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Michigan is trying to lure electric car makers

MARY LOUISE KELLY, HOST:

As states race to attract and keep businesses, one tactic is throwing money into the effort. Michigan is the latest to do that, as it tries to remain a center of automotive development and manufacturing. That comes as the industry transitions to building more electric cars and trucks. Michigan Public Radio's Rick Pluta reports.

RICK PLUTA, BYLINE: Michigan has had an on-again, off-again romance with using tax breaks, deal-brokering and sometimes straight-up cash payments to try to lure businesses. That's especially true when it comes to winning big factories, which should be a natural fit for the state deeply steeped in building cars and trucks.

The latest effort by Republicans and Democrats here came after a bit of a panic following Ford's recent announcement that it will locate electric vehicle and battery development centers in Tennessee and Kentucky and not in Michigan. Tennessee offered electricity discounts, a training center and a $500 million grant. Kentucky kicked in workforce training, 250 acres of land and a $250 million forgivable loan.

Brad Williams is with the Detroit Regional Chamber, a business advocacy group, and says Michigan faces some serious interstate competition.

BRAD WILLIAMS: The marketplace is what it is. We have to deal with the fact that states are battling for automotive investment, and we need to be aggressive about competing for it.

PLUTA: Legislators went into electric overdrive to adopt an incentives package, and Governor Gretchen Whitmer quickly signed the bills.

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GRETCHEN WHITMER: We know the next 20 months will determine what the next 20 years looks like. And because of our collective collaboration over the last few weeks to secure economic opportunity, Michigan's future is bright.

PLUTA: Among other things, the effort creates a fund to pay for site redevelopment. The immediate goal is to win a General Motors plant near Lansing.

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WHITMER: Michigan is home to some of the hardest-working people you'll ever meet. And there's nothing we can't build, and there's no one who can outhustle us.

PLUTA: The city of Lansing also offered its own tax breaks. But all these incentives are controversial. Conservatives don't like the government picking economic winners and losers. Progressive say the incentives can hurt funding for other priorities.

Michael LaFaive is with the Mackinac Center, a free market think tank, and challenges the cost-benefit analysis.

MICHAEL LAFAIVE: Incentive, of course, is very expensive and forces many taxpayers to underwrite a few.

PLUTA: And Michigan State University economics professor Charles Ballard says incentives have a spotty record.

CHARLES BALLARD: Some of them successful, some of them not so successful. A big challenge for all of these things is accountability.

PLUTA: Ballard says it's critical to pressure companies to follow through on their promises. Those pushing incentives say they've built in safeguards to make sure the promises are kept. It's clear that the stakes are high as Michigan dangles $1.5 billion in an effort to keep hold on a changing industry that has long kept its hold over Michigan government.

For NPR News, I'm Rick Pluta.

(SOUNDBITE OF KRAFTWERK SONG, "AUTOBAHN") Transcript provided by NPR, Copyright NPR.