by Kelley Rendziperis, on Feb 15, 2022 3:06:49 PM
Site Selection Group estimates that in 2021 more than $8.9 billion in economic incentives were offered to attract various projects in the United States ranging from office projects, such as headquarters and data centers, to industrial facilities, including manufacturing plants and distribution centers. Incentives are a vital tool for state and local jurisdictions looking for an extra edge to make their communities more attractive and cost-effective for competitive projects.
To help understand economic incentive trends, Site Selection Group has evaluated the economic incentive deals announced during the calendar year 2021.
$8.9 billion in economic incentives
As of the date of publication, Site Selection Group identified 2,236 economic incentive packages offered to companies across the United States during 2021. These economic incentive deals represent an estimated total incentive value of approximately $8.9 billion. To garner these economic incentives, companies are expected to make roughly $177.9 billion in capital investments and generate 375,453 new jobs, resulting in:
- A total return on investment of approximately 5%
- An average economic incentive award of $23,761 per new job
- An average incentive award of approximately $4 million per project
- A median economic incentive award of approximately $430,000
When compared to 2020, 2021 had a decrease in the number of announced awards by roughly 13.4%, from 2,582 to 2,236 projects; however, there was an astounding increase of 94.8% in the total value of announced economic incentive awards and a 60.8% increase in the average award per job. Other major metrics increased as well, with committed capital investment increasing by 150% and the number of jobs to be created by 21%.
The largest announced economic incentive package this year was offered to Ford Motor Co. Tennessee offered $884 million in economic incentives for Ford to build an electric vehicle mega campus near Memphis. $500 million of the package will go toward supporting the project, and $384 million will be used to build roads, infrastructure and even a trade school on the site. The company plans to create 5,800 jobs, and the new facility will be producing batteries and electric vehicles.
States with the largest awards and greatest number of announced projects
Tennessee and North Carolina offered the largest amount of announced economic incentive awards with $1.18 billion for 93 projects and $1.14 billion for 142 projects, respectively. While Ford’s electric vehicle campus was the largest announced project in Tennessee, the most notable project announced in North Carolina was to lure Apple, which was awarded an $848.5 million grant over a 39-year period through the North Carolina Job Development Investment Grants (JDIG) program. This is contingent on Apple meeting a 3,000 job creation target.
Overall, the 2,236 projects announced during 2021 represented 43 states, led by Ohio with 352 announced projects and Indiana with 204.
Top 10 States for Number of Announced Incentive Packages
Data Source: IncentivesFlow, a service from WAVTEQ Limited
Number of announced projects by economic incentive value
The following chart depicts the number of projects announced during 2021 broken out by estimated economic incentive value:
Number of Projects by Incentive Value
Data Source: IncentivesFlow, a service from WAVTEQ Limited
Approximately 68%, or 1,525 of the 2,236 announced projects, were awarded economic incentive packages valued at $1 million or less and 91% were awarded economic incentive packages valued at $5 million or less. While the average economic incentive package was valued at approximately $3.99 million for all 2,236 announced projects, the average award for the top 25 deals was approximately $208.85 million. There is a sharp increase in the number of awards in excess of $10 million.
Economic incentives and industry trends
The following chart depicts the breakdown of the 2,236 announced projects during 2021 by industry function:
Number of Projects by Industry Function in 2021 (Annual)
Data Source: IncentivesFlow, a service from WAVTEQ Limited
Manufacturing continues to be the top incentivized industry function this year. The sector was led by Ford Motor Co., detailed above. The chart below illustrates the level of capital investment committed by industry sector in 2021:
CapEx Value By Industry Sector in 2021 (Annual) (USD m)
Data Source: IncentivesFlow, a service from WAVTEQ Limited
The top industry sectors in terms of projected capital investment were the electronics and basic materials sectors, which together account for nearly 55% of all the investment announced during this period.
Notable economic incentive packages in 2021
The top 25 economic incentive packages announced in 2021 represent approximately $5.2 billion of the total $8.9 billion of estimated incentives for all projects, or approximately 58.53%. These projects in isolation will account for:
- $95 billion of capital investment;
- 47,826 new jobs;
- A return on investment of approximately 5.5%; and
- $110,650.71 average award per new job.
