COLUMBUS, Ohio — Concerns about Intel’s long-awaited multi-billion dollar manufacturing plant in Ohio continue to swell as the tech giant has once again delayed the project — this time until next decade.
The Buckeye State was supposed to have the first-of-its-kind semiconductor facility up and running by now. Instead, Intel’s latest major delay comes amid the “needs” of the business and “broader market demand,” according to executive Naga Chandrasekaran.
The company promised Central Ohio at least $20 billion, now nearly $30 billion, for a plant that would create tens of thousands of jobs. This wouldn’t have been possible without the CHIPS Act, which President Joe Biden signed in August 2022.
The immediate economic impact was supposed to be major, especially for Licking County. The plant was supposed to create 3,000 longer-term, higher-paying jobs, 7,000 construction jobs and tens of thousands of additional jobs. The highest profile were the researchers and facility workers making the chips.
Semiconductors are the chips behind e-commerce, social media, cars, computers and everything that utilizes digital technology, which nowadays is just about everything.
Now, Ohio is anticipating two fabrication facilities — the original is set to be constructed in 2030 with operations beginning by 2031. The second would be completed in 2031 and begin in 2032.
“We’re just really on for a little bit longer ride than what we thought,” said Mike Knisley with the Ohio State Building and Construction Trades Council.
Intel previously blamed delays over the past few years on the lack of the CHIPS Act money, but they received $1.5 billion for the Ohio plant from federal funding in November.
Ohio’s Intel plant moving forward with long-awaited CHIPS Act funding
RELATED: Ohio’s Intel plant moving forward with long-awaited CHIPS Act funding
But now, Chandrasekaran said the company is continuing construction at a “slower pace,” something that Knisely said is part of industry norms — but he also understood why it is concerning.
“We’ve got to have faith in that company,” he said. “It would be disastrous for everybody, not just the trade unions, but for the administration, for the millions of dollars that have been spent on incentives and things like that.”
State Sen. Bill DeMora (D-Columbus) argued that Ohio needs to hold Intel accountable.
“Intel is a huge company, and it’s gonna be a lot of jobs and it’s a huge project, but you can’t let them just hold the state hostage for as long as they want to,” DeMora said. “It’s ridiculous.”
Governor Mike DeWine and the state have already given billions to subsidize the project. Knisely added that the unions and colleges have been training workers. Cities have also been a part of the progress.
“The City of Columbus is planning a nonstop bus route down 161 to get to Intel,” DeMora said, adding about other types of deals Franklin County is making to help out the neighboring county.
Workers have been waiting while the days pass by, Knisley added.
“Some of the larger unions, electrical workers and the pipefitters, spent an enormous amount of money on training, getting ready for this,” he said. “We’ve got a fallback position on this and all the work in Central Ohio. Had we not had that, and we had made all this investment on recruiting and training, it could have been a real detriment to the unions to put that kind of investment in [and not have it pan out] — but thank God that we have other investors around the area.”
DeMora has been concerned about the tech company for months now.
Former CEO Pat Gelsinger suddenly resigned in December.
Where is the CHIPS Act funding for Ohio’s Intel plant?
RELATED: Where is the CHIPS Act funding for Ohio’s Intel plant?
Intel’s stock has dropped more than 50% in the last year while the industry has grown more than 120%. After spending 25 years on the Dow Jones Industrial Average, Intel was replaced on the index by Nvidia, a leader in artificial intelligence, in late November. The company also had mass layoffs in October, cutting 15,000 jobs, slashing its workforce by 15%.
Some officials in Ohio have privately worried that Intel will become another ‘Foxconn’ scandal. In 2023, Ohio-based Lordstown Motors filed for bankruptcy and sued international manufacturer Foxconn for failing to live up to and follow through on their massive investment deal.
“At some point, you got to hold their feet to the fire and either take away some of their tax incentives, start charging them — start taking back some of the money they were promised until they actually do what they’re supposed to do,” DeMora said.
The Ohio Department of Development defended the company in a statement to us.
“Intel’s latest report highlights the progress the company is making on its Ohio One project. The statewide economic impact of this investment is already evident—6.4 million construction hours worked by Ohioans from 83 counties, and more than 430 Ohio companies supporting the effort across 50 counties. We remain confident that Intel will deliver on its commitments to the State of Ohio, and we have every indication that the plants will become operational. Large-scale projects of this magnitude are inherently complex, and while we hope to have the plants online sooner, construction estimates may shift. However, as the agreement stands, Intel is still expected to meet its investment, job, and payroll commitments by 2028, and that has not changed,” spokesperson Mason Waldvogel said.
DeWine’s team also said they still believe in Intel.
“While we are disappointed the plants will not open sooner, construction continues at the Ohio Intel site and the company has continued to tell the state the fabs will be completed and produce chips,” DeWine’s spokesperson Dan Tierney said. “This is a construction delay. The project is moving forward.”
JobsOhio, a private nonprofit that is, for clarity, a partner of the state when it comes to economic development, is also following the same rhetoric.
“Although Intel’s timeline has moved to address market realities, the commitment to creating at least 3,000 jobs and $20 billion in capital investment while continuing construction of its most advanced chip production fabs on Earth in Ohio remains unchanged. One of the competitive advantages of choosing Ohio is that we are a flexible partner with the ability to work alongside Intel as it moves the project forward on its adjusted timeline, placing Ohio at the center of cutting-edge semiconductor production that is essential to American national economic security and national defense,” spokesperson Matt Englehart said.
But DeMora wondered if Intel was breaking their agreement to the state by continually delaying.
No, according to the governor’s office.
Recourse
In a back-and-forth with Tierney, he did explain some of the clawback provisions, which are ways for Ohio to get its money back if Intel underperforms.
“The terms are that they have to make a specific investment, they have to maintain a specific payroll and they have to keep a specific number of jobs,” Tierney said, saying that Intel is making all of those requirements right now.
What isn’t in the contract? A way to ensure the project is completed or operating by a certain date or timeframe. I asked why not.
“The company is upholding its end of the bargain,” Tierney said. “So why argue today over a provision that’s not in the contract and really has nothing to do with what was promised — which was money spent in the state of Ohio’s economy and jobs being created.”
I asked why not have both the benchmarks he mentioned and a completion date provision.
“The purpose of a clawback provision is to get the company to do what it promised, and what it promised was investment and jobs — and those are the terms that we will look at at the appropriate time, which again is far in the future,” he said, noting that the date Intel needs to meet their commitments is in 2028.
Case Western Reserve University business law professor Eric Chaffee said that it is standard to have completion clauses. But because construction is a fickle — and because Ohio clearly really wanted this project — some bargaining was likely done.
“In regard to thinking about contract law, it’s about building relationships between parties, and you have to make choices about what’s important in regard to those relationships,” Chaffee said. “Ohio made choices in regard to what they wanted to insure. There’s still incentives, as far as I can tell, for Intel to get this facility completed, but there’s just not the penalties that might make them a little bit more incentivized to do that.”
They don’t need a completion clause because they already have the benchmarks, Tierney argued.
“We live in the real world where we’re competing against other states to build things here,” the spokesperson answered.
Still, Knisley believes the project will be completed.
“Everybody is bullish on Intel, even with their poor performance on Wall Street, the change in leadership,” he said. “A lot of things that might give people pause on this, but Morgan, we still have all the faith that the project’s going to go on.”
Intel confirmed to me that they are still dedicated to Ohio, and their official comment said that this delay does not “diminish our long-term commitment.”
Follow WEWS statehouse reporter Morgan Trau on Twitter and Facebook.
This article was originally published by a www.news5cleveland.com . Read the Original article here. .