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I wonder what other cities were under serious consideration. I wonder how Indianapolis stacked up against us. I would think they would be similar.
I can see why Cleveland would be problematic since it's limited to the north by water. So can only expand south, which might already be too crowded.
I wonder about Pittsburgh, Minneapolis, Detroit, Milwaukee, Cincinnati, St Louis, Nashville, Memphis, Charlotte, Atlanta, etc.
Were the incentives we gave the cherry on top?
Intel had confirmed that a site north of Albany, NY was under consideration. It’s also where Global Foundries operates a Fab facility.
Whether Albany, NY made the final bake-off against New Albany, OH (ironic, huh?) is unclear.
Intel mentioned in an interview that one other state actually offered a slightly more lucrative financial package, but Intel picked OH because, among other things, OH made them feel more welcome and was more eager to accommodate them. I think that was in a Dispatch article that I’ve lost due to a paywall.
In another interview, Intel implied that they were put off by some other state(s) set of demands placed on the company during negotiations.
This Intel deal seems ridiculous to me -- $2 billion for 3,000 direct jobs, likely 7,000 additional jobs assuming a reasonable 2-1 multiplier effect, but many of these 7,000 additional jobs will be relatively low-paying service jobs. Ohio is paying over $650,000 for each direct job, money not available to primary and secondary schools or universities, nor available to cities or mass transit.
Half of the $2 billion is for new infrastructure, which likely will benefit greatly major Republican donor Les Wexner and other Republican New Albany area landowners. Certainly, this major economic infusion into the New Albany area will boost land values and benefit Easton Town Center, another Wexner project.
Sadly, all of this was done in secret. The comments in this thread about available land ruling out Greater Cleveland are ridiculous. If the Intel fab could have been built in rural Lorain County near I-480, perhaps much of the new infrastructure wouldn't have been needed, and/or it would have been much less expensive as land in the New Albany area relatively is very expensive. The Intel plant would have been close to Cleveland Hopkins, a larger airport than Columbus.
What additionally disturbs me, especially as a long-time Intel shareholder, is that it seems to me that too few of the goods that will use chips are actually built in the U.S. -- computers, smartphones, TVs, car parts, etc. American cars are largely assembled using many imported parts. Unless the federal government changes its tax and health insurance policies to restore competitiveness for American manufacturers, I worry this new fab complex may prove to be a costly "white elephant." Has any one noticed how Intel's share price has FALLEN since this announcement?
<<
Also hanging in the balance is what the US Government opts for, both in terms of orders and incentives. The Ohio fabs will be used for domestic production of sensitive chips, as the US looks to secure its supply lines. Meanwhile the CHIPS for America Act and its 53 billion in incentives will also be a. Intel for its part isn’t playing coy about its interest in the CHIPS money, explicitly stating that “The scope and pace of Intel’s expansion in Ohio, however, will depend heavily on funding from the CHIPS Act”. In some respects Intel is taking a bit of a gamble by investing in the Ohio location before any CHIPS funding is approved – on a pure cost basis, overseas production is traditionally cheaper – so there is certainly a political element in announcing these fabs and selecting an Ohio location. And as an added incentive to the US Government, Pat Gelsinger has told Time that Intel would even be interested in bringing some chip packaging, assembly, and testing back to the US if the CHIPS Act were funded, which in turn would allow Intel to do every last step of production within the US.>>
[CENTER][/CENTER]
How wise was Ohio to bet so heavily on as of yet non-existent funding from a federal government, arguing facing insolvency and immensely difficult challenges in the years ahead? E.g., will Congress bail out Medicare and Social Security or save the American semiconductor industry? IMO, right now these are not mutually exclusive challenges, but within a few years, this no longer may be true.
Currently, I know of no national politicians who understand how factors such as the lack of a value-added tax or extremely expensive health costs destroy American competitiveness. If this ever changes, the Intel presence in Ohio could be extremely beneficial, but time is of the essence. Some analysts believe Intel is doomed because the U.S. already has lost the tech war, especially if China takes over Taiwan, as seems increasingly possible.
One last point, the Republican toll road (Ohio Turnpike) continues to weigh on economic development in northern Ohio. It now costs over $30/truck to traverse the Turnpike, with the cost escalating by the rate of inflation each year, and I-70 remains free. Who would build anything in northern Ohio dependent in any way on truck transport???
