Ohio Lured Intel's Chip Plant with a $2 Billion Incentive Package

Posted by EditorDavid

on Sunday January 30, 2022 @11:34PM from the cash-incentives dept.

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  But modern chip plants don't bring a lot of jobs. We need to stop giving companies money in exchange for nothing but the vague promise of some jobs and maybe some tax revenue. I've said it before and I'll say it again if they want my tax dollars they need to give us something for it and that's something is stock. And not the cheap stuff I want proper voting shares. No more corporate welfare Queens.
  • 3 hidden comments

  • Re:

    And lose the kickbacks? What are you, a communist?

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  • Re:

    https://www.intel.com/content/www/us/en/corporate-responsibility/intel-in-ohio.html [intel.com]

    Maybe they hit those numbers, maybe they don't. All we know for sure is that whatever jerbs there are won't be in the People's Republic of Fucking California.

    So money well spent. Good job Ohio.

    • 2 hidden comments

    • Re:

      > So money well spent. Good job Ohio.

      So in other words, Ohio gets the shit jobs, the nice jobs stay in California. Good job California, the Peoples Republic has done well to make Ohio their fiefdom.

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      • Re:

        Good job California, the Peoples Republic has done well to make Ohio their fiefdom.

        Not sure how this is California's fault. But let's not question that for now and roll with it.

        So California manages to do something aggressively capitalist and cream off the money, and this is somehow socialist? No, my sig is right. The reason people hate California it that they manage to be better at being capitalists than the states that like to wrap them selves in the flag (which one) and venerate those who fought for the

        • Re:

          California is paying no subsidies while keeping the good design jobs. Ohio taxpayers are giving up $2B for crappy production jobs usually done in the 3rd world.

          So it is California's fault that Ohio looks stupid.

          But Ohio has looked stupid before. Several Ohio schools dropped cursive from the curriculum and taught touch typing instead. The Ohio legislature, in their infinite nanny state wisdom, mandated that the schools go back to teaching cursive. So Ohio will be ready if this Internet thing turns out to be

          • Re:

            Ohio taxpayers are giving up $2B for crappy production jobs usually done in the 3rd world.
            So, Ohio had more tax money if INTEL would not build the chip factory there?

            Your American system makes not any sense to me...

            • Re:

              The limiting factor on business growth is the availability of employees. If Intel does not employ the workers, they will be employed by another company that is not receiving the tax breaks. So, yes, Intel is costing the taxpayers money.

              If the subsidies are "free", as you suggest, why not offer them to everyone? And why stop at $2 billion? Why not $2 TRILLION? After all, it costs nothing, right?

            • Re:

              Yes 2Billion of them. Didn't you read the article?

          • Re:

            Ohio needs no help to look stupid.

        • Re:

          Well first I think Ohio is the better location then Calif and Texas, the usual locations for these plants, why ? Plenty of water (needed for chip fab), the environment is already crap due to the heavy industry they had through most of the 20th century, so a fab plant probably not make it worse. Plus no earthquakes and hurricanes. All they get is snow, but with climate change that will probably change.

          But this trend of states bribing companies to move there should be stopped. All it does is encourage com

          • Re:

            Yep samsung just flushed around 700K gallons of sulfuric acid into a creek in their round rock TX plant. Barely a whisper. All aquatic life in the area was killed. And because we are techies, most of us know that sulfuric is one of the more benign chemicals used.

    • Re:

      Maybe they hit those numbers, maybe they don't. All we know for sure is that whatever jerbs there are won't be in the People's Republic of Fucking California.

      So money well spent. Good job Ohio.

      I'll bet you really like the Foxconn success in Wisconsin. Great Jerb, Ohio, own the libs and drinkin their tears.

    • Re:

      7,000 short term jobs, 30 years of no tax collected for Ohio. Yeah, Ohio citizens got fucked on that one. No roads, schools, water, sewer, police or fire. Fuckem real good. The plant worker jobs, they high end paying jobs, or dumping trash at $8 an hour? Benefits? Let's hope their payroll taxes offset the 30 years of no taxes Intel has to pay, unless those we're gifted too. Wait, probably on the Intel state tax side, not the employee side. Yeah, true win for the citizens of Ohio, take it up the ass,

  • Re:

    So Intel claims this plant will create 3000 jobs. It's said Samsung's upcoming Texas plant will create 1800 jobs. "Many" of these jobs will be highly-skilled, according to TFA.

