Michigan Senate narrowly clears $175 million for China-linked Gotion plant

• A Senate committee approved $175 million in state incentives for the Gotion Inc. EV battery component factory near Big Rapids
• The vote was 10-9, after three Democrats joined the six Republicans in opposition
• The close vote reflects growing unease over deals with companies linked to China and over the state’s business incentive spending 

LANSING — State funding for a controversial $2.3 billion electric vehicle battery factory near Big Rapids narrowly passed its last hurdle on Thursday, with the Senate Appropriations Committee approving the transfer of $175 million to support Gotion Inc.

With the move, the state is now funding a portion of four new EV battery factories after starting a $1.6 billion program in December 2021 to lure large-scale industrial projects to Michigan.

While incentives began with popular support, Thursday’s 10-9 committee vote underscores a growing, bipartisan discomfort with promoting companies with ties to China and with the state’s incentive system, with three Democrats — Jeff Irwin of Ann Arbor, Rosemary Bayer of Keego Harbor and Sylvia Santana of Detroit — joining the six Republicans on the committee in opposing the Gotion deal. 

Related:

• Gotion controversy tests longstanding Michigan-China economic ties
• Jobs v. China: How politics, communist ties roiled $2.3B Gotion plan in Michigan
• Amid Gotion furor over China, Michigan vows to change how it vets firms
• Chinese EV battery factory planned near Big Rapids faces renewed scrutiny

But a win is a win and economic developers praised the “once-in-a-century opportunity” that the large-scale investment, with its estimated 2,350 jobs, brings to a region that Appropriations Chair Sarah Anthony, D-Lansing, described as “one of the poorest communities in the state.”

Critics — including nearly 20 people who urged the committee to deny the funding, either in person or on submitted forms  — warned of potential environmental damage from the 3-million-square-foot battery plant facility and feared national security threats due to Gotion Inc. parent company’s connections to the Chinese Communist Party. 

Thursday’s committee action fulfills the offer to Gotion from the state’s Strategic Outreach and Attraction Reserve (SOAR) fund for large-scale projects, Anthony said, and also meets Gov. Gretchen Whitmer’s goal of bringing jobs to economically depressed areas of the state. The committee considered those aspects, in addition to concerns raised about the company’s ownership, before a majority of Democrats approved the funding, she said.

"It is a point of privilege for individuals to say that good paying jobs ... for a very rural, very low-income area should not be considered with (that kind of) due diligence,” Anthony said. 

The funding is a legacy of the former Republican-led Legislature, which did not address the award promised to Gotion Inc. last October before the new Democratic legislative leadership took office in January. Anthony and other Democrats said they plan to make changes to the state’s incentive offerings, though they’ve released no details. 

The vote releases the $175 million to the Michigan Economic Development Corporation, which oversees the SOAR Fund. Of that, $125 million will be a grant to Gotion after the factory is operating, while $50 million will go to The Right Place economic development group in Grand Rapids for site preparation and land acquisition.

While parent company Gotion High-Tech was founded in China and operates under rules that align businesses with the Communist Party, Gotion Inc. operates in the U.S. as a wholly owned subsidiary with no connection to Communism, said Chuck Thelen, Gotion Inc. vice president.

Thelen told the Senate committee on Thursday that the company’s filing through the federal Committee on Foreign Investment in the United States for an undisclosed company facility in another state requires no further review. The company also voluntarily sought a review for the Big Rapids-area project in Green Charter Township and expects  “a similar … outcome.”

Two local public officials were the only ones to speak in favor of the project Thursday. Jim Chapman, supervisor of Green Charter, and Jerrilyn Strong, chair of the Mecosta county Board of Commissioners, attended via Zoom.

Expected pay for up to 2,350 workers is important, they said. Starting production wages should be $24 per hour — or about $50,000 per year — plus benefits, Thelen told Bridge recently. The local officials also insisted that Gotion has addressed all concerns raised about its company and potential operations in the township.

The project, Strong said, “is a great opportunity for the people in Mecosta County and the surrounding area. … I believe this project will be critical to the future of our region and our state.”

