The biggest economic development deal in Kentucky history also comes with what is likely the most generous corporate subsidy the state has ever offered.
Officials on Thursday gave final approval to a $250 million contribution of public money to BlueOval SK, the joint venture of Ford Motor Company and South Korea’s SK Group. BlueOval is building a $5.8 billion pair of plants near Glendale that will employ 5,000 people making batteries for electric vehicles.
Kentucky has previously offered subsidies in the hundreds of millions to big manufacturers such as Toyota and Ford, which also operates auto plants in Louisville.
This time, however, the $250 million awarded to the Glendale-area battery park will be paid upfront.
Typically, corporate incentives in Kentucky and other states are doled out over long periods, such as a decade, to reduce the risk that companies pocket the money without providing the promised economic benefits.
Kentucky officials say they have the legal wherewithal to claw back the state’s money from Ford and SK should the battery park, already under construction, not materialize as planned.
Kentucky officials on Thursday approved a similar award of $116 million to Envision AESC, the Japanese company that plans a $2 billion EV battery factory in Bowling Green.
The upfront funding of the EV battery makers comes as loans whose balances will be forgiven over time as the companies hit targets for job creation and average total compensation.
For the Ford-SK project, the companies must create 2,500 jobs by the end of 2026 paying average hourly compensation of $26.41, a figure that includes the value of employee benefits in addition to wages. The target grows to 5,000 jobs with average pay of $30.04 per hour by the end of 2031.
For Envision, the company must create 772 jobs by 2029, growing to 2,000 by 2031, with average hourly compensation of $39.88 per hour, according to state documents.
If the companies fail to meet those targets, they could be forced to make prorated repayments of the loans or to repay the full balance, depending on how far short they fall. The targets are measured annually for 10 years, after which the companies won’t face the possibility of repayment demands.
Kentucky’s collateral for the battery plant loans is not a claim on any specific company assets, but guarantee agreements given by the corporate parents of Ford, SK and Envision, according to state documents made public Thursday.
For Ford and SK, the $250 million is only part of Kentucky’s subsidy package. It also includes 1,500 acres of land that Hardin County transferred to BlueOval at no cost in October. The land was valued at $27 million, according to the deed. Kentucky is also spending $25 million to establish a workforce training center run by Elizabethtown Community & Technical College.
Source: WDRB
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