As a native Kentuckian, I am very excited about the new Lexus ES350 plant to be built in Kentucky. However, I find myself wondering if I am 146.5 million dollars excited. That figure is the amount the state of Kentucky will be giving to Toyota, and Lexus by extension, in the form of tax breaks and other incentives in order to secure the plant being built in Georgetown. Obviously, the plant will be a boon to the economy, but I am curious rather or not the benefit justifies the substantial cost.
On the one hand, the plant will bring around 750 permanent jobs, and many temporary construction jobs to Georgetown, as well as large tax revenues. But, is it worth almost a hundred and fifty million dollars? Looking purely at permanent jobs, the state of Kentucky will be paying roughly 195,000 dollars per job. In comparison, the CBO reports that during federal stimulus spending from 2008 to 2010 the US government was paying roughly $500,000 to $4,000,000 PER JOB! So, maybe Kentucky isn’t making out to badly for itself.
However, even if it is cheaper then what the federal government is “paying for jobs,” I have a feeling the plant could have been secured for much less. Toyota already operates a Georgetown Kentucky plant producing the Toyota Camry, a platform cousin to the ES350. In 2009 over 60% of ES350 sales occurred in the US. With a strengthening YEN, it makes little sense to produce a car in Japan when the large majority will be exported to the US. An established production infrastructure in the Georgetown area makes it a prime location for the new ES350 plant. Knowing Toyota has these incentives to build its plant in the area already, I cant help but feel like the state of Kentucky “overpaid” for this new plant.