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Published in Manufacturing
Lear Corp. plans $112M expansion in SE Mich., Traverse City to grow EV components  COURTESY OF LEAR CORP.

Lear Corp. plans $112M expansion in SE Mich., Traverse City to grow EV components 

BY Tuesday, December 13, 2022 12:27pm

Tier 1 automotive supplier Lear Corp. plans a $112.5 million expansion at three facilities in southeastern Michigan and Traverse City to support the manufacturer’s ongoing growth in the electric vehicle market.

The Southfield-based company, which specializes in seating and electrical systems, plans a new 120,000-square-foot facility in Independence Township in Oakland County. The company also expects to ramp up operations at existing facilities Traverse City and Macomb County to support the expansion, which could create up to 500 new jobs.

The Michigan Strategic Fund board today supported the project with a $4.5 million Michigan Business Development Program performance-based grant as well as a 15-year, 100-percent State Essential Services Assessment (SESA) exemption valued at roughly $1.9 million. The SESA is required for manufacturers that do not pay personal property tax on eligible equipment. 

Under the expansion, Lear (NYSE: LEA) will produce electrical subsystems for electric vehicle batteries through 2030. The battery disconnect units and interconnect cell boards control the power transfer from a vehicle’s battery to the electrical system.

Bill McLaughlin, vice president of global tax and trade at Lear, said the battery disconnect unit (BDU) is the “primary interface between the battery pack and the vehicle’s electrical system, so it’s a very key component in electric vehicles.”

“Our BDUs were the first-to-market thermal management innovation that have enabled electric vehicles to charge faster and drive farther,” McLaughlin said during today’s MSF board meeting.

The company, which was founded in 1917 in Detroit, previously received a Michigan Economic Growth Authority tax abatement in 2009 and a 2017 performance-based grant that helped create 435 new jobs. Lear went public in 1994 and currently operates 253 facilities in 38 countries with more than 160,000 employees. It reported third quarter sales of $5.2 billion, a 23-percent year-over-year increase, and an adjusted net income of $140 million.

Lear first announced an $80 million expansion in October that executives said would exclusively supply General Motors with battery disconnect units for the automaker’s SUVs and trucks. Officials said at the time that the expansion, once completed, would generate $500 million in new revenue annually.

The Independence Township location would primarily be used for production in addition to warehousing, testing and office space. Lear plans to use its existing Traverse City plant for manufacturing components related to the EV battery back, and both the Traverse City and Sterling Heights plant in Macomb County will supply the new Oakland County facility. The new jobs created under the expansion will pay an average hourly wage of $20.30 plus benefits.

“We’re happy to continue to invest in the state of Michigan and further support its role as a leader in electric vehicles and mobility,” McLaughlin said.

Michigan Economic Development Corp. officials said today that the incentives were crucial for Lear to expand in Michigan instead of existing facilities in Mexico and Texas.

Lear considered Michigan because of its “skilled labor force, proximity to its customers and potential for inventory and transportation cost savings,” according to an MEDC memo on the project. 

“Whenever a company like Lear has operations elsewhere, you’re always in a pitch battle to make sure that when they’re making resource allocation decisions, those resources come to Michigan,” MEDC President and CEO Quentin Messer, Jr. said today during a call with reporters. “This is important because Lear has been here since 1917, and we can’t take for granted that if we don’t go out and earn it everyday, they’re going to be here for over another 100 years. We have to be flexible and see ourselves as partners to our existing companies and earn their business daily.”

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