SOAR program promised 8,812 jobs, delivered none

For decades, Michigan lawmakers have sworn that corporate subsidies create prosperity. Yet the Strategic Outreach Attraction Reserve, Michigan’s largest subsidy program, has spent $670 million in three after its inception and has not created any jobs, according to a new report.

Politicians promised that the SOAR would create 8,812 jobs.

In 2021, Gov. Gretchen Whitmer signed Senate Bill 844, which created the Strategic Outreach Attraction Reserve and authorized the state to hand out $1 billion to select companies. “Today, I am proud to sign another bipartisan bill that will build on Michigan’s growing economic momentum, attract billions in investment, and create tens of thousands of good-paying jobs,” Whitmer said in 2022. “The bipartisan legislation will help us grow, attract, and retain businesses in Michigan, ensuring we can lead the future of mobility and electrification and bring supply chains of chips and batteries home to Michigan.”

Two significant projects attracted by the fund have either been paused or shrunk as few Michigan consumers have adopted electric vehicles. About 50,000 EVs are registered statewide, according to the federal government. The biggest barriers to EV adoption are higher cost compared to standard vehicles, range anxiety, and a sparse charging network, according to S&P Mobility, Science Direct and Kelly Blue Book.

General Motors received $480 million to redo its Orion Township assembly plant to build full-size EV pickups. The plant will produce the GMC Sierra Denali EV and the Chevrolet Silverado EV, according to GM’s website.  It has created zero jobs so far.

Ultium Cells LLC received $120 million. It has created no jobs.

The firm Our Next Energy, which was founded in 2020, received over $70 million. In 2023, the company laid off 25% of its employees, CapCon reported.

Ford made headlines with its promised EV factory in Marshall before it cut projected spending by $1 billion and 800 jobs, securing a 2023 award for the worst economic development deal of the year.

The Michigan House road funding plan would cut $1 billion from business subsidy programs and instead use it to fund roads. It also would draw on dedicated corporate income tax revenue, taking it away from the state’s general funds and putting it toward roads.

The SOAR was poorly designed, said James Hohman, director of fiscal policy at the Mackinac Center for Public Policy.

“It allows companies to cash in on taxpayer subsidies without having to create jobs,” Hohman told CapCon. “Lawmakers must wait years to ask for taxpayer money back if deals fail to deliver. It’s good that the House lawmakers are working to redirect this money to roads.”

Only one of every 11 jobs promised by Michigan public officials in business subsidy announcements actually gets created, according to a Mackinac Center for Public Policy study that analyzed two decades of government grants to private businesses.