The announced economic incentive awards for the top 25 deals alone account for more incentives announced than the entire year of 2020. The following table identifies some of the largest economic incentive deals (removing real estate development and film incentives) offered in 2021. These projects provide a great way to benchmark the potential range of economic incentives for a variety of project types. However, it is important to understand these values are estimated and typically only reflect state-level incentives.
| Company | Location | Industry function | Incentives Value (USD m) | Capex (USD m) |
Jobs Created |
| Ford Motor Company | Unspecified (TN) | Manufacturing | $884.0 | $5,600.0 | 5,800 |
| Apple | Unspecified (NC) | Research, Design & Development (RDD) | $845.8 | $1,000.0 | 3,000 |
| General Motors (GM) | Lansing (MI) | Manufacturing | $838.1 | $2,500.0 | 1,700 |
| Samsung Electronics | Taylor (TX) | Manufacturing | $677.0 | $17,000.0 | 2,000 |
| Ford Motor Company | Elizabethtown (KY) | Manufacturing | $400.0 | $5,800.0 | 5,000 |
| Freeport LNG Development | Quintana (TX) | Warehousing and Distribution | $178.0 | $2,400.0 | 55 |
| Great Lakes Cheese | Franklinville (NY) | Manufacturing | $166.0 | $500.0 | 200 |
| Texas Instruments | Sherman (TX) | Manufacturing | $148.0 | $30,000.0 | 3,000 |
| Fiserv | Berkeley Heights (NJ) | Business Services | $109.2 | $105.0 | 1,927 |
| Regeneron Pharmaceuticals | Tarrytown (NY) | Manufacturing | $100.0 | $1,800.0 | 1,000 |
| Intel | Chandler (AZ) | Manufacturing | $90.0 | $20,000.0 | 3,000 |
| Toyota Motor | Liberty (NC) | Manufacturing | $86.6 | $1,290.0 | 1,750 |
| Dana | Fort Wayne (IN) | Manufacturing | $70.0 | $0.0 | 0 |
| Oracle Corporation | Nashville (TN) | Business Services | $65.0 | $1,350.0 | 5,989 |
| JM Huber | Cohasset (MN) | Manufacturing | $64.3 | $439.0 | 123 |
| Ultium Cells | Spring Hill (TN) | Manufacturing | $60.0 | $2,300.0 | 1,300 |
| Malouf | Logan (UT) | Headquarters (HQ) | $56.0 | $450.0 | 4,200 |
| Alphabet | Columbus (OH) | Data Center | $54.3 | $300.0 | 20 |
| Magellan Enterprise | Columbus (OH) | Data Center | $54.3 | $300.0 | 20 |
| Elanco Animal Health | Greenfield (IN) | Manufacturing | $54.0 | $92.5 | 337 |
Data Source: IncentivesFlow, a service from WAVTEQ Limited
Notable awards in the business services industry during 2021
Most projects are not nearly as sizable in terms of incentives offered as the top 20 highlighted above. Thus, we like to share notable 2021 projects garnering economic incentives in the business services and call center industries:
| Company | Location | Industry function | Incentives Value (USD m) |
Capex (USD m) |
Jobs Created |
| Fiserv | Berkeley Heights (NJ) | Business Services | 109.23 | 105.0 | 1,927 |
| Oracle Corporation | Nashville (TN) | Business Services | 65.00 | 1,350.0 | 5,989 |
| Microsoft | Multiple locations (CA) | Business Services | 35.00 | 175.0 | 2,085 |
| Microsoft | Atlanta (GA) | Business Services | 28.00 | 75.0 | 1,500 |
| Torch.AI | Leawood (KS) | Business Services | 27.00 | 45.0 | 500 |
| CoStar Group | Richmond (VA) | Business Services | 15.00 | 460.0 | 2,000 |
| Infosys | East Providence (RI) | Business Services | 12.91 | - | 1,000 |
| Zoom Video Communications | San Jose (CA) | Business Services | 12.50 | 5.0 | 1,222 |
| Consumer Cellular | Louisville (KY) | Call Center | 5.50 | 15.5 | 486 |
| Tekion | West Chester Township (OH) | Call Center | 1.00 | - | 160 |
Data Source: IncentivesFlow, a service from WAVTEQ Limited
Conclusion
In sum, while there were fewer projects announced in 2021, the value of economic incentives offered in total, as well as per project on average, were significantly higher than 2020. The 375,453 new jobs committed to in 2021 is the highest amount since 2017 and 21.2% higher than new jobs in 2020. The increase reflects an influx of investment and significant market activity. We will analyze these findings further in the upcoming release of our 2022 Economic Incentives U.S. Market Report.
Please note that the analysis above is based on publicly available data at the time of this blog. In addition, the current data is compared to the information available at the time of prior blogs.
For additional information about these projects and others, please contact me at krendziperis@siteselectiongroup.com with any questions.
Contributions by Matthew Kahn.
