Kansas officials pursue new megadeals with semiconductor makers
Panasonic project site ‘buzzing with activity’ as company adds Lucid Motors to client list
Paul Hughes, deputy secretary for business development at the Kansas Department of Commerce, briefs lawmakers Jan. 10, 2023, on the status of the Panasonic battery plant in DeSoto and other megaprojects in the pipeline. (Sherman Smith/Kansas Reflector)
TOPEKA — Kansas officials are pursuing megadeals for six new projects, including two companies that make semiconductors, by using the same tax incentives that landed Panasonic’s $4 billion investment last year.
Paul Hughes, deputy secretary for business development at the Department of Commerce, briefed lawmakers Tuesday on the status of Panasonic’s operation and the potential to reach multibillion deals with more companies, providing thousands of jobs.
Panasonic plans to start pouring concrete this month for its facility in DeSoto, where the company will make batteries for electric vehicles.
To land the deal with Panasonic, lawmakers and state officials crafted a package of tax credits, known as APEX, with the idea of luring large economic investments. APEX incentives include rebates on capital investments, payroll and staff training, as well as relocation incentives for workers and a sales tax exemption on construction materials.
The APEX program also lowers the corporate income tax rate by 0.5% for Kansas businesses for the fiscal year after a megadeal is signed. The corporate tax cut will take effect in July of this year.
Panasonic will receive $829.2 million over 10 years under the APEX deal.
Hughes said the state is pursuing deals with a company that would invest $1.9 billion in a specialty semiconductor facility, as well as a company that would invest $1.4 billion in a facility for “semiconductor downstream processing.” The projects would include about 2,000 jobs apiece, and both would be eligible for support through a $52 billion federal program designed to secure U.S. supply chains.
The state is also looking at projects that involve advanced manufacturing, heavy industry manufacturing and renewable industry.
“There is no doubt that the APEX legislation has created momentum and established Kansas as one of the best places in the country and world to do business,” Hughes said. “It would not have been possible without the bipartisan support and work of the Legislature.”
The Commerce Department wants lawmakers to extend the APEX program, which is set to expire at the end of this year, by another 12 months.
Rep. Rui Xu, a Westwood Democrat, raised concerns about whether companies that invest in Kansas can find the employees they need.
“It sounds like you’re not really looking at the workforce shortage now necessarily, but just kind of looking at the big picture, and just kind of projecting the confidence that we’ll find the workers if we have the jobs,” Xu said.
Hughes said the strategy involved working with universities to match degrees with workforce needs. Too many students leave the state after they graduate, Hughes said.
“The approach, if you will, on taking a look at these projects is really under the umbrella of future-proofing the economy of the state of Kansas,” Hughes said.
Xu also wondered whether the downturn in Tesla stock following Elon Musk’s purchase of Twitter would affect Panasonic’s operations in Kansas. Hughes said Panasonic recently reached a deal to provide batteries for Lucid Motors of Arizona and is looking to reach deals with other automakers.
Hughes said Panasonic’s project site in DeSoto has been “buzzing with activity” since signing the agreement in July. That includes the demolition of antiquated buildings and cleanup of asbestos siding.
Panasonic has hired human resources leadership and expects to employ HR staff, engineers and management at the site early this year.
The company plans to provide at least 4,000 jobs, increasing the state’s annual labor income by more than $505 million. The state anticipates the project will create an additional 4,000 jobs through suppliers and community businesses. The state expects to see a $26 return for every $1 invested in tax incentives.
“It’s good to see that work that we all did together last year is already starting to pay off,” said Rep. Sean Tarwater, a Stillwell Republican and chairman of the House Commerce, Labor and Economic Development Committee. “I look forward to more details as far as the numbers of jobs that have been created as we work through this year.”
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