    We do have some chip manufacturing happening in the US already, and obviously a whole lot of existing manufacturing is happening in Taiwan and China... anyone know how many actual well paying, skilled jobs exist in one of these existing plants?

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    • • Re:

        Which is is than? Do we not have enough "educated workers" (oxymoron right there) or can it be automated. The more costly we make human resources the more that prices them out of the marketplace in the face of automation. Look at what happened in fast food, there was a sudden serge in automated order taking and robotization in recent years - right after wages got driven up by political forces.

        Reality is the US has plenty of educated workers or easily could invest in educating enough people to fill these rol

    • Re:

      Typically such claims include the construction workers and not the long-term jobs created by the factory. Every one of these projects overstates the number of jobs created. Usually if the government had taken the subsidy and just giving it directly to people they'd have come out ahead. That was the case when Amazon was trying to get those massive subsidies out of New York and it's why New York sent them packing.

      • Re:

        They also count jobs during construction (on previous "relocations", I'm not sure about this specific project). There are a lot of skilled jobs involved when designing and building facilities. Like building a datacenter, it take a lot of people to build it, but not many to run it. Chip factories are much more complex for many reasons, but I could see the same job issues holding true here. Actual paid jobs going forward could be much lower than the numbers they project.

  • Re:

    The problem with gov getting company shares is company still has an incentive to screw over whatever local jurisdiction to make the most profit. (And don't start dreaming about voting shares, not viable). And laws can regulate specific actions, not intangible intent.

    The real way to keep from getting nothing but vague promises of jobs is to structure it in a way that there's a financial motivation (in other words, a dependency) on the actual materialization of those benefits, rather than the mere fact the bu

    • Re: This makes it sound like they won something

      I expect the politicians understand very well. Itâ(TM)s the voters amd influencers who have an understanding deficit.

  • Re:

    We need more chip fabrication sites on US soil for national security. I, for the record, oppose this comment being modded "Offtopic" but you're just plain wrong about the potential value of this. Who cares if it doesn't make many jobs? Ohio doesn't have many people.

    • Re:

      Intel was already committed to building the plant on US soil.

      The subsidy is not to build it in America but to put it specifically in Ohio.

  • Re:

    Well, in defense of the plant, it is good to have more chip making facilities out of reach of the CCP.

    However, the value of this plant is also measured in how many politicians can crow about successfully luring an Intel plant to Ohio on the backs of Ohio taxpayers. That gift will continue to give for a few years until the politicians have milked it dry and have moved on.

    The U.S. should now argue that Intel has been properly rewarded in their efforts to build a new chip plant in the U.S. and now is off the M

  • Re: This makes it sound like they won something

    But subsidising corporations & letting them evade taxes is the American way!

  • Make America Grift Again

    The corporate money trough is still open. The problem I see is that Intel already twice promised a president that it will build a new factory and nothing came of it. Why will this time be any different?

  • Re:

    Which is probably better for the state and local authorities in the long run. If anything it makes these tax deferments a safer bet.

    In the past or if it was some other kind of industry a whole bunch of new jobs likely resulted in a lot of new people in the vicinity, which necessitates expanding schools, roads, sewer, etc - when the place closes you get left with a lot of infrastructure you don't need and can't fund. Maybe you ultimately collected enough revenues to offset those expenses, either directly or

  • Re:

    The answer is pretty simple, As a Republican, Dewine will probably profit well from this. As well as his minions.

    I'd wager that this will end up being Foxconn rev 2

  • Re:

    Not all jobs pay the same amount of taxes. Even if what you're saying is true -- a claim for which you have supplied no supporting evidence -- the highly skilled jobs they do provide will be much higher paid. Thanks to your favored progressive taxation scheme, these people will pay much more per-person in taxes than the rest of the state's population. This means the state grows its tax base without a corresponding increase in head count, which means there are more tax revenues overall to spread around fo

  • Re:

    Agreed. Someone has to make up the 2 Billion on lost taxes... guess who?

