LG Plans $2.8B Phoenix-Area Plant

by Gail Kalinoksi

A plan by ES America LLC to build a $2.8 billion, 1 million-square-foot manufacturing plant on 300 acres in Queen Creek, Ariz., has received approval from town and Pinal County officials.

If the company acquires the 650-acre site owned by the state of Arizona at an Arizona State Land Trust auction in April, construction is expected to begin soon thereafter, with completion estimated by December 2024. The minimum bid for the 650-acre property at the April 19 auction is $84.4 million.

Numerous media reports identify LG Energy Solution Ltd., part of the South Korea-based electronics giant LG, as the principal of ES America. The plant, which would hire as many as 2,800 full-time employees, is expected to produce batteries for electric vehicles, most likely for electric semi-truck manufacturer Nikola Corp. An article late last year from the Yonhap News Agency reported LG Energy Solution and Nikola had signed a long-term battery supply contract in 2021. Nikola is building a 1 million-square-foot manufacturing facility in Coolidge, Ariz., also in Pinal County and about 26 miles from Queen Creek.

The Queen Creek Town Council last week approved a development agreement between the town, Pinal County and ES America LLC for the 300-acre site. The Town Council also approved a Foreign Trade Zone designation for the entire 650-acre parcel. The FTZ allows “domestic activity involving foreign items to take place prior to formal customs entry,” according to town documents. “Duty-free treatment is accorded items that are re-exported and duty payment is deferred on items sold in the U.S. market, thus offsetting customs advantages available to overseas producers who compete with producers located in the U.S.”

The FTZ designation also provides a property tax benefit, reducing the real and personal property tax rate from 18 percent to 5 percent, the Phoenix Business Journal reported.

National Search

The selection of the Queen Creek site came after a “national search involving multiple states and regions,” according to town documents. The advanced manufacturing facility will be the largest manufacturing development in town history, according to information about the project posted on Facebook by Queen Creek Vice Mayor Jeff Brown.

The town noted the project will have “significant, positive economic and fiscal impacts,” including economic output, labor incomes, new jobs and new state, county and Queen Creek tax revenues. Direct revenues for the town are estimated to be about $25 million for one-time revenues such as construction sales tax and annual revenues between $3 million and $4 million once the plant is operating.

Indirect impacts will include increased demand for the supplier industries that provide services and products that will support the construction and operations of the plant. Those include suppliers that provide construction materials and restaurants that will serve the construction workers and later plant employees.

Donation of rights of ways to the town is valued at $3.6 million.

There has been a recent increase in major companies locating giant manufacturing campuses in the Greater Phoenix area. Intel is expanding its Ocotillo campus in Chandler, Ariz., by adding two new factories for a total investment of $20 billion. Taiwan Semiconductor Manufacturing Co. has begun construction of a 3.8 million-square-foot manufacturing campus in Phoenix at a cost of $12 billion.

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