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Missouri Battery Maker Expanding In Michigan

Kokam America Inc. is partnering with Dow Chemical for an 800,000 square-foot plant in Michigan to build batteries for hybrid and electric vehicles.

JEFFERSON CITY, Mo. (AP) -- Missouri Gov. Jay Nixon said Tuesday that a Kansas City-area battery maker is headed to Michigan for a proposed 900-job expansion and that legislative delays on an economic development package are to blame.

But the company's president said later Tuesday that it still is considering building a similar-sized plant in Missouri.

Lee's Summit-based Kokam America Inc. announced Tuesday it was partnering with Dow Chemical Co. for an 800,000 square-foot plant in Michigan to build batteries for hybrid and electric vehicles.

According to documents filed with Michigan officials, the plant would employ 885 people and pay them a weekly wage of $730, or nearly $38,000 a year.

At a news conference in the governor's office, Nixon cited the announcement as an example of the consequences of legislative delays in an economic development bill favored by the Democratic governor.

Nixon said the bill, which is stalled in the Senate, would have boosted the incentive package Missouri could have offered to Kokam by $24.2 million.

"We could have been in the running for these jobs," he said.

Kokam president Don Nissanka said later Tuesday that despite the Michigan announcement, the company hopes both to expand its existing plant and build another 800,000-square-foot plant in Missouri.

"It's not one plant, it's probably 10 plants," Kokam said in an interview with The Associated Press. "Our plans are still to expand in Missouri. We are not eliminating that."

Kokam currently produces lithium polymer batteries for the U.S. Department of Defense and has a contract with a Kansas City electric vehicle company at its 50,000 square-foot Lee's Summit plant.

Many hybrids currently use traditional batteries, but Nissanka said lithium is both lighter can hold more energy.

"I think you're going to see a significant increase in the role lithium batteries play in the automotive industry," he said.

Nixon spokesman Scott Holste said officials were aware of Kokam's long-term plans but that Missouri still missed out on an immediate opportunity.

The economic development legislation expands several existing business tax incentives, such as the Quality Jobs and Business Use Incentives for Large-Scale Development programs.

The Quality Jobs program, created in 2005, allows employers to earn tax credits and keep part of the payroll taxes for newly hired employees who earn above average wages and receive health care benefits through their jobs.

The BUILD program is designed to encourage manufacturing companies to construct new plants in Missouri. The program awards tax credits to companies to pay off bonds used to build their plants.

Nixon told reporters Tuesday that much of the state's package for Kokam relies on those programs, plus some money for job training, and therefore had to include asterisks because it is unclear whether senators will go along with expanding the two programs.

"When you send out an economic development package to somebody and two of your big numbers -- two of your key numbers -- have asterisks next to them ... that puts us at a competitive disadvantage," he said.

Lawmakers have said those programs -- in addition to a proposed new research tax credit -- also could help encourage St. Louis-based Monsanto Co. to build a proposed new facility in Missouri instead of Iowa.

But the legislation has been stuck in the Senate as some lawmakers seek to place new restrictions on tax credits.

Michigan has created a series of special tax breaks for makers of electric and hybrid vehicle batteries. The state is seeking to re-brand itself as a hub for battery research and manufacturing.

Part of the Missouri legislation would increase the annual amount of tax credits that can be authorized under the BUILD program from $15 million to $25 million.

Although the BUILD program has been consistently under its annual cap, Department of Economic Development spokesman John Fougere said the state still needs the extra cap room.

Under next year's budget, pending and approved BUILD proposals total $14.9 million in tax credits. Fougere said the department would have to wait for a pending proposal to fall through before making another one, because the state can't risk going over the cap if all proposals win approval.

"We can't send up more proposals at this point," he said. "Once we hit that ceiling of $15 million, we're out of the game."

To be eligible for the BUILD tax break, a company must invest at least $15 million toward a project and hire at least 100 new workers in three years.

Tax breaks are capped at 5 percent of the total wages of new workers employed by the project. For example, if Kokam were to add 885 employees with an annual salary of $38,000, it could receive $1.6 million. If it builds a plant in an area designated as "distressed," those credits could be doubled.

Associated Press writer Chris Blank contributed to this report.

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