• Hey Rocky, watch me pull a rabbit out of my hat!

  Again?

  Nothing up my sleeve...

  • Re:

    Wish I had mods, I usually do not waste mods on AC, but this is very funny!

• > The state's share will be money well spent because the Intel facility will not only create jobs, but also make Ohio more attractive to industries such as auto, aviation and defense that rely on chips

  Wait until someone tells them about this new disruptive technology I read about --shipping. It means the place where materials are made and the place they are used don't have to be the same place.

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  • Re:

    Yeah, see it doesn't really work like that. Downstream manufacturers need to work directly with the managers and engineers that make the components. Integrating semiconductors into small, low power, high feature products is very hard and time sensitive and achieving that often requires the people making the components to be in the same room, especially when — as is the case here — the components will be at the leading edge.

    • Re:

      > Downstream manufacturers need to work directly with the managers and engineers that make the components.

      I think I've seen this before: https://www.youtube.com/watch?... [youtube.com]

  • • Re:

      More likely Corporate Americanis realizing that siting water hungry facilities in the Globally Warmed West makes little sense when the Great Lakes region appears to have plenty of water, for now.

      That doesn't mean foreigners are bright enough not to site plants in Arizona and Texas. Sooner or later, they'll come around when they find they have no water there. Or not, they will have the chance to buy out the local pols so they get first dibs on what water there is.

    • Re:

      No it doesn't. The primary manufacturer of fab equipment is ASML in the Netherlands. The are the ONLY supplier of the EUV steppers needed by the new Intel fab.

      ASML is not going to relocate to Columbus, Ohio.

      ASML [wikipedia.org]

      • Re:

        If this fab is as big as it sounds, ASML will probably open a 100 engineer service office near the fab though. Several of the other fab equipment suppliers are likely to do the same at a smaller scale.

  • Re:

    I'm sure the company & the state spent quite a bit of effort to come up with a list of perks for the public spin.

• but nothing for a small business. Helping the companies who don't need it while doing nothing for the businesses that need it

  • Well, most small businesses aren't willing and/or capable (emphasis on the not capable) of spending $20 billion to build something in Ohio. The only thing Ohio can do to make it happen in Ohio is to make it cost less to do it there than somewhere else. So Ohio is getting a $20 billion construction project (read: stimulus project) and all Ohio had to do was agree that instead of a huge percent of $0, which is what they're getting now, they'll settle for a smaller percent of what tax revenue that $20B project produces.

    And... after the fab plant is built it's not exactly easy to pack up and move it somewhere else. So even if it's entirely staffed by robots controlled from India or something, it's already lifted the local economy (producing increased revenue), which comes around to lift the local economy again (producing more revenue again). The trick is to make sure the business doesn't take the incentives and then close, like the latest poorly-thought-out Walmart incentive or a hundred other examples. So as long as Intel keeps running the plant ("sunk cost" of $18B) Ohio can rely on some sort of economic-boosting activity.

    Not giving Intel incentives means the decisions will be made on an even cost/benefit basis. Look at AOC not wanting an Amazon HQ2 in NY, and guess what she didn't get one, she got far crappier jobs. She may or may not be happy about that, but I hear there were a lot of grumbles from the constituents who would have liked the jobs, even if it meant working for Amazon. (it seems to me that complaints about the quality/pay/conditions of amazon jobs need to go to OSHA or DoL, not to the tax revenue meetings. And I bet the people who complain the loudest about Amazon working conditions aren't so upset about it so as to "vote with their feet" and buy elsewhere) I'm sure whatever permanent economic impact (local jobs, etc all lifting local tax revenue) Intel has in Ohio will be higher quality.

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    • • Re:

        (there should probably be a moderation of -1 Not Paying Attention, or a -1 Didn't think it through)

        You clipped off the part that dealt with that: "The only thing Ohio can do to make it happen in Ohio is to make it cost less to do it there than somewhere else.". But since it seems to need to be explained: Intel was willing and capable of spending the whole $20B, it's just that Ohio really, really wanted it to happen in Ohio where Ohio gets the benefits, not somewhere else where Ohio doesn't get the benefits

    • Re:

      If I remember correctly the people in Germany thought the same thing when they agreed to a Nokia factory... I believe.