But it was opponents who filled the hearing room, where Senate committee members arrived to find notes at their seats urging a no vote. Speakers asked the committee to delay the vote until more information could be gathered on Gotion. Geopolitical concerns were top of mind.

“Our own president is using sanctions against Russia because economics is a weapon,” said Big Rapids area resident Larry Finkbeiner. “Money leaving this project going home to China is a weapon.”

While some Democrats joined Republicans against the transfer, their reasons differed. 

“If we are going to directly subsidize development, it should be for jobs that provide a thriving wage,” Irwin, who has been against incentives, told Bridge after the vote.

Opposition from legislators who represent the Big Rapids area was a factor as well, Irwin said. 

“If they don’t want state investment it seems odd to push it on them,” he said. “That is especially true when we have more important economic development priorities that are desperate for investment, such as transportation.”

The company’s origin in China was a factor for Sen. John Damoose, R-Harbor Springs, to vote against the transfer.  While a supporter of rebuilding manufacturing in Michigan, Damoose said he’s uncomfortable with statements from the Chinese government that they expect more conflict with the U.S.

“This is a matter of national security,” Damoose said. 

He’s not against all ties to China, he said, since many companies already are based in Michigan. However, Damoose said, “we need to be smart .. in terms of who we give money to going forward.”

Both Democratic and Republican party leaders also weighed in on the vote. 

“Extremists in the Michigan GOP have spent weeks promoting baseless conspiracies that only work to block the thousands of good-paying, American jobs Gotion plans to bring to our state,” Michigan Democratic Party Chair Lavora Barnes said in a statement, calling the effort “scare tactics.”

 “The reality is that projects like this one will create financial opportunities for residents in Big Rapids who are looking to provide for their families.”

Kristina Karamo, chair of the Michigan Republican Party, spoke against the project in the hearing, and again to reporters after the vote, when she said the state should not accept Chinese investment. 

“It’s unbelievable that we’re even here at this moment  … considering giving millions (to Gotion),” Karamo said. A yes vote on the transfer, she said, would mean “you are a traitor to this Republic,” she told the committee.

Meanwhile, Tudor Dixon, a Republican who ran against Whitmer in the 2022 gubernatorial race, first raised questions about the state giving incentive funds to Gotion Inc. during the campaign last fall. On Thursday, after the vote, she reiterated her stance against the project.

“This is a massive slap to local residents who adamantly oppose the project,” Dixon said. 

Among them is Marjorie Steele, a resident of Grant Township, east of the proposed factory, who vowed ongoing grassroots opposition, including recalls. A petition has been filed against Chapman and Steele said more initiatives are expected. 

“This is not just Mecosta County … this is a community effort to stop not just this project, but to stop all of these ill-vetted EV battery projects that are being forced on pristine rural communities across the state,” she said. 

Other battery production sites are in development in Delta Township, where a General Motors partnership with LG Energy Solutions of South Korea is building an Ultium Cells factory, and in Marshall, where Ford Motor Co. plans to build an assembly plant with licensed technology from partner Contemporary Amperex Technology Co. Limited (CATL) of China. 

State officials, including Whitmer and Quentin Messer Jr., CEO of the MEDC, have cheered the investment in large-scale battery factories for their jobs and also to keep the newer developments in the automotive industry within the state.  Multiple states are competing for the projects, including several in the South, even as Michigan remains a hub of production and R&D.

With the Gotion vote, “we are optimistic for Michigan’s continued preeminence in EV and all other forms of mobility,” Messer said.

But Steele said the scale of the projects on hundreds of acres put an undue impact on rural communities that host them.

“We don’t care about the automotive industry,” she said. “We care about our farms. We care about our food. We care about our community … not transforming in ways we don’t want it to. 

“It’s not our job as the Big Rapids community to fix the entire automotive industry.”

In addition to the $175 million approved on Thursday, Gotion Inc. also received a $540 million, 30-year tax break last fall from the state and incentives worth about $38 million from Consumers Energy. The project now will proceed under regular permitting, such as through the township for the site plan and state environment regulations for systems like water and any chemicals onsite.

After the Gotion funding is disbursed, $526 million remains in the SOAR Fund reserves,