Signs point to this firm as target of Kansas’ billion-dollar secret bid for JoCo factory
For weeks, Kansas officials have been tight lipped, urging lawmakers and the public to trust them as they sought to commit more than $1 billion in incentives to lure a mystery company.
Republicans and Democrats alike have cited nondisclosure agreements as they’ve kept the name, industry and location of the project secret. Breach of those agreements, they say, would kill the state’s chances at competing with Oklahoma for the project.
Officials in Oklahoma are likewise silent about the nature of the project. But signs and sources now point to a new Panasonic battery plant that would make hundreds of thousands of batteries for electric vehicles.
Panasonic, which has agreements to build batteries to power electric vehicles for both Tesla and Toyota, would likely land outside of De Soto if Kansas wins the project.
Gov. Laura Kelly’s office declined to comment when asked to confirm or deny the name and location of the project.
Public officials, remaining secretive about the nature of the project, convinced a bipartisan majority of the Kansas House and the Senate to rewrite state law earlier this week without knowing what the company makes, where it will go or how much a massive incentive project will ultimately cost taxpayers.
Now the unnamed company will weigh the state’s massive incentive package, which could cost taxpayers some $1.3 billion. Kansas is competing against its neighbor to the south, as public officials there seek to lure the project to the Tulsa area. A small Oklahoma newspaper identified Panasonic as the likely company behind top-secret negotiations there.
The bipartisan agreement reached in Topeka to develop the new business incentive program now sets up a battle between two World War II era munitions plants that both aim to evolve into modern centers of advanced manufacturing.
In Kansas, officials are hoping to see the factory land at the Sunflower Army Ammunition site just south of De Soto. The Army has been working for years to clean up the site, which is preparing for its first round of private redevelopment.
Some 216 miles to the south, officials hope to see the plant rise up at the MidAmerica Industrial Park in Pryor, Oklahoma, about 45 miles outside of Tulsa. That park is already home to dozens of industries and local officials have been considering new tax breaks for a 700-acre portion of land.
Kelly and Lt. Gov David Toland said new legislation was needed to compete for megaprojects, those where private companies invest more than $1 billion. In previous years, the administration said, Kansas has lost out on 11 similar projects.
The administration made big promises about the economic rewards such a project could deliver.
Administration officials and lawmakers who signed non-disclosure agreements consistently touted the project as “transformative” for Kansas and its economy. Toland said the company’s arrival in Kansas would result in $2.5 billion in economic activity per year in the state.
Deputy Commerce Secretary Paul Hughes said it would bring an entirely new industry to Kansas. House Commerce Committee Chairman Sean Tarwater said the project would be a good fit for Kansas based on the state’s history of being home to a manufacturing workforce.
Tarwater, Sen. Renee Erickson, a Wichita Republican, and Kelly all said the project could help halt Kansas’ “brain drain,” in which the state’s college graduates take jobs outside Kansas.
“A company coming in like this, offering to bring a really really new industry to Kansas, not unlike the aviation, will give us the opportunity to own a new market,” Tarwater said during the House debate on the program. “It’ll give our kids an opportunity to stay here and work for companies they are proud of.”
Erickson wouldn’t comment on speculation of what the project was but affirmed that she believed, if done right, the benefit could be major.
“In order for us to be competitive, we’ve got to do something,” Erickson said. “What we’re hoping is that we will be able to bring some of those students home and have opportunities for them to have good paying jobs.”
Senate President Ty Masterson, an Andover Republican, told reporters earlier in the week that the incentive passed despite the secrecy because of “trust” within his caucus.
But lawmakers in both chambers that opposed the plan said it was bad governance to approve such a large sum of money without knowing where it would go.
“If I were betting my own money I might even buy into the deal,” said Rep. John Carmichael, a Wichita Democrat. “I’m not betting my own money. I’m betting my constituents’ money and their children’s futures.”
The incentive program approved by the Legislature includes refundable tax credits, training costs and payroll tax incentives for the main company and five of its suppliers. The total amount provided to the company is based on the size of the investment.
Provisions were included in the bill allowing Kansas to claw back some of those benefits if the company fails to meet the terms of its agreement with the state.
Kansas City’s site
In the Kansas City area, the 9,000-acre Sunflower site remains the metro’s largest undeveloped property.
While the Army’s cleanup efforts will continue for years, officials say more than 1,100 acres of the site are near shovel-ready and should receive their final state and federal environmental approvals soon. That acreage, in the northeast corner of the Sunflower campus, could be ready for new development this year.
De Soto Mayor Rick Rick Walker and the city manager said they could not discuss the megaproject the state is pursuing because of nondisclosure agreements they have signed.
Last month, De Soto annexed 6,000 acres of the Sunflower site as it gears up for major redevelopment. The Sunflower plant sits south of K-10 between Lawrence and Olathe. The De Soto City Council approved the first step of a massive incentive package that will help the developer fund demolition and environmental cleanup.
