Tennessee puts clawbacks in Ford incentive package after lesson from Hemlock Semiconductor

Hemlock Semiconductor
Posted at 3:59 PM, Oct 22, 2021
and last updated 2021-10-22 19:08:31-04

CLARKSVILLE, Tenn. (WTVF) — The State of Tennessee is promising nearly a billion dollars in incentives to the Ford Motor Company, to build an electric vehicle plant in West Tennessee. But what happens to that money, if the deal falls through?

It turns out, the state has learned its lesson after that exact nightmare scenario played out in Clarksville a few years back.

"This is a really big win for the state," said then-Tennessee Governor Phil Bredesen to NewsChannel 5 back in 2008.

The crowd inside Austin Peay State University's Mass Communications' auditorium gave state leaders a standing ovation after Hemlock Semiconductor announced they would be creating initially 500 jobs, and then eventually 1,400 jobs, to manufacture polysilicon, a key component in solar panels.

"It’s my understanding, this investment could be the single largest investment for the state of Tennessee ever," said then-Clarksville Mayor Johnny Piper in 2008.

But it would never open.

During construction, market conditions plummeted the value of polysilicon. In 2014, Hemlock Semiconductor pulled the plug on their Clarksville location. "So we were both surprised and disappointed to get that announcement from them," said then-Governor Bill Haslam in 2014.

But even without creating a single long-term job, the state still had to pay Hemlock Semiconductor nearly $100 million in construction grants. The reason? Their incentive package didn't include clawbacks. "Those have become standard procedure with the state after what happened up in Clarksville," said NewsChannel 5 Political Analyst Pat Nolan. "It’s the old saying -- once burned twice remembered. I think when the state got burned like that -- because it was several million dollars involved -- they made sure they didn’t get themselves and the taxpayers in that situation again."

In the Ford Blue Oval City Deal, the state can get some money back if it doesn't create the number of jobs as promised. "We have a lot riding on that investment in terms these of jobs," said Nolan.

But some of the incentives for Ford can never be paid back, like construction, roads and utility improvements. The hope is, if the Ford project ever failed, another company could benefit from those improvements, too.

That's what eventually happened in Clarksville. Shortly after HSC moved out, a Google Data center took over the property. However, Google only hired less than 70 people for that location.

Hemlock Semiconductor received more than $300 million in local and state incentives in all. However, since the plant never officially opened, the company only received $95 million because they were already spent on construction and were not given a clawback provision.