MEDC Admits Failure of Gotion Project Mackinac Center Warned About

MIDLAND, Mich. —  The Mackinac Center for Public Policy is pleased by the candor of the Michigan Strategic Fund in pulling the plug on the long and costly Gotion Inc. electric vehicle battery parts factory project in Mecosta County. But the failure of this project and its steep cost to the people of Michigan has been obvious for many years.

The Michigan Strategic Fund has declared China-based Gotion High-Tech Co. Ltd. to be in default of its obligations to the state under a 2022 grant agreement. The chief operating and performance officer for the Michigan Economic Development Corp. tells Crain’s Detroit Business she does not “foresee a world in which this project goes forward.” The state has suspended subsidies to the project and is seeking to claw back $23.7 million taxpayers have already lost.

Over the course of three years, as the Gotion factory faced steep local opposition and the company engaged in a lawsuit against Green Township, Gov. Gretchen Whitmer and other officials made extravagant promises of a $2.4 billion factory that would create 2,350 high-tech jobs.

But the Mackinac Center has established, through both broad market research and intensive reporting on this specific project, that there was never a serious hope that the Gotion plant would deliver on the promises. The positive and somewhat distinctive element in this case, as opposed to the many other state-subsidized projects that have crashed and burned, is that the Michigan Economic Development Corp. this time admits defeat, so there is reason to hope the people of Michigan might recover some of the millions that have been wasted.

“The state expected the company would create 2,350 jobs with $175 million in subsidies. But Gotion will not create any jobs, and taxpayers may be out the $24 million they spent on site preparation for the company,” said James Hohman, director of fiscal policy at the Mackinac Center. “Business subsidies tend to disappoint. Only 9% of the jobs promised in major deals actually get created. Lawmakers would be better advised to improve the business climate for everyone rather than to write checks to select companies.”

The Mackinac Center and its news division Michigan Capitol Confidential have reported closely on the Gotion deal throughout the three-year process. The termination of this ill-considered spending blitz is good news for the people of Green Township and all Michigan taxpayers.