      Did not pan out as they envisioned as far as I remember and no, it wasn't because Nokia went belly up. They built the building and then fucked right off AFAIR.

      • Re:

        In Germany we do not have tax incentives - or how you call that - for new founded companies or factories.

        How would that even work? The new factory is still owned by the same company, which makes the earnings and then gets taxed.

        • Re:

          Well I guess you did in the 90's. https://www.reuters.com/articl... [reuters.com] 40m euros in fact, which is peanuts compared to what is given now, but then money was worth more too when you factor inflation.

    • Re:

      Tax treatment should be consistent and fair for both companies and people. Honestly any deviation from this should be illegal and challenged in court, and if upheld in court then the constitutions need to be changed. Government should not be playing favorites or picking winners. So the big company gets an enormous tax break to locate there, while all the secondary job creators (restaurants, grocery stores, auto repair shops, etc) get no such break. I do not see how that is all right. Since corporations

      • Re:

        You should move to TX to see it in action. Property tax is huge here. A typical house in Austin is now 500K x 2% = 10K/year. And there is no cap. BUT, you can protest, and in fact people like Michael Dell take it all the way to the courts. Way back when he built his estate for 110M. Of course he did not want to pay tax on a 110M. So he does what normal people do first, file a protest. Protest is denied, I mean he just did build it. Escalate to next level, denied, escalate to court, wins. Why, because he thr

    • Re:

      It says "tax breaks and incentives", so I wonder exactly what the incentives are. The problem is you get into a race to the bottom. In fact you go through the bottom and end up paying these companies money in the hope of the voters seeing a few jobs as worth the price. It's usually infrastructure stuff, new roads and the like.

    • If you set the state's tax rate at x% (generalizing here - I realize there are lots of different taxes), you do so because you believe that x% taxation results in the best balance of taxes (which inhibit business) and government services paid for by those taxes (which help business). That is, you believe that at x% taxation, the net effect of these two contrary factors yields the best environment for everyone in your state.
      
      If you then give someone (business or individual) a tax break, you're basically admitting that were wrong - you now believe your x% tax rate is too high. And that the environment in your state can be improved by a lower tax rate. In that case, instead of giving just this one business or individual a tax break, you should give it to everyone to remain consistent with this epiphany you've had about lower taxation. What's good for the goose is good for the gander.
      
      If you honestly believe that x% is the best tax rate, and a company refuses to move into your state unless you give them a tax break, then you should simply tell that company not to let the door hit its ass on the way out. Because if you believe x% taxation is ideal, you also believe that taxing a company at less than x% would result in a worse environment for everyone in your state.
      
      When you apply different tax rates to businesses or individuals in the same circumstances, you're basically forcing one group to subsidize the other. Give a tax break to Intel that you don't give to mom and pop shops, and you're basically saying you believe mom and pop shops should subsidize Intel.

      • Re:

        When you apply different tax rates to businesses or individuals in the same circumstances, you're basically forcing one group to subsidize the other.

        Congratulations, you just described the entire US tax policy dating back to at least our departure from the Gold Standard, and really since the founding of the country itself. By design, these different tax rates are literally codified into tax law via loopholes, deductions, credits, and every other tactic you can think of. You can thank in part the commer

    • Unfair and Anti-competitive

      True, but the way that is supposed to work is that you make your tax laws competitive so that taxes apply equally to everyone and then companies can look at your taxes and infrastructure and compare it to others. Large companies essentially negotiating a private tax rate just for them ought to be illegal since it is highly anti-competitive as your average small business does not get this opportunity, nor does your average citizen. If they are going to allow haggling on taxes then it needs to be open to eve

  • Re:

    Subsidizing Intel is stupid. Subsidizing small businesses is equally stupid.

    Let's end the subsidies and let the market decide which businesses succeed.

    • Re:

      Let's end the subsidies and let the market decide which businesses succeed.
      Then you end up in a 3rd world shit hole where half the population is to poor to have food, shelter, education - or are slaves.

