HOLLAND — LG Energy Solution Michigan Inc. is planning a $1.7 billion lithium ion battery manufacturing expansion on vacant land the company owns in Holland, officials announced today.
The Michigan Strategic Fund this morning approved $56.5 million in various grants as well as a 20-year renaissance zone valued at roughly $132.6 million to support the project, which could create up to 1,200 jobs.
The expansion calls for several new facilities totaling 1.4 million square feet — five times the size of the company’s existing Holland manufacturing footprint — to support the manufacturing of battery components for electric vehicles. The project includes a main manufacturing facility, material storage sites and a disassembly lab.
“We’re incredibly excited about this. Not just the manufacturing, but also to make sure that we have the prospect and potentiality to capture even more of the value chain when we talk about disassembly … and a line of communication to an R&D facility,” Michigan Economic Development Corp. President and CEO Quentin Messer Jr. said in an interview.
The site will support the manufacturing of lithium ion battery cell components for electric vehicles, which are emerging as significant lines of business for legacy automakers.
“It’s not just the EV manufacturing, it’s what the EV manufacturing manifests and forces you to think about … to be in place to make sure the (EV) adoption (levels) by 2030 happens,” Messer said. “To the extent that we can maintain manufacturing in Michigan, it allows us to have more stickiness for (headquarter) opportunities.”
The LG Energy Solution growth was first reported late last year, though it was unclear how a Holland expansion would fit into the company’s North American plans. LG Energy Solution Michigan disclosed in regulatory filings last year that it had secured $1.36 billion in financing through a capital raise that would be issued incrementally through 2024. South Korea-based parent company LG Corp. plans to invest $4.5 billion through 2025 to increase North American production capacity and create about 10,000 jobs as part of its Project Green Field initiative.
“I think West Michigan remains really competitive for future investments,” Messer said of the region’s position to attract investments in battery manufacturing. “I think the future is bright in West Michigan.”
The incentive package approved today includes a $10 million Michigan Business Development Program grant, a $10 million Jobs Ready Michigan Program grant and $36.5 million in Community Development Block Grant funding requested by Allegan County for machinery and equipment. The city of Holland requested a 20-year renewable energy renaissance zone, which essentially eliminates all property taxes on the site where the company is making new investments. The renaissance zone is valued at roughly $132.6 million, according to the MEDC.
The Holland Board of Public Works also offered LG Energy Solution an “economic development incentive rider” that will provide “significant savings” on energy costs, according to state officials.
In a media briefing before today’s MSF board meeting, Josh Hundt, MEDC’s chief business development officer and executive vice president, said LG Energy is planning to begin the project this spring and start hiring as early as later this year for the project.
“The company is ready to begin investing as early as this spring, that’s why it was important we were able to get this project to the board today,” said Hundt, who also noted that LG will only receive the full incentive package by creating the 1,200 jobs as promised.
State economic development officials said Michigan was competing for the expansion with existing LG Energy Solution facilities in the southeastern U.S. states, Poland and China.
“We had to earn this — it was a competitive process,” Messer said.
However, the company also can “leverage its trained, existing labor force and are accustomed to the local environment in Michigan where it already has access to customers and existing infrastructure,” according to an MEDC memo.
LG Energy Solution, which built its existing Holland battery plant in 2009, has 1,495 employees in Michigan. The new project is more than five times the size of the company’s initial $303 million investment in Holland.
Jennifer Owens, president of economic development organization Lakeshore Advantage Corp., said that the newly announced expansion has been a long time coming.
“This project has been underway for three years with our team working side by side with the MEDC, governor’s office, the Legislature, local units of government and community colleges to really put in place a competitive case for LG to choose to expand in our community. And let me tell you, they had lots of choices,” said Owens, whose organization works with companies in Allegan and Ottawa counties.
Owens pointed out that the expansion is by far the largest investment her two-county jurisdiction has netted and the largest project she has contributed to in her more than 20-year career in economic development.
According to Owens, the ripples of the investment will expand beyond the 1,200 jobs promised to the Holland area.
“This expansion will benefit not only our community directly, but also, according to economic modeling software, this project will create another 600 jobs for suppliers and customers of LG Energy Solution,” she said.
— MiBiz Senior Editor Jayson Bussa and Staff Writer Kate Carlson contributed to this report.