LANSING — The Michigan Economic Development Corp. announced that the Michigan Strategic Fund will provide a $1.5 million Michigan Business Development Program incentive to Sakthi Automotive Group for the establishment of a new plant in Detroit, a project that will generate up to $18.6 million in new private investment and add up to 183 new jobs.
The MSF also voted to provide a $2.5 million incentive to Hyundai America Technical Center Inc. to expand its operations in Michigan by building a world class hot and cold weather dynamometer test facility at its Superior Township location south of Ann Arbor.
Sakthi Automotive Group is a division of the Sakthi Group, one of the fastest growing business groups in South India. A major supplier of safety critical automotive components including steering knuckles, control arms, brake drums, brake discs, hubs, brake calipers and carriers, Sakthi Automotive has received a $1.5 million Michigan Business Development Program incentive to locate its first North American facility in the City of Detroit. Sakthi proposes to invest up to $18.6 million to purchase and upgrade an existing vacant building in Detroit, creating up to 183 new jobs as a result of the project. Michigan was chosen over a competing site in South Carolina. The City of Detroit has offered support in the form of a 12-year tax abatement to the project.
“Michigan has proven to be a progressive and strong partner for Sakthi and Sakthi’s end customers,” said Sakthi chairman M. Manickam. “Sakthi and Sakthi’s end customers share mutually beneficial plans to continue to provide world-class, progressively designed vehicles and vehicles subsystems together as Michigan remains famous to the entire world of car performance enthusiasts and value-conscious customers alike.”
As for Hyndai, the company will invest $15 million to construct the building and add 50 full-time jobs over the next five years. The State of Michigan will fund construction of a new power substation at the Superior Township location that will improve the power output to the building. Superior Township has offered support to the project in the form of a tax abatement.
Hyundai announced its expansion in January at the 2012 North American International Auto Show in Detroit.
Superior Township’s willingness to provide incentives for Hyundai’s expansion was critical to the success of the project, according to Paul Krutko, Ann Arbor Spark president and CEO.
“It’s this type of collaborative economic development between Ann Arbor Spark, the state and regional communities that makes business choose to locate and grow here. Ann Arbor Spark’s business development team proactively works with businesses in the region to meet their needs as they grow and evolve,” Krutko said. “Working with Hyundai, Ann Arbor Spark was able to identify ways that the region and state could support the growth of the company’s North American technical center.”
Gov. Rick Snyder met with Hyundai executives in Korea during his trade mission to Asia last fall, when he led a delegation to promote business opportunities in Michigan to major company executives and to meet with Japanese, Chinese and Korean government officials.
Signed into law by Snyder in December, the Michigan Business Development Program provides grants, loans and other economic assistance to qualified businesses that make investments or create jobs in Michigan, with preference given to businesses that need additional assistance for deal-closing and for second stage gap financing.
The MSF will consider a number of factors in making these awards, including: out-of-state competition, private investment in the project, business diversification opportunities, near-term job creation, wage and benefit levels of the new jobs, and net-positive return to the state. Business retention and retail projects are not eligible for consideration of these incentives.
The Michigan Business Development Program replaces the state’s previous MEGA program that was a feature of the Michigan Business Tax that was eliminated under business tax restructuring legislation approved and signed into law by Snyder in May 2011. The Michigan Business Development Program and Michigan Community Revitalization Program are MEDC Business Attraction and Economic Gardening programs, supported by the MSF state general fund appropriation.
For more on the MEDC and its initiatives, visit: www.MichiganAdvantage.org.