      Subsidizing small businesses is equally stupid.
      There are quite a few countries that show: you are wrong.

• Will this work out better than the FoxCONn LCD plant in Wisconsin that never materialized? My first thought is how much Ohio tax payer money did the politicians and their lawyers give away in the poorly written loophole ridden contracts? Probably buying nickels for dollars in the end. (which they won't be around for anyhow)
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  • I guess we'll see. But anyways the incentives Wisconsin offered FoxConn were performance-based, so they were sharply reduced along with foxConn's dowscoping the facility.

    Wisconsin Governor Tony Evers said the new agreement will save Wisconsin taxpayers a total of $2.77 billion compared to the previous contract, maintain accountability measures requiring job creation to receive incentives, and protect hundreds of millions of dollars in local and state infrastructure investments made in support of the project.

    The state will reduce the tax credits authorized for the project to $80 million from $2.85 billion.

    And as of just this past December:

    Foxconn Technology Group has qualified for $28.8 million in state tax credits, marking the first time the Taiwan-based company has secured state aid since breaking ground on its southeastern Wisconsin facility in 2018.

    • Re:

      The Foxconn facility paid off well for the pols at the time who got to honk on about a New Day in Wisconsin Manufacturing. Even the fake president showed up and got his picture taken.

    • Re:

      You forgot the part where they build a small suburb that was then never populated because no jobs were created. It was a massive money losing flop like all these deals are.

  • Re:

    But I am sure the politicians involved got a nice trip to Silicon Valley, and maybe if they were really lucky they even got an Intel T-shirt!

    • Re:

      and Ohio will learn "Intel Inside" has a second meaning...

      • Re:

        Sadly Amazon has removed the 55 gallon barrels of lube.

  • Re:

    ...or the previous two US factories that Intel promised and never built?
• So they had bad CEO for over a decade and now they want a corporate socialism and billion dollar handout. Screw them, since they don't give a crap about customers.

• These things always sound like everybody wins, because that's always the plan.

  "We'll get the tax dollars back in the next layer."
  But then they offer tax breaks to the next layer too. But that's okay, because

  "All those jobs are residents who will immediately pay income taxes."
  But then we need to build infrastructure to support all those residents.

  Incidentally, this is another opportunity for me to troll with the usual:
  "I thought you said the USA wasn't a socialist country."

  But I see roads, and police, and f

  • Re:

    Wrong: not socialism but corporate socialism. The difference being that in socialism the benefits of corporate wealth are shared with the workers (general population) while in corporate socialism the workers pay the costs and the benefits go mostly to the wealthy.

    The US is organized around the principle of corporate socialism.

    • Re:

      Corporate Socialism is commonly referred to as Fascism. And it got a big push from Reagan who declared the government was the problem and proceeded to farm out some of its operations to the private sector. The private sector was only too willing get in on the contracts and do the required lobbying for more. Thus, the Beltway Bandits got a nice financial push. Succeeding administrations only continued to farm out more government functions to the private sector.

      Lest you whine about government expenditures, th

      • Re:

        Last I checked, the Pentagon was not a social program. It could easily be argued that they engage in the most corporate socialism, however.

  • Re:

    Somehow, in your head, a government choosing to forego tax revenue to attract private sector investment is evidence of socialisim...

    That's some strange socialism.

    • Re:

      Excuses excuses. I'm sure you'll pick out a way to re-classify each individual government expense, all the way back to your interstates. The point is that you spend tax dollars on products and services designed to improve society with no direct monetary return. That's socialism. Your word "investment" is "investment in society".

• That seems like a fairly modest amount. We lured a Facebook data center with the equivalent of 13 billion US$ incentive, in the Netherlands.

• The 1980's auto transplants had many a state vying to get the Japanese to setup a local automobile factory in their state with various incentives. In The Reckoning [goodreads.com] by David Halberstam describes this...the more things change the more they remain the same...as French writer Jean-Baptiste Alphonse Karr wrote.

  JoshK.

  • Re:

    Those factories were built in response to content tariffs created under Reagan and lobbied for by the UAW.

    A Republican president that understood the value of industry and employment.

