According to the Michigan Economic Development Corp., the new agreement saves the state $51 million over the life of the tax credits by eliminating the remaining Business Tax credits and reduces the available state tax credit for advanced battery makers from $100 million to $75 million.
LANSING, MI - Johnson Controls Inc. is paying $3.75 million back to the state after failing to create 400 jobs at its Meadowbrook advanced battery plant in Holland.
The Milwaukee, Wisconsin-based company also agreed to maintain its current employment level of 225 jobs at the plant and invest another $12 million as part of an agreement presented to the Michigan Strategic Fund on Tuesday, Oct. 27.
The agreement also calls for JCI to pay back another $8.75 million to the state if employment at the 5-year-old plant falls below 225 jobs. The state also stands to get another $125,000 a year in taxes by revoking a Michigan Strategic Fund Renaissance Zone.
In 2009, Michigan economic development officials approved a Michigan Business Tax Credit valued at $48.5 million over 15 years for the plant. The project also became eligible for new Battery Cell State Tax credit that has a value of $100 million over four years.
According to the Michigan Economic Development Corp., the new agreement saves the state $51 million over the life of the tax credits by eliminating the remaining Business Tax credits and reduces the available state tax credit for advanced battery makers from $100 million to $75 million.
Tuesday's action marks the second time JCI has renegotiated terms of its tax credits with the state. The company negotiated a reduction in its original promise to create 550 jobs in early 2014.
The plant, located on W. 48th Street north of the West Michigan Regional Airport, was built with the help of a $299.2 million federal stimulus grant and $168 million in state grants and tax credits.
"However, due to slower than anticipated development of the advanced battery industry, the company does not anticipate the creation of 400 jobs by Dec. 31, 2018," according to a memorandum prepared for the Michigan Strategic Fund board.
JCI's Holland plant is one of two advanced battery manufacturing plants in the Holland area. Korean-based LG Chem also operates a battery facility that recently announced an expansion.
The LG Chem plant makes battery cells for Chevrolet's Volt and is starting up production for a yet-to-be-announced second vehicle platform. Industry observers speculate the new production will be for the Chevrolet Bolt, an all-electric vehicle that will be introduced in 2017.
LG Chem, which employs 318 workers in Holland and plans to hire another 70 to 90 workers in the next six months, hosted a media tour of the four-year-old plant last week to promote improvements made to the batteries that will power the second-generation Volt.
RELATED: Holland's LG Chem and GM show off 2016 Volt's new, improved battery
Jim Harger covers business for MLive/Grand Rapids Press. Email him at jharger@mlive.com or follow him on Twitter or Facebook or Google+.