In another interview, Intel implied that they were put off by some other state(s) set of demands placed on the company during negotiations.
What? Like job guarantees and penalties for failure to maintain the expected job levels?
The Ohio negotiators likely were as much interested in the $1 billion of infrastructure headed for the New Albany area as for landing Intel IMO.
I wouldn't be surprised if not a single Democrat was involved in the negotiations, despite the fact that this $2 billion is diverted from local government funds, repair of existing infrastructure, school and university funding, mass transit, etc.
Personally, I don't think there is any doubt the positive impact on Ohio's economy would have been much greater if the $2 billion would have been instead allocated to jobs training credits available to any employer anywhere in Ohio
And all of this was done in secret, and hardly a Democrat, if any, is raising an objection. Sad. Perhaps not surprising as Wexner broke his direct affiliation with the Republican Party in opposition to Donal Trump and now gives token political contributions to Democrats, apparently sufficient to buy their silence.
This Intel deal seems ridiculous to me -- $2 billion for 3,000 direct jobs, likely 7,000 additional jobs assuming a fair 2-1 multiplier effect, but many of these 7,000 additional jobs will be relatively low-paying service jobs. Ohio is paying over $650,000 for each direct job, money not available to primary and secondary schools or universities, nor available to cities or mass transit.
Half of the $2 billion is for new infrastructure, which likely will benefit greatly major Republican donor Les Wexner and other Republican New Albany landowners.
Sadly, all of this was done in secret. The comments in this thread about available land ruling out Greater Cleveland is ridiculous. If the Intel fab could have been built in rural Lorain County near I-480, and much of the new infrastructure wouldn't have been needed, and/or it would have been much less expensive as land in the New Albany area relatively is very expensive. The Intel plant would have been close to Cleveland Hopkins, a larger airport than Columbus.
What additionally disturbs me, especially as a long-time Intel shareholder, is that it seems to me that too few of the goods that will use chips are actually built in the U.S. -- computers, smartphones, TVs, car parts, etc. American cars are largely assembled using many imported parts. Unless the federal government changes its tax and health insurance policies to restore competitiveness for American manufacturers, I worry this new fab may prove to be a costly "white elephant."
One last point, the Republican toll road (Ohio Turnpike) continues to weigh on economic development in northern Ohio. It now costs over $30/truck to traverse the Turnpike, with the cost escalating by the rate of inflation each year, and I-70 remains free. Who would build anything in northern Ohio dependent in any way on truck transport???
This is a bad take overall given the information we have. First of all, the $2 billion is not just for 3,000 jobs. Those 3K were only for the first phase, which supposedly includes 2 fabs. The company plans to build up 8-10 fabs on the site over the next 10 years or so, so the minimum jobs would be 24K. This obviously wouldn't include a decade or more of construction jobs, or all the ancillary companies that have already stated they plan physical buildings in the region to directly support Intel's operations- or the many more that ultimately will. We have also already seen investment in the area from other unrelated development and investment companies that have stated the Intel project prompted them to move forward on either real estate purchases or other investments. In other places in the country that have seen smaller fab developments, direct and ancillary job growth has been up to 100K or more.
So the $2 billion is, at minimum, for 24K jobs, so that wouldn't be $650K each, it would be about $83K each, and that doesn't include anything else which will dramatically lower that total further. Intel won't exist in a vacuum and will have a significant impact on local job and population growth as similar developments have in other locations. Given that this is planned to be the largest such development in the world, the multiplier will be even higher.
Intel did not want to be near an airport, though, regardless of size. Airport traffic causes vibrations, the same as having rail lines too close, and vibrations are bad for this type of manufacturing. Also, apparently the Cleveland area just didn't have any location that had both the space and was close enough to things like an airport, distribution and talent pipelines- but not too close- that would've made it work. Intel had a very specific set of requirements, whether you believe that or not.
The whole point of building this stuff is to reduce foreign reliance on chip manufacturing and assembly. Assembly is still largely done overseas, but there are plans to bring some of that back to the US over time. The world looks somewhat unstable right now, so it's also a national security issue- and why the federal government is willing to invest $52 billion initially to builld back up the US' chip manufacturing base. We should all be thrilled that this is happening.
