Lawmakers: Spending $660K per job for Sandisk would have been tough sell

• Lawmakers say they are shocked Michigan was prepared to offer $6.2 billion to Sandisk to build a semiconductor factory near Flint 
• The deal would have faced a tough sell in Lansing, they said, noting it was worth more due to a 50-year tax break
• The situation renewed discussion about the state’s economic development policy and whether it’s effective

Michigan lawmakers say they’re shocked by the $6.2 billion incentive package Gov. Gretchen Whitmer’s administration had offered in a doomed bid to land a semiconductor factory — and the proposal would have faced a tough sell in Lansing.

“I know there would be a lot of pressure to vote yes on it, but given the lack of success on (earlier big incentive) projects, I think it would have been a very, very hard lift,” said state Sen. Mallory McMorrow, D-Royal Oak.

Whitmer’s announcement on Wednesday that Sandisk ended negotiations to open a $63 billion semiconductor factory in Genesee County renewed a debate that has percolated in recent years in the Legislature about the value of tax incentives.

Michigan’s Sandisk deal —  which included land acquisition, job training and $1.9 billion in cash — would have been the equivalent of paying $660,000 for each of the 9,400 jobs promised by the project.

The collapse of the project “is a time to celebrate for the people,” said state Rep. Steve Carra, R-Three Rivers, chair of a state subcommittee examining corporate subsidies.

“It’s an abuse by the government to compel taxpayers to pay for corporate handouts.”

The reaction comes after Bridge Michigan on Wednesday reported the full details of the Michigan Economic Development Corporation’s incentive offer. The state signed an agreement with Sandisk in August 2024 to pursue a series of fabrication factories — or “fabs” — on a 1,300-acre megasite near Flint. 

Michigan spent $260 million in state funds to assemble and prepare the megasite for development. 

Besides cash, the offer included: 

• Tax reimbursements and exemptions on construction materials worth $3.7 billion. 
• Additional awards for workforce training, road improvements, land acquisition and more worth $802 million
• A 50-year tax break with an undisclosed value

Besides jobs, the company in turn promised $500 million in community payments instead of taxes over 50 years.

The deal was important to Whitmer, who’s lobbied all year for an extension of large-scale subsidy funding through SOAR. More recently, she visited the Flint area to say she was dedicated to landing a semiconductor factory as a transformational economic boost by the time she leaves office at the end of next year.

Speaking to reporters Thursday, Whitmer did not answer questions about the incentives package. But she said she called President Donald Trump on Wednesday and told him the deal’s failure was “very disappointing.”

She had said Wednesday that the deal fell apart due to “national economic turmoil.”

Trump, she said, told her, “We are going to work together and get an even better deal for the state of Michigan.”

“Time kills deals,” Whitmer said. Getting the US Department of Commerce to move forward on awarding Sandisk a federal grant “was very challenging,” Whitmer added. 

“And (there are) lots of other challenging things in the economy right now, from tariffs to a lot of other uncertainty,” she said. “We're hearing from businesses every single day what it means in terms of their ability to make investments and why we're seeing paralysis.”

Sandisk has not commented on its reasons for ending negotiations in Michigan.

While much of the incentive package would not have needed approval from lawmakers, they would have had to sign off on the $1.9 billion from the state’s Strategic Outreach and Attraction Reserve (SOAR) Fund.

“This is one of the most insane things that I've seen in the history of corporate handouts,” said Rep. Dylan Wegela, D-Garden City.

“It's actually insulting to the people of Michigan that we would spend $6 billion in tax money to bring one single project in one corporation here,” Wegala told Bridge on Thursday. 

Instead, he said, the money could improve schools, upgrade water infrastructure and fix public spaces. 

“If I were to have a chance to vote on this,” Wegela said, “I would be voting hell no.”

State Sen. John Cherry, D-Flint, said he was shocked to learn Wednesday of Sandisk’s decision. He’d supported the effort due to the potential job gains near Flint, which has lost jobs over decades of manufacturing disinvestment. 

But he also hadn’t known the dollar value of the subsidy offered to Sandisk. When it comes to an opinion on the $6.2 billion subsidy, Cherry said, “I’m still processing that.”

Cherry said having an incentive plan is important to the state, but not one that “wins” by spending more. 

“You want to remain competitive,” Cherry said, but not by bidding up other states.

Related:

• Michigan loses massive semiconductor plant. Whitmer blames ‘national economic turmoil’
• Whitmer’s semiconductor dreams near Flint become nightmare for neighbors
• Gretchen Whitmer’s big goal: A Michigan chip plant before she leaves office
• With Flint megasite deal, Michigan tops $1B in spending on development land

But how other states use incentives to create jobs also offers a way to compare Michigan’s spending and the value it receives from subsidies, he added, “so that we're improving the effectiveness of our incentive plans.”

A Bridge Michigan investigation in spring showed that during Whitmer’s tenure just one-fifth of promised jobs were actually created after subsidy awards. Among the slowest: The largest deals, including advanced manufacturing.

“This strategy of trying to cut a check to land a company doesn't work,” Rep. Bill G. Schuette, R-Midland, told Bridge.   

When the Sandisk withdrawal was announced, “it was very easy” for Michigan’s Democrats to blame Trump and national policies, Schuette said. 

Harder to do, he said, is to evaluate Michigan’s competitiveness under Whitmer’s two terms since 2019 and the two-year Democratic “trifecta” leadership until this year. 

“It's important that we take a look at Michigan and ask, ‘How can we get more competitive?’” Schuette said. “And I'd encourage us all to get serious about that.”

McMorrow, meanwhile,  has spent several years urging incentive reform, including a recent bipartisan proposal with state Sen. John Damoose, R-Harbor Springs, that calls for a 10-year plan for the MEDC.

In fact, she added, she’s requested information from the MEDC on how many dollars are promised in letters of intent, but has yet to get a response. 

“We’ve never gotten a clear answer,” she said. “We've got to get to a place where we have a plan that not just the Legislature but the public can see and buy off on.”