Top Economic Incentive Deals of 2017

Kelley Rendziperis

Kelley Rendziperis | January 23, 2018

Site Selection Group estimates that in 2017 more than $10.12 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. While economic incentives continue to be scrutinized and heavily debated, there is no doubt that they continued to be utilized by states to attract and retain business. 

To help understand economic incentive trends, Site Selection Group has evaluated the economic incentive deals announced during calendar year 2017. 

As of the date of publication, Site Selection Group identified 2,613 economic incentive packages offered to companies across the United States during calendar year 2017, valued at $10.12 billion in incentives.  This is comparable to the 2016’s number of projects at 2,487, but the value is significantly higher with over $3.4 billion more in incentives offered in 2017 over 2016’s $6.7 billion.

Not surprisingly, the combined award of $4.2 billion for Foxconn Technology and Exxon Mobil accounts for most of the differential in overall economic incentive packages from 2016 to 2017.

The companies that were offered economic incentive packages are expected to cumulatively create 392,017 new jobs and invest $79.5 billion of capital, which represents an overall return on investment of approximately 12.7%. The average economic incentive award was approximately $3.9 million and the median value was approximately $330,000.

The most utilized type of economic incentives offered during 2017 continues to be tax credits followed by grant/subsidies and then loan/credits.

Manufacturing continued to be the most awarded industry function as shown in the chart below:

Asset 3.png

The following chart depicts the 2,613 projects broken out by estimated economic incentive values:

Asset 5.png

As reflected in the chart above, approximately 72% of the 2,613 announced projects were awarded economic incentive packages of less than $1 million, and 91% were awarded economic incentive packages valued at $5 million or less. The average incentive value of all 2,613 economic incentives packages is $3.9 million, far less than the average of $230 million for the top 25 announced projects.

The chart below shows the top 10 states for the number of economic incentive packages offered during 2017 with a total of 1,809 projects, or 69% of the total number of announced projects, but represents only 30.4% or approximately $3 billion of total economic incentives value of $10.12 billion.

Asset 4.png

The top 25 announced economic incentive packages totaled approximately $5.7 billion, or 57%, of the total economic incentives offered during 2017 with more than $30.7 billion of capital investment, creation of over 22,500 new jobs, retention of approximately 5,200 jobs. These 25 projects represent a total return on investment of approximately 19%, with an award per net new job of $254,861. 

20 of the largest economic incentive packages during the year

The following table identifies some of the largest economic incentive deals offered, in various industry functions, in the third quarter of 2017. These projects provide a great way to benchmark what range of economic incentives exist for a variety of project types. However, it is important to understand the values are estimated and typically only reflective of state level incentives.

The following table identifies the top economic incentive awards offered in 2017:

Company Location Industry Function Incentive Value ($m) Capex ($M) Jobs Created
Foxconn Technology Co. WI Manufacturing 3,000.00 10,000 13,000
Exxon Mobil Corp. TX Manufacturing 1,200.00 9,300 400
Apple IA Data Center 207.9 1,375 50
DXC Technology LA Business Services 115 0 2,000
Conner Strong & Buckelew NJ Headquarters 86.24 86 111
NFI NJ Headquarters 79.38 79 0
The Michaels Organization NJ Headquarters 79.38 79 87
Cold Spring Harbor Lab. NY Research, Design & Develop. 75 75 30
Blue Origin AL Manufacturing 64.36 200 342
Quest Diagnostics NJ Research, Design & Develop. 61.07 208 384
HB BM East Lansing MI Construction & Infrastructure 60.61 127 125
Credit Suisse Group NC Business Services 53.9 71 1,200
EmberClear IL Manufacturing 50 1,000 30
Creative Planning KS Construction & Infrastructure 44.75 44 404
Amazon KY Warehousing & Distribution 40 1,494 600
Digi-Key Corp. MN Warehousing & Distribution 40 200 1,000
Barclays NJ Business Services 40 19 900
LabCorp NJ Research, Design & Develop. 39.98 150 175
Sanofi NJ Headquarters 39.94 40 0
Wakefern Food Corp. NJ Warehousing & Distribution 39.27 116 390
Wakefern Food Corp. NJ Warehousing & Distribution 39.27 116 390

 

As shown above, the largest incentive package of $3 billion was offered to Foxconn Technology Co. for the construction of a display screen plant in commercial vehicle tire plant in Racine County, Wisconsin.  The company will create 13,000 new jobs and invest $10 billion. This package is dramatically larger than the 2016 largest incentive of $595 million, offered to Continental Tire of the Americas for the construction of a commercial vehicle tire plant in Hinds County, Mississippi. For additional information on the Foxconn project, see my article at: https://info.siteselectiongroup.com/blog/foxconn.

The second largest economic incentive package of $1.2 billion was provided to Exxon Mobil Corp. to build the world’s largest ethylene cracker plant in Portland, Texas, where they will create 400 new jobs and invest $9.3 billion. The third largest project of $208 million was awarded to Apple to construct a data center that will run 100% on renewable energy in Waukee, Iowa. The company will create 50 new jobs and invest $1.4 billion. These three projects in isolation were awarded approximately 44% of the total incentives awarded and represent approximately 3% of the overall jobs created and 26% capital invested for projects reported in 2017. 

In addition, some notable 2017 projects garnering economic incentives in the business services and call center industry functions are as follows:

Company Location Industry Function Incentive Value ($m) Capex ($M) Jobs Created
Honegger/Clean-Tex Serv. NJ Business Services 37.96 15 352
The Allstate Corp. NC Business Services 23.75 22 2,250
E Mortgage Mgmt. NJ Business Services 23.66 24 86
Swiss Re MO Business Services 19.82 19 403
Progressive Corp. OH Business Services 17.4 30 900
Fortuity Holding OH Call Center 7.6 13 200
Senture KY Call Center 4 10 500
Phone Ware CA Call Center 1.45 1 175
Anthem NV Call Center 0.83 5 400
Select Comfort Corp. LA Call Center 0.8 0 225
Tenneco MI Call Center 0.75 23 95

Please note that the analysis above is based on publicly available data at the time of this article and typically only reflective of state level incentives.

For additional information about these project and others, please contact Site Selection Group.

Source: IncentivesMonitor, a service from WAVTEQ Limited.  www.incentivesmonitor.com

 

Let us know what you think!