The Ohio Turnpike is a separate issue and I have seen no suggestion that tolls there affected the decision.
This is a bad take overall given the information we have. First of all, the $2 billion is not just for 3,000 jobs. Those 3K were only for the first phase, which supposedly includes 2 fabs. The company plans to build up 8-10 fabs on the site over the next 10 years or so, so the minimum jobs would be 24K.
Please read my post again and especially the linked article explaining the incredible contingencies that explain the gamble assumed by the Ohio negotiators. The price of Intel's stock has fallen since the Ohio fab was announced. I've invested in Intel for decades, and I explained in my post how none of this is a guaranteed success, not even the success of the initial fabs. I suggest you read much more about Intel and its problematic attempt to enter the contract semiconductor foundry business to compete with the likes of Taiwan Semiconductor. You, like most Ohioans (not you, who I believe still lives in Mexico), are drinking the economic Kool-Aid. I believe that at this point, along with the markets overall, that Intel is a speculative gamble. I'm not optimistic, because American politicians and even the media refuse to focus on the reasons for American economic decline and lack of manufacturing competitiveness.
Here's another article explaining Intel's predicament and massive gamble to save itself. Note that Intel no longer is the semiconductor industry's behemoth, and unlike its competitors, is relying on a PROSPECTIVE (and likely inadequate) U.S. federal government bailout. Isn't that just thrilling and worth a $2 billion bet of precious Ohio resources?
<<But now, as the global pandemic continues to disrupt supply chains, chipmakers have decided that the current spike in demand isn’t going away. Intel’s $20 billion investment is only one example. Samsung announced in May that it would spend $151 billion over the next decade to boost its semiconductor capacity. TSMC made a similar announcement in April, pledging to invest $100 billion in the next three years alone.>>
Semiconductor literate Ohioans would have been infinitely more thrilled if Ohio had committed $2 billion to TSMC for an American manufacturing center. Remember, Intel currently is a nobody in the foundry business.
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Originally Posted by jbcmh81
Also, apparently the Cleveland area just didn't have any location that had both the space and was close enough to things like an airport, distribution and talent pipelines- but not too close- that would've made it work. Intel had a very specific set of requirements, whether you believe that or not.
Apparently???? Neither you nor I nor almost all Ohioans know nothing about this deal, nor about Intel's requirements. Anything that Intel will say now is tainted. The only way to ever learn about this deal is have a new Ohio administration that would investigate the deal, likely a possibility only if the deal collapses and wastes $2 billion. As I've explained, the failure of the Ohio fab project is a possibility, and as a long-time Intel investor, I'm not heartened by the market's reaction (down over 5 percent) to Intel's receipt of the $2 billion Ohio financial give-away.
I've said before that the secretive JobsOhio which has diverted billions of Ohio revenues to shadow projects, in my opinion, is one of the biggest scandals in Ohio history.
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Originally Posted by jbcmh81
The whole point of building this stuff is to reduce foreign reliance on chip manufacturing and assembly. Assembly is still largely done overseas, but there are plans to bring some of that back to the US over time. The world looks somewhat unstable right now, so it's also a national security issue- and why the federal government is willing to invest $52 billion initially to builld back up the US' chip manufacturing base. We should all be thrilled that this is happening.
All of this is true, but the reality is that the federal government is running massive deficits and hasn't yet committed to subsidizing the semiconductor industry and high tech, and it's doubtful it can afford to do so adequately on a sustained basis given inflation (resulting greatly from years of the Fed monetizing federal deficits), its existing deficits, and massive economic demands on future revenues (e.g., climate change, Medicare, Social Security, Medicaid, ad infinitum).
I will only be thrilled when the federal government bites the bullet and takes steps (value-added tax, rationalizing national healthcare expenses) to restore American manufacturing competitiveness, which isn't even on the agenda. A necessary first step is controlling drug prices so we don't pay much more than the rest of the world. Likely a large majority of national politicians pay lip service to this goal, but never do anything about it.
