to be some form of punishment for women who have an abortion, proposing cuts to Social Security and Medicare and tax cuts for big corporations — the voters who moved away from us after the debate came home,” O’Malley Dillon said. “And, after hearing messaging about the stakes of the election, we move ahead of Trump in vote choice.”

The imposition of restitution is meant to be a civil remedy and not a form of punishment that adds to the weight of a sentence and is therefore not a violation of constitutional ex post facto clauses, a unanimous Supreme Court ruled Monday.

In an opinion written by Chief Justice Elizabeth Clement, the entire bench upheld a 2022 unpublished decision from the Court of Appeals in a winding criminal case that involved the resentencing of the defendant in People v. Neilly (MSC Docket No. 165185).

The case centered around a Kalamazoo Circuit Court conviction of the defendant for first-degree murder and other felonies, who was 17 years old at the time of the crime. He was sentenced to mandatory life without parole, but without a restitution order.

In Miller v. Alabama and Montgomery v. Louisiana, the U.S. Supreme Court ruled that mandatory LWOP sentences were unconstitutional for people under the age of 18 years old.

On resentencing, a Kalamazoo Circuit Court judge issued a sentence of 35 to 60 years in prison instead of life without parole. It also ordered the defendant to pay nearly $15,000 in restitution to the victim’s family.

The defendant argued the order violated both the U.S. and Michigan constitutions’ ex post facto clauses because it added to his punishment.

In an unpublished opinion, the Court of Appeals held that restitution was a civil remedy and not a form of punishment, and the imposition did not increase punishment of the new sentence imposed.

Upon hearing the case, Clement and the high court bench agreed.

“In enacting the restitution statutes, the Legislature intended to create a civil remedy. Although the imposition of these statutes has some punitive effect, that effect is not sufficient to overcome the demonstrated legislative intent,” Clement wrote. “Accordingly, the imposition of restitution is not punishment. Given this conclusion, the trial court’s application of the current restitution statutes on defendant during resentencing does not violate the Ex Post Facto Clauses of the United States and Michigan Constitutions because it does not constitute a retroactive increase in punishment.”

The Michigan Strategic Fund Board  voted Tuesday to approve a $5 million grant to the Troy-based company Gestamp North America, which is seeking to expand its metal auto parts manufacturing operation in Michigan with a new facility in Macomb County and updates to facilities in Lapeer, Washtenaw, and Ingham counties.

The grant, and subsequent state essential services assessment exemptions valued at $5.9 million, are aimed at incentivizing the company to keep expanding its operations in Michigan.

“The expansion of Gestamp’s locations in Mason, Lapeer and Chelsea, with plans to open a fourth location in Chesterfield, will solidify the company’s presence in the state and support our position as a leader in the future of mobility and vehicle electrification, while bringing immediate job growth to our automotive ecosystem,” Michigan Economic Development Corporation Chief Executive Officer Quentin Messer said.

When asked on a media call why the MSF would seek to incentivize a company already operating at multiple locations in Michigan, MEDC officials defended the grant and exemptions as an opportunity to keep Gestamp from establishing new facilities in southern states like Texas or Oklahoma.

“The companies could invest elsewhere. They could decide to consolidate facilities outside of the state,” Messer said. “Just because they’re going to continue to invest in their Michigan footprint, it’s not a foregone conclusion that that’s their only option. So that’s why there’s an opportunity for us to do risk the investment, which is our objective with any incentive, and to do it in a fiscally prudent way.”

Gestamp’s director of communications, Susanna Tello Pozo, said the company functions as an “invisible hand that shapes the metal components that make up a vehicle” and is expanding its physical presence in Michigan to respond to the electrification of the auto industry.

