Ford Motor Business and a South Korean company would have to create more than 5,000 full-time jobs in Tennessee for a projected electric pickup vehicle production and battery manufacturing plant or lose a $500 million state grant.

A lease has been approved on land in rural Stanton, to the north-west of Memphis by the Megasite Authority of West Tennessee’s board of directors.

This means a $5.6 billion project to make electric F-Series pickups and batteries on the 3,600 acre site.

READ MORE: 3M TO CREATE 600 NEW JOBS AT TENNESSEE PLANT

Ford is working with the battery maker SK Innovation and Tennessee Governor Bill Lee on the project.

Another project called BlueOvalSK will see two new battery plants built in Glendale, Kentucky, in an investment worth an estimated $5.8 billion.

The two initiatives are planned to generate 10,800 jobs and transfer the automaker’s future production footprint to the south, with a focus on green energy.

Construction on the Tennessee site is projected to begin later this year.

Ford has said it plans to start production by 2025 hut It was not nearly clear on Thursday, February 17, if Ford had agreed to the lease.

In October, Tennessee lawmakers committed to spending nearly $900 million on state incentives, infrastructure upgrades and more as part of a sweeping plan with Ford. The agreement included $500 million in capital grant funds.

The lease approved by the board essentially grants the land to Ford through December 2051. The rent is $1 for the entire lease term.

An accountability provision in the lease demands the development of 90 percent of the committed 5,760 jobs in connection with the $500 million grant given during the meeting by attorney Chris Bowles.

If fewer than 5,184 jobs are created within 10 years, Ford and SK will have to repay a portion of the grant plus $175 million, which represents the value of the land in the lease presentation.

Mr Bowles said: “We thought to ourselves, ‘What protections does the state have if … either the joint venture or Ford default on the obligation?’”

But he added: “That’s not what we expect to happen.”

The deal includes only full-time workers at the plant, not the estimated 30,000 jobs tied to the construction of the facility.

Bob Rolfe, Tennessee’s economic development commissioner, noted Swedish appliance maker Electrolux’s decision in 2019 to shut down its Memphis factory after receiving a large incentive package.

The state’s 2010 agreement with Electrolux didn’t include clawback provisions to recover $100 million in state incentives if job thresholds weren’t met. Electrolux later agreed to pay local taxes on the factory.

Rolfe said: “Basically, Electrolux took $100 million from the state and lot of money from the city and the county, and then just woke up in year six and said … we’re going to shut the plant down and we own everything, and there were no repercussions,”.

Rolfe added that the Ford payback provisions are “almost the opposite” of the Electrolux deal.

“He said: “There’s an enormous amount of capital at risk here.”

Before landing the Ford project, Tennessee had invested more than $174 million in the Memphis megasite but struggled to lure the big tenant it wanted.

Source: US News

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