Panasonic selects Kansas for vehicle battery mega-factory

FILE - People walk by the Panasonic booth during CES International, on Jan. 9, 2018, in Las Vegas. Japan’s Panasonic Corp. selected Kansas as the location for a multibillion-dollar mega-factory to produce electric vehicle batteries for Tesla and other carmakers, Gov. Laura Kelly announced Wednesday, July 13, 2022.

OKLAHOMA CITY — Lawmakers aren’t yet sure if or how they’ll spend the $698 million in cash incentives they set aside as part of a failed bid to bring an electric vehicle battery plant to Pryor.

Republicans say that only a little over a week has elapsed since Panasonic announced that it had chosen Kansas over Oklahoma for the new plant that was expected to create as many as 4,000 jobs.

Some Democrats say Oklahomans are suffering now, and that it’s time to reinvest those economic funds into the state’s people and infrastructure.

For months, Kansas and Oklahoma legislators wooed the Japanese company. In an attempt to seal the deal, Oklahoma lawmakers created a taxpayer-funded rebate incentive program that offered up to $613 million to a “mega project” like Panasonic, and another $85 million to a second project related to the same industry. The incentive provides a 3.4% rebate of the investment over five years up to the balance of the fund once capital expenditures and jobs are created.

In May, uncertain that Panasonic would choose Oklahoma, legislators gave themselves the power to reallocate the funds if necessary.

“It’s a little premature to say what will happen with these funds,” said state Rep. Kyle Hilbert, R-Bristow, speaker pro tem. He said that it’s only been a week since Panasonic announced it had rejected Oklahoma’s bid.

Hilbert said the funds remain in a state account, available for any company to use that can meet the job and capital expenditure benchmarks. He anticipates the state will continue to pursue Panasonic in hopes that it will build a second battery plant, but he said they also continue to pursue other companies and opportunities.

Speaking by phone from the Farnborough Air Show in England, Hilbert said state leaders are working to expand the international presence of Oklahoma and promote the state’s low taxes, low utility costs, business-friendly regulatory environment and strong CareerTech programs.

He also said he’s heard from companies across the world that are potentially interested in investing in Oklahoma, though perhaps not at Panasonic’s level.

“I think the message for the $698 million is, ‘Hey, if there is a big opportunity, we’ve sent a message that we’re open for business, and we’re willing to get creative and think outside the box for whatever it takes to help grow and diversify our economy as long as it’s going to be a good return on our investment for taxpayers,’” Hilbert said.

State Sen. Chuck Hall, R-Perry, who serves as vice chair of appropriations, said there are several different directions the state can go.

“We’ll be looking at this for over the next couple of months to determine the best use of those funds,” Hall said.

He said Panasonic has indicated that while it selected Kansas for its battery plant, it might be interested in opening a second in Oklahoma. He expects lawmakers will spend several weeks working with Panasonic officials to get a better sense of whether there’s any urgency.

“We’re trying to get our arms around what that really means, and what the timeline of that is,” Hall said. “At some point, though, you’ve got to kind of fish or cut bait. It would be my guess that those dollars need to be deployed in the most effective way to help Oklahomans.”

He said lawmakers aren’t expected to return for a special session until late September or early October, so the money would remain in the fund until then.

Hall said if it doesn’t look like Panasonic will be coming, he’d like to see some money left in the fund in anticipation of another mega project coming.

“Who knows, this might now open the door for another mega group to come in and provide a large number of jobs and a large investment in Oklahoma,” he said. “So I think a certain amount of money should be left in that fund, and then, what we don’t anticipate will be used, we need to turn it into some sort of benefit for Oklahoma.”

But state Rep. Trish Ranson, D-Stillwater, said the state needs to reinvest it now. She said Oklahomans are grappling with record inflation and struggling to pay for groceries, gas and utilities. She said recent decisions to pass billions in winter-weather related natural gas costs onto consumers has made paying utility bills unmanageable for many Oklahoma families.

“Our families are really feeling the pinch and not being able to make ends meet simply because of utilities, gas and groceries,” Ranson said. “So if we can offer some of those funds to help our families with that, I think that would be helpful too.”

She also said the public school system needs further investment. Lawmakers only boosted its budget 0.4% this budget year even though investing in public schools bolsters economic development by training the next generation of workers.

“I think we should be investing it back in public education to make sure that we are creating a workforce that is ready for the next big company to come to Oklahoma,” Ranson said.

State Rep. Josh West, R-Grove, said there’s a chance that Oklahoma could still get some sort of investment from Panasonic. The company’s inability to commit to Oklahoma was why lawmakers opted to place the incentives into a cash rebate program and keep the money in a separate account that could later be spent on other priorities if Panasonic ultimately went another direction.

“There was always a chance that it wouldn’t go through,” West said.

He said he’d like to see some of the money invested in rural areas to expand economic opportunities, but said lawmakers hadn’t yet started having conversations about the fund.

“Who knows,” West said. “I’m sure if you ask all 82 (House) Republicans, I’m sure you’d get 82 different answers.”

Janelle Stecklein covers the Oklahoma Statehouse for CNHI's newspapers and websites. Reach her at jstecklein@cnhinews.com.

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