Toyota gets $43.5 million in tax incentives on $1.33 billion investment

Toyota’s Georgetown plant is getting $43.5 million in Kentucky economic incentives for the $1.33 billion investment in the Scott County plant that was announced Monday.

The investment will be used to enable the plant to make vehicles using Toyota New Global Architecture, a system designed to make the company more nimble in car development.

Described in a Toyota news release, the architecture is “a completely new strategy to the way the company designs, engineers and manufactures its vehicles ... (that) will shorten the development cycle for vehicle improvements and new vehicles.”

Also, Toyota will update equipment and build an all-new paint shop at the Georgetown plant.

Documents released by the Kentucky Economic Development Finance Authority said the average total hourly compensation for jobs at the plant is $45.47. The KEDFA documents specify that, under the Kentucky Jobs Retention Agreement, Toyota must achieve a total cumulative investment of $1.7 billion by March 31, 2020, and must maintain at least 90 percent of a job target of 7,880, or about 7,092 employees.

KEDFA approved the $43.5 million tax incentives shortly after the Toyota expansion announcement was made Monday. The dollar figure combines the incentives from the Lexus expansion in 2015 with the latest investment for a total of $190 million in incentives, said Jack Mazurak, communications director at KEDFA.

The latest $1.33 billion investment doesn’t add jobs to Toyota’s work force of 8,200. Wil James, president of Toyota Motor Manufacturing Kentucky, said the plant had hired 700 employees in the last year. The Georgetown plant is Toyota’s largest plant in the world.

Also during Monday’s announcement, Toyota announced that it will make a donation to Scott County economic development, including three properties at Lanes Run Business Park and $2 million to Scott County United.

Gov. Matt Bevin said during a brief news conference after the announcement that his administration is “big believers in incentivizing people based on things that will come,” and that Toyota will deliver on its commitment.

“Toyota doesn’t do it for the incentives,” said Bevin, who owns a 1998 Toyota minivan.

Asked whether other states had been in the running for all or part of Toyota’s investment, Bevin said the Toyota New Global Architecture “wasn’t a given that it would be here first.”

James said, “it really makes good sense” to start the program at the Georgetown plant, because it’s the flagship plant among Toyota’s American production plants.

Even president Donald Trump weighed in on the Toyota announcement, describing it in a statement as “further evidence that manufacturers are now confident that the economic climate has greatly improved under my administration.”

Toyota’s Georgetown plant makes 550,000 vehicles and 600,000 engines a year. Vehicles produced include the Lexus ES 350, Camry sedan, Camry hybrid sedan, Avalon sedan and Avalon hybrid sedan.

In 2015, when production of the Lexus ES 350 began, Toyota invested $360 million and more than 1.5 million training hours to bringing the sedan into the family of cars produced at Georgetown.

Bevin said the Toyota announcement was not the “mystery investment” hinted at during the last hours of the state legislature, when lawmakers approved as much as $15 million for a mystery economic development project somewhere in Eastern Kentucky.

Bevin said the company involved in that announcement has told other states that they are no longer in the running. He said he expects an announcement in the next few weeks.

And the cost of the “mystery investment”?

“That would be north of a billion,” Bevin said.

Eastern Kentucky has been listed as a possible site for the investment, but Bevin said, “I don’t decide for them (the company) where they go.”

Cheryl Truman: 859-231-3202, @CherylTruman