Panasonic battery plant
Gov. Kevin Stitt speaks during a press conference Monday, April 18, 2022, asking the Oklahoma Legislature to pass expanded business incentives. (Tres Savage)

(Update: In the days following this article, the House passed HB 4455 by an 81-17 vote, and the Senate passed it by a 41-5 vote, which sends the bill to Gov. Kevin Stitt.)

Days ahead of a potentially monumental vote by Panasonic’s board of directors regarding the location of a $4 billion North American battery plant, Gov. Kevin Stitt requested and legislators advanced a proposal today creating a new business incentive rebate program aimed at bringing the Japanese company and 4,000 jobs to Oklahoma.

Called “Project Ocean” by state leaders who have signed non-disclosure agreements, efforts to land the Panasonic battery plant have been underway for months, with members of the Stitt administration and the Department of Commerce trying to pitch a package of economic incentives to compete with a $1.2 billion package offered by Kansas. Panasonic has existing agreements with Tesla, which has a new factory in Austin, and Canoo, another electric vehicle manufacturer that has announced plans for manufacturing and research operations in northeast Oklahoma.

Like Canoo, Panasonic’s proposed plant would be built in the MidAmerica Industrial Park in Pryor — if the company’s leadership selects Oklahoma as the final location.

During a 1 p.m. press conference today, Stitt said a non-disclosure agreement prevented him from saying the word “Panasonic” or revealing exact job estimates and financial figures related to the project. But numerous people with knowledge of the situation have confirmed Panasonic is the company in question.

“If we can land some of these major, major companies and some of these investments, it will have a generational impact on the state of Oklahoma,” Stitt said. “The supply chain that will follow is just unbelievable.”

Legislature advances LEAD Act incentives

House Minority Leader Emily Virgin (D-Norman) asks a question of House Speaker Pro Tempore Kyle Hilbert (R-Depew) regarding HB 4455 on Monday, April 18, 2022. (Tres Savage)

Less than four hours after Stitt stood solo at a podium and publicly requested the enhanced business incentives, the Legislature held near simultaneous meetings of their Joint Committees on Appropriations and Budget to hear HB 4455, dubbed the Large-scale Economic Activity Development Act, or LEAD Act.

However, the bill revealed by the Legislature contained a different incentive than what Stitt promoted during his press conference. Instead of “kickers” to raise the percentage of existing Quality Jobs Act and investment tax credits, as discussed by Stitt, legislative leaders opted for a straight 3.4 percent “rebate” on qualified investments. It also created a Large-scale Economic Activity Development Act Fund that will require a direct legislative appropriation and will functionally cap the program at a set cost to the state.

The bill defines qualifying projects as those featuring at least $3.6 billion in capital expenditures that yield at least 500 direct jobs during their first year, at least 1,000 direct jobs during their second year, at least 2,500 direct jobs during their third year and at least 4,000 direct jobs in their fourth and fifth year.

While the 13-page bill is complicated, its first section opens with a value statement from lawmakers explaining their willingness to create such a program.

“The Legislature hereby finds that it is beneficial to the state and its citizens to provide large-scale enhanced economic development incentives to certain establishments, including, but not limited to, those associated with an industry that creates a substantial number of jobs, as such economic activity results in a greater benefit to the state,” HB 4455 reads.

Lawmakers are expected to appropriate $698 million in money carried over from prior fiscal years to the LEAD Fund for the program’s investment-based rebates, according to House Speaker Pro Tempore Kyle Hilbert (R-Depew).

Hilbert presented the bill in the House committee and spoke of “safeguards” that make the LEAD Act different from prior incentive programs “where we have no caps on a fund it’s just kind of growing and growing and growing out of control.”

House Appropriations and Budget Chairman Kevin Wallace (R-Wellston) said he was under a non-disclosure agreement regarding the company at the center of HB 4455. House Majority Floor Leader Jon Echols (R-OKC) said he was not.

“I’m not under a non-disclosure agreement, so all I know is what I’ve read about in the papers, and it’s like the worst kept secret in the world,” Echols said.

House Minority Leader Emily Virgin (D-Norman) asked Hilbert whether he was concerned that depositing hundreds of millions of dollars in the proposed LEAD Fund could “eat away at [our budgetary] cushion that we need to have when there is inevitably an economic downturn.”

“We would still have the largest state reserves that we have ever had in the state of Oklahoma,” Hilbert said.

Rep. Collin Walke (D-OKC) suggested that lawmakers’ constituents may find the price tag of the new incentive program to be unpalatable.

“How am I supposed to go back to my constituents and say, ‘I gave away three-quarters of a billion dollars to a company that I don’t even know their name?’ Is that responsible?”

Hilbert said the question before lawmakers is whether their campaign-trail statements about growing and diversifying Oklahoma’s economy have just been empty promises.

“If we land this mega deal, it will be national and international news,” Hilbert said.

The House JCAB advanced HB 4455 by a 27-3 vote. The Senate JCAB advanced the same bill by a 16-5 vote.

Stitt: ‘If I don’t get it passed, it’s not happening’

Earlier in the day, Stitt said the LEAD program needed to be approved by lawmakers and signed on his desk “this week” for Project Ocean to become a reality in Oklahoma.

“If I don’t get it passed, it’s not happening,” Stitt said. “It’s our understanding that the company needs to make a decision fairly quickly.”

Stitt said companies like Panasonic “don’t necessarily ask for this stuff.”

“But they do have a fiduciary obligation to their shareholders,” Stitt said. “We do compete against every other state.”

Asked how he justifies dedicating hundreds of millions of dollars in what could be state savings to a multi-national company that could have limited tax liabilities, Stitt said the creation of thousands of jobs and a permanent manufacturing plant will benefit Oklahoma for decades.

“Companies don’t drop billions and billions of dollars on the most advanced manufacturing facility in the country and then pick up and move shop in five years or 10 years,” Stitt said. “These companies will pay taxes. They will have employees that pay taxes. There will be vendors who pay taxes. There will be property taxes. There will be homes with employees that live there who pay taxes.”

Stitt said automakers are transitioning heavily into electronic motors and that the current “disruption in the automobile industry” means now is the right time to pursue major companies as they invest plan their new investments.

“As I’ve met with other automobile manufacturers around the country, it is clear we are moving into an age where all of the resources and all of the research and development money are moving into electric vehicles. With that said, we’re going to go after that new technology, so we have done a lot of things to prepare Oklahoma for that industry,” Stitt said. “Tens of billions of dollars are going to be invested int he next five to seven years in this space. (…) We have an opportunity to land one of the largest factories in the country.”

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Connections with Canoo

Stitt and other state leaders say an investment the size of Panasonic’s proposed battery plant does not come along every day, and Panasonic’s existing agreements with Tesla and Canoo are being pointed to as potential seeds for even more future investments in Oklahoma.

Under the LEAD Act, Canoo could also qualify for some enhanced state business incentives related to an expanded Quality Jobs Act program, but only if Project Ocean — the Panasonic battery plant — comes to fruition in Oklahoma. That component is outlined on Page 7 of the bill.