Largest Economic Incentive Deals of First Quarter 2022

To help understand economic incentive trends, this report evaluates economic incentive deals announced during the first quarter of 2022.

$5 billion in economic incentives

As of the publication date, Site Selection Group identified 346 economic incentive packages offered to companies across the United States during the first quarter of 2022. These economic incentive packages represent an estimated total incentive value of approximately $5 billion. To garner these economic incentives, companies are expected to spend roughly $42.9 billion of capital investment and generate over 67,200 new jobs, resulting in:

• A total return on investment of approximately 11.6%
• An average economic incentive award of $74,317 per new job
• An average incentive award of approximately $14.4 million per project which is heavily skewed by a couple of mega projects
• A median economic incentive award of approximately $800,000

When compared to the first quarter of 2021, Q1 2022 had a decrease in the number of projects by roughly 9%, from 383 to 346 projects; however, there was an 833% increase in the total value of announced economic incentive awards and a 377% increase in the average award per job. Other major metrics saw increases, with capital investment increasing 50% and the number of jobs to be created increasing 95%. The average return on investment for Q1 2022 increased to 11.6% from 2% in Q1 2021.

The largest announced economic incentive package this quarter was offered to Intel, which designs, manufactures, and sells computer, networking, data storage, and communication platforms. Intel plans to invest $20 billion to establish two semiconductor manufacturing facilities on a 1,000-acre site in New Albany, Ohio. The company will create 3,000 new jobs paying an average annual wage of $135,000 and 7,000 additional construction jobs.

Ohio awarded Intel an incentive of $1.95 billion to support the project. The offer includes $600 million to help Intel offset the cost of building the factories, which is more expensive than it would be in Asia, and $700 million for roadwork and water infrastructure upgrades, including a system that will allow the plant to reuse wastewater. The Ohio Legislature also approved a 30-year tax break that will allow Intel to save $650 million.

The 346 announced projects during the first quarter represented 32 states, led by Ohio with 70 announced projects and Kentucky with 31, excluding film or real estate projects. Ohio and West Virginia offered the largest amount of announced economic incentive awards totaling $2.04 billion and $1.66 billion, respectively. As mentioned above, the most notable project from Ohio was Intel and the most notable project from West Virginia was Nucor, which was awarded $1.35 billion in tax credits and $315 million from the local government to support Nucor’s investment of $2.7 billion to build a new sheet steel mill in Weirton, West Virginia, which will create 800 new jobs paying an average annual wage of $96,000 and 1,000 construction jobs.

Top 10 States for Number of Announced Incentive Packages

Data Source: IncentivesFlow, a service from WAVTEQ Limited

The following chart depicts the number of projects announced during the first quarter broken out by estimated economic incentive value:

Number of Projects by Incentive Value

Data Source: IncentivesFlow, a service from WAVTEQ Limited

Approximately 53%, or 183 of the 346 announced projects, were awarded economic incentive packages valued at $1 million or less and 88% were awarded economic incentive packages valued at $5 million or less. While the average economic incentive package was valued at approximately $14.4 million for all 346 announced projects, the average package for the top 25 deals was approximately $182 million.

Economic incentives and industry trends

The following chart depicts the breakdown of the 346 announced projects during the first quarter of 2022 by industry function:

CapEx Value by Industry Sector in Q1 2022 (USD m)

Data Source: IncentivesFlow, a service from WAVTEQ Limited

Manufacturing continues to be the top incentivized industry function this quarter. The sector was led by Intel (detailed above).

The chart below illustrates the level of capital investment committed by the industry sector this quarter:

Number of Projects by Industry Function in Q1 2022

Data Source: IncentivesFlow, a service from WAVTEQ Limited

The top industry sectors in terms of projected capital investment were the electronics and automotive sectors, which together account for nearly 64% of all the investments announced during this period.

Notable economic incentive packages in the first quarter

The top 25 economic incentive packages announced in the first quarter represent approximately $4.5 billion of the total $5 billion of estimated incentives for all projects or approximately 91%. These projects in isolation will account for:

• $33 billion of capital investment
• 28,714 new jobs
• A return on investment of approximately 13.5%
• An average award per new job of $158,238

The following table identifies some of the largest economic incentive deals (removing real estate development and film incentives) offered in Q1 2022. 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.

Notable awards in the business services industry in Q1

Most projects are not nearly as sizable in terms of incentives offered as the top 20 highlighted above. Thus, we’d like to share notable Q1 projects garnering economic incentives in the business services and call center industries in the following table.

Data Source: IncentivesFlow, a service from WAVTEQ Limited

Conclusion

While the metrics of Q1 2022 indicate a strong economy with approximately $5 billion of economic incentives awarded in exchange for $42 billion of capital investment and the creation of 67,206 new jobs, the highest amount since Q2 2019, increasing inflation and supply chain issues may drastically affect these metrics next quarter. We will continue to analyze these changes on a quarterly basis.

Please note that the analysis above is based on publicly available data at the time of this blog. In addition, the current quarter’s data is compared to the information available at the time of prior quarterly blogs.

For additional information about these projects and others, please contact me at krendziperis@siteselectiongroup.com with any questions.
Contributions by Matthew Kahn.