Three weeks after Michelin announced plans to close an Ardmore tire manufacturing plant at some point in 2025, the Oklahoma Development Finance Authority approved a Department of Commerce plan today to use the next two years of the company’s payroll taxes in an attempt to avoid subsequent job loss among suppliers and to improve the chances of landing another manufacturer for the facility.
The state agencies have estimated that Michelin will pay about $5 million in payroll taxes to the Oklahoma Tax Commission as its workforce is gradually reduced. Under existing statutory authority, the ODFA will capture those funds and create an application-based process by which the money can be used to:
- Improve and market the building being vacated by Michelin at some point in 2025 and spur entrepreneurial efforts in the Ardmore area; and
- Provide investments to support expansion of businesses that are state-based suppliers to the current Michelin plant.
The Rapid Community Response Program concept is similar to the agencies’ jointly operated Oklahoma Innovation Expansion Program, which leverages payroll taxes in the bond market to finance loans supporting expansion projects for Oklahoma businesses, with one key difference.
“These are technically direct placements, if you will,” said ODFA director Mike Davis. “We’re not going to the market. We’re not selling public debt. We’re moving these dollars directly from the state to projects that Commerce has determined to have a net-positive benefit.”
While Michelin’s decision to shutter its Ardmore factory is expected to reduce local employment by about 1,400 people, state leaders have been concerned that a potential “domino effect” that could be felt in the Carter County area and in other parts of the state where other companies will experience business loss when they can no longer supply services and goods to Michelin.
“We’re using existing tools to mitigate the negative effects of a very significant job loss,” Davis said. “There are known Oklahoma suppliers, and they’re not just in that region. They’re all across the state. All of those will be eligible if they can identify a project that is a net-positive benefit, creates jobs and gives them new capabilities or helps them service new customers so that we don’t have the domino effect.”
John Chiappe, director of research and economic analysis for the Department of Commerce, made a brief presentation to ODFA members Thursday.
“We will work with the Ardmore Development Authority on being part of their task force so we can be part of their strategic planning,” Chiappe said. “[We want] to ensure that any asset that is currently owned by Michelin remains a marketable asset. We don’t want it to fall into disrepair and become an albatross for the community.”
‘Demonstrate to the community a state investment’
Members of the Oklahoma State Senate discussed the unexpected decision by Michelin, which has made tires in Carter County since 1970, during an Oct. 31 meeting of the Senate Select Committee on Business Retention and Economic Development. Although the company is concluding its tire manufacturing at the property it owns on the northwest edge of Ardmore, a mixing plant inside the 1.5 million-square-foot building is set to remain operative.
“This is not a million-plus square feet facility that is available tomorrow,” Lt. Gov. Matt Pinnell told ODFA board members Thursday. “This is a facility that will not be available for a while. And there is a mixing plant that is not going away. (…) So that’s why this program is going to be so effective where we’re going to be able to pool up to $5 million so we can reach out to businesses looking to expand.”
In a press release distributed by the Department of Commerce, Gov. Kevin Stitt said the Micheline news was “tough” to learn in October.
“I am optimistic about the creation of the Rapid Community Response Program and I’m proud of the work the Department of Commerce is doing to make sure the people of Ardmore land on their feet,” Stitt said. “It was tough to lose a key economic contributor that brought commercial activity to Ardmore for over 50 years, but we’re looking to the future and ensuring that Oklahoma doesn’t miss a beat. We will continue to work to make our state the best place to do business.”
Pinnell said after Thursday’s meeting that it was important for the state to take action after Michelin announced its decision to close the plant, which the company said was “”not equipped to deliver tires at competitive costs” owing to shifting market forces.
“This program certainly was needed because we wanted to demonstrate to the community a state investment, but also to begin moving as rapidly as possible to start having conversations with those 1,400 employees,” Pinnell said. “Ardmore is the front door to Dallas, and there are not a lot of communities that can say that. Ardmore can. I’m excited for the future in Ardmore because of where it is located, because of the relationship we have with the sovereign nation in the area as well.”
Noting that he anticipates to return to ODFA in the spring with positive reports on the use of the $5 million authorized Thursday, Pinnell said he remains extremely confident in Ardmore’s economic development prospects, something he said he has touted during his five years in office.
“Before this Michelin announcement, when people would ask me, ‘Hey, over the next 10 years, what communities do you think are going to grow a lot?’ Ardmore was always at the top of my list — Ardmore and Durant, in particular, because they’re so close to Dallas and north Texas and Oklahoma (are) just growing into each other. So, I think there are going to be many opportunities in Ardmore for the million-plus square foot facility, and I think there are going to be many opportunities for the 1,400 employees to find other very good job prospects in the area.”
Proposed hydrogen plant discussions continue in Ardmore
During their tenures, Pinnell and Stitt have been pushing for growing companies and international businesses to locate plants and factories in Oklahoma. The largest economic development deal discussed publicly for the Ardmore area involves a hydrogen energy facility proposed by Woodside Energy, an Australian company that announced in December 2021 it had secured a lease option to buy 94 acres from the Ardmore Development Authority and build a liquid hydrogen production facility in the Westport Industrial Park.
Economic development agents and company officials requested about $50 million of incentives to close a financing gap during this year’s regular session, but legislators did not approve the appropriation amid a contentious budget process that included hundreds of millions of dollars for other economic development and housing efforts.
“We’re still working on that project,” Pinnell said. “There may be a future ask next legislative session. We still see a lot of upside with hydrogen projects in Oklahoma, but Woodside is certainly one that we are still having active conversations with.”
Although a joint application between Oklahoma, Arkansas and Louisiana to establish a federally funded hydrogen hub was not approved, Pinnell said he had a conversation with Woodside officials a few weeks ago.
“There could be future legislative action on that,” Pinnell said.
Gooden Group, the public relations firm representing Woodside, provided NonDoc a proposal overview and a statement in September that said Woodside officials are aiming to be ready for a final investment decision this year. Construction would follow the decision to proceed with the project, with first production anticipated for 2026. Referred to as H2OK, the proposed plant would be expected to produce up to 60 tons per day of liquid hydrogen through electrolysis and liquefaction.
The plant could create about 600 jobs during construction and about 30 high-paying jobs in Oklahoma once the facility became operational, the company said.