“We are here to be sure that we are ready for customers during the electrification of the country and also to support staples that are still on the road and will be for a while, so that the customers can really choose what is their best mobility future,” Tello Pozo said. “Gestamp has decided to choose Michigan to grow our Mason, Chelsea, and Lapeer operations (and establish a new facility) in Macomb County that will take our workforce up to over 500 people and double our assets in this space by 2028. We are proud and thankful to have the support of the government to grow our business and the automotive hub.”

The board also approved a handful of grants for projects in Detroit and Pontiac, as well as smaller-dollar investments in business projects in Lansing, Marquette, and Farmington.

The Michigan Strategic Fund Board approved a new, reduced plan for incentives directed at Ford’s BlueOval battery plant, currently under construction in Marshall, after the auto maker slashed nearly $1 billion in what it plans to spend on the project and downsized the scope of job creation the sprawling plant is expected to generate.

Ford was set to receive an incentive package valued at roughly $1.03 billion from the Michigan Economic Development Corporation prior to the company’s scale back of the plant project, which is planned to be a hub for electric vehicle battery manufacturing. After Tuesday’s MSF board meeting, the incentives will be valued between $384 million and $409 million.

The Marshall site is currently undergoing construction, which Ford said is 20% complete. MEDC Chief Executive Officer Quentin Messer said the new incentive agreement was reached through mutual discussions between Ford and the state, and that the new figures are proportionate to Ford’s investment in the project.

“The restructured incentive package will appropriately address Ford’s revised project scope, balancing the company’s investment and growth in Michigan and allowing the company to proceed with establishing a new EV battery manufacturing facility in Marshall,” Messer said.

Tony Reinhart, Ford’s director of state and local affairs, thanked the MEDC and MSF Board for their cooperation and support for the project.

“We are nimbly adjusting our manufacturing operations to match evolving customer demand and the Michigan Strategic Fund board is revising its incentive offers accordingly,” Reinhart said in a statement.

The project was initially also approved for a Renaissance Zone break of $772 million, which was struck from the new package. However, MEDC officials said an approximately $224 million State Education Tax abatement, an increase from the original $52 million tax break, will help make up the difference.

“As part of the resizing, the Renaissance Zone was considered,” MEDC developer Christin Armstrong said. “The revised package would include a set of payments in lieu of the Renaissance Zone. There is still a need or desire to keep a tax abatement on the table for this project, and we went with one that was a smaller overall abatement.”

Incentives for the expansion of other Ford electric vehicle manufacturing sites across the state were also modified by the board, based on job creation targets not being fully met at each plant. Ten facilities were approved for a grant of over $100 million, to be awarded if they could meet a threshold of creating 90% of the 3,030 projected new jobs.

“The job targets at each of those project sites did not pan out as originally expected,” Armstrong said. “They had both overall and project specific job targets, that while they met the overall target, the original approval required them to meet specific requirements as well. And that didn’t happen. We did not execute the agreement for this. So, this is just a mutual termination or rescission of that approval.”

The Project Site Commitment was not met because of a low headcount at Ford’s Rouge Electric Vehicle Center, Armstrong said. While exceeded minimums at other locations helped Ford meet the overall job commitment requirements, the Rouge plant’s insufficient staffing numbers held it back from meeting the site-specific requirements. As a result, Ford and MEDC will forgo the initial grant and instead add a waiver of the State Essential Services Assessment program guidelines to “allow investment in Eligible Manufacturing Personal Property” over the term of the 15-year SESA exemption agreement.

The changes in incentives for Ford did not subject the MEDC’s agreement with the Marshal Area Economic Development Alliance, MAEDA, to any change. MAEDA praised the MSF’s approval of the new incentives for Ford, saying they will help move forward a project that has already been beneficial to the Marshall area.

“We’re excited to see this project move forward after we’ve had about 20 years of stagnant growth in the community,” Marshall City Manager Derrick Perry said during public comment at the board meeting. “We’ve lost about 2,000 jobs over that time period and this project would help bring those jobs back… it has done that already with construction jobs, we have about 250 construction jobs onsite that will ramp up to about 1,000 by the end of the year.”