• Clearly more cheating. And they have the gall to blame China for cheating, Just remember, the US could not make solar panels without subsidies, and the cost of energy saw few raw silicon foundries built where electricity was cheapest. Lastly, subsidies encourage home grown industries to be sluggish and fall behind the curve. Intel needs more snail bait to weed out slug management.

• It's a race to the bottom for states and localities. That's a pile of tax money they'll never see again. $600 million subsidy for building the plant? Because it would be cheaper in China? Intel is going to build in the US, that is already a given. So that's $600 million that didn't need to be spent.

  Anyway, not counting the (very temporary) construction jobs, they promise 3000 jobs. You know that's overly optimistic, but let's run with it. $2 billion divided by 3000 means that Ohio is paying $2/3 million per job. That's just nuts - there is no way they will ever recover that much money.

  Also, let's not forget that this is on top of the federal subsidies that are just about guaranteed to flow. Intel screws the pooch, and gets government bail-outs at all levels.

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  • Re:

    $2 billion divided by 3000 means that Ohio is paying $2/3 million per job. That's just nuts - there is no way they will ever recover that much money.
    With your math skills it should be easy for you to figure how much taxes you pay over a course of let's say 30 years. Now consider the factory is probably regularly revamped and runs for 50 or more years...

    • Re:

      What's your point? Let's be generous and assume no discount to get net-present-value: What kind of salary does someone have to earn, in order to pay $2/3 million in state taxes? Ohio's maximum income tax bracket is under 5% and sales tax is under 6%. The average job had better pay more than $200k/year. For a factory job, in Ohio? Not gonna happen...

• I'm gonna laugh so hard the next time I hear some right-wing nutjob CxO bang on about "rugged individualism". Like maybe they should try it sometime.

• I don't know if the corporation says it can't afford the full tax debt, or if politicians think there's more tax revenue but laws are subtly re-written when tax-breaks end: The most common being, the factory can work more hours. Sports, recreation, entertainment businesses cop the brunt of it. Plus, competing factories (or economic substitutes) don't get the same economy of scale and go out of business.

• Stay vigilant! If we're not careful, some sort of actual economic activity (like making or doing actual things) might break out.

• Each of those 3000 jobs has to somehow generate 66K in tax revenue *every year* for the next 10 years -

  Let's see how that works.

  In order to pay 66K in state income taxe, I estime a gross annual income of $3 Million.
  I'll be generous, and cut that in half, and assume the 33K difference is somehow made up in sales tax - after all someone earning 1.5 million is gong to buy a lot of crap, and pay a lot of sales tax in Ohio.

  This still implies that Ohio is expecting the employment multiplier to be greater than 10,

• Giving taxpayers money to specific companies.

• as long as most of the incentives come AFTER the plant is up and running. No "cash up front" and the state winds up with 2-billion dollar warehouse.

• $2 Billion for a $20 Billion factory is much better than Scott Walker negotiated for Wisconsin when Foxconn came calling.
  The Republican led state agreed to $3 Billion in assistance for a $10 Billion plant. This is neither fiscally sound, nor the sign of a great negotiator.

  I'm not a big fan of using tax money to pick large companies as winners, and small local companies as losers, but if you are going to do something like this you might as well have a decent ROI.

  There is a risk that when subsidies run out,

• Except they'll give tax breaks to all of those business too, trying to entice them as well. 30 years of tax breaks with no one left to pay for infrastructure. Suck it up citizens. Let the billionaires pay nothing, as usual. Typical shortsighted thinking. All those socialists, wanting roads, police, fire, water, sewer, schools, etc. Fuck'em all. We can pass more and more bonds and make the cities go into default. Fuck'em. Almost makes you wonder what kind of kickback, err campaign donation? Doesn't m
• Corporations "chose" in the name of profit to fire Americans to send jobs overs seas. Communities decimated by corporate greed now are willing to pay even more. What makes this notion even more egregious is income tax for corporations and wealthily has dropped from 90% in the 1960's to 70% in the 1970's todays 21% (top corporate tax rate). The result leaves education unfunded, students with crushing debt, infrastructure in disrepair, and municipalities selling off utilities just to stay solvent. As S