“There’s large portions of the site that are suitable for large scale manufacturing, light industrial and e-commerce type uses,” said De Soto City Manager Mike Brungardt.
Just down the road from Sunflower sits another mega site primed for development.
Flint Development plans to build as much as 3.5-million-square-feet of industrial facilities on undeveloped farmland. The council recently annexed the company’s 370 acres near the intersection of Edgerton Road and West 103rd Street.
In an agreement with the city, Flint Development has agreed to build a 500,000-square-foot speculative building if no other developments on the site move forward over the next year.
Officials with that company did not respond to a request for comment.
Brungardt said that both sites could house a major industrial project soon. Both were rezoned for light industrial, which could include a major manufacturer, he said.
“I think from a planning and infrastructure standpoint they’re both on equal footing,” he said. “The Flint property is maybe more turnkey because it doesn’t have the remediation issues. I would see the Flint property more advanced than the Sunflower plant. But there are portions of the Sunflower plant that are immediately available.”
Brungardt said something like a 4,000-employee factory would be welcomed in De Soto.
“It would be an absolute game changer. It would be the next economic generator of the county and of the state,” he said. “We’ve been long aware that the potential for that sort of thing exists on Sunflower.”
Initial plans for Sunflower envisioned a multi-building development centered on warehousing and logistics, similar to the massive buildings that have multiplied around Edgerton’s intermodal facility off of Interstate 35.
But John Petersen, a representative for the Sunflower Redevelopment, said developers are interested in other uses like tech manufacturing. He said the site could easily house the type of major employer that state officials are trying to woo.
“We’re not intimately involved in that bill. That’s Commerce’s initiative” he said. “What we’re focusing on is getting ourselves in a position to develop Sunflower in the very near term so we can take advantage of those types of activities.”
Oklahoma and electric vehicles
Last month, officials from Mayes County, Oklahoma, home of the industrial park, visited a factory in the Nevada desert as they considered their mystery prospect.
After three days of touring a single facility, one county commissioner told The Paper, a weekly newspaper in Mayes County, that he was “wore out.”
While officials did not disclose the exact location of their visit, the newspaper identified it as Tesla’s massive Gigafactory, a still-growing factory outside of Reno that is expected to become the world’s largest building when it’s completed.
Despite similar secrecy in Northeast Oklahoma, The Paper reported that Panasonic is the company believed to be behind the undisclosed factory.
Crucial for the Oklahoma site is an existing agreement from startup Canoo, which has committed to building a $400 million electric vehicle factory at the MidAmerica Industrial Park. The state reportedly awarded some $300 million in incentives to land that project.
But Canoo has experienced problems of late that could threaten the project.
After several leadership changes and wider market concerns, the Los Angeles-based company saw its stock price dip by 20% in January.
As business newsletter author Edwin Dorsey put it, Canoo has experienced “a slew of resignations, self-dealing, consistent losses, a shifting business plan, and has been rife with conflicts.”
Press coverage of Canoo’s trials have some in Mayes County skeptical of the company.
During a recent public meeting there, a resident asked whether Canoo would actually build its factory at the industrial park. Residents were assured that the company would come and notified by public officials that Canoo had an agreement with Panasonic to supply batteries.
Earlier this week, Oklahoma Gov. Kevin Stitt touted the company during his State of the State address, where Canoo CEO Tony Aquila was on hand.
Batteries make up nearly a third of the cost of building electric vehicles. And the EV industry is expected to continue its rapid rise in the coming years — General Motors, for instance, says it will only offer zero-emissions cars by 2035. Rapidly shifting consumer preferences for hybrids and electric vehicles has pushed legacy auto makers and upstarts to spend billions to perfect the technology and meet demand.
Osaka-based Panasonic has inked several agreements with vehicle makers. Aside from its recently announced deal with Canoo, the company created a joint venture with Toyota and plans to start making batteries at a new North Carolina plant by 2025. And Panasonic is expected to begin producing batteries for Elon Musk’s Tesla sometime next year.
Panasonic in 2020 announced plans to invest $100 million in battery production at Nevada’s Tesla plant. But late last month, Panasonic announced it would begin making batteries for Tesla in Japan after having trouble getting a large-scale battery plant online in the United States.
Officials with Panasonic did not respond to The Star’s request for comment.
Kansas officials told reporters they didn’t expect a decision from the company they are courting for several weeks.
But after discussing the pitch in a closed session of the State Finance Council Thursday, Kelly told reporters she was “very optimistic” that Kansas would land the company with the help of new incentives.
“A lot of people put their heart and soul into this,” Kelly said. “We were ecstatic with the bill that got passed because we think that it provides us with the tools that we’re going to need to win this.”
The Star’s Jonathan Shorman contributed reporting.
This story was originally published February 11, 2022 at 4:48 PM.