You and most Ohioans are lauding this deal only because you lack a basic economic knowledge of the new American reality and 21st century global semiconductor industry. Do you forget my posts of years past warning of stagflation (see post 22 in the following link)? Well the piper now is at the door, and even if Congress passes and funds (not a certainty) the $53 billion "Chips for America Act," I'm not certain it changes Intel's likelihood of success at entering the foundry business, but Ohio clearly is BETTING that Congress will act AND Intel will succeed in the foundry business. The market so far is betting that Intel will fail. Compare Intel's valuation (e.g., 10 P/E) with competitors Nvidia (74) and AMD (35), or Taiwan Semiconductor (29).
The Ohio Turnpike is a separate issue and I have seen no suggestion that tolls there affected the decision.
Right. Ohio's Republicans who clearly negotiated the Intel deal are never going to discuss, let alone admit, that with the Republican Toll Road they've hung an ever-heavier (inflation-adjusted tolls) anchor around the neck of the northern Ohio economy. More ridiculously, northern Ohio political and media leaders don't even want to discuss this obvious economic burden.
One last thought: $2 billion is less than $200 for every Ohioan. Of course, $200 is precious to many Ohioans, many of whom are financially challenged, and invested wisely, $2 billion could produce a significant positive return. As explained, I worry the Intel deal is a poor one, but at least New Albany, haven of the wealthiest Ohioans in central Ohio, will get about $1 billion of new infrastructure, apparently costing about $100,000 for each New Albany resident!!! Just warms your heart, doesn't it?
BTW, thanks. Maybe I should bail on my small Intel position. However, my bet is that the U.S. won't allow itself to plummet further into the pit of deindustrialization, but I recognize it's likely, extraordinarily sadly, a losing bet. Government subsidies won't save an economy. What is required are effective, free market reforms, a concept now IMO foreign to both the Democratic and Republican Party leaderships.
What? Like job guarantees and penalties for failure to maintain the expected job levels?
The Ohio negotiators likely were as much interested in the $1 billion of infrastructure headed for the New Albany area as for landing Intel IMO.
I wouldn't be surprised if not a single Democrat was involved in the negotiations, despite the fact that this $2 billion is diverted from local government funds, repair of existing infrastructure, school and university funding, mass transit, etc.
Personally, I don't think there is any doubt the positive impact on Ohio's economy would have been much greater if the $2 billion would have been instead allocated to jobs training credits available to any employer anywhere in Ohio
And all of this was done in secret, and hardly a Democrat, if any, is raising an objection. Sad. Perhaps not surprising as Wexner broke his direct affiliation with the Republican Party in opposition to Donal Trump and now gives token political contributions to Democrats, apparently sufficient to buy their silence.
I’m aware of one data-driven analysis that measured true economic impact of Intel operations. In this case, it was conducted in 2012 by ECONorthwest, and quantified Intel’s impact to Oregon, as well as its local county and metro area (Portland).
Key findings here. KEEEP IN MIND…this is 2012 data…the economic impacts in 2022+ would scale up with the time value of money.
16,500 - the number of employees in Oregon
3.1 - jobs created statewide for every direct job at Intel
67,579 - total jobs attributed to Intel statewide
$5.4B - total income generated statewide by Intel
5.3% - amount of income in the state generated by Intel
$79,207*- average gross personal income for Intel’s direct, indirect, and induced jobs statewide (* note these are 2012 wages…). This is ~67% higher than the average Oregon wage.
$26.7B - total economic impact of Intel
8.7% - percent of Oregon output attributable to Intel
$136M - property tax revenue generated by Intel
$192M - personal state income tax generated by Intel
If OH scales to Oregon’s level - and by accounts it should - then similar impacts could be expected. (Impacts may actually be greater given the possibility of scaling to 6-8 Fabs).
Ohio’s $2B investment to attract Intel will very easily recouped.
BTW, what good would investing $2B in jobs training do, when there is no associated jobs creation? The state needs employment growth.
You’re looking at this with a 100% political lens. Interesting take.
=WRnative;62812414]Please read my post again and especially the linked article explaining the incredible contingencies that explain the gamble assumed by the Ohio negotiators. The price of Intel's stock has fallen since the Ohio fab was announced. I've invested in Intel for decades, and I explained in my post how none of this is a guaranteed success, not even the success of the initial fabs. I suggest you read much more about Intel and its problematic attempt to enter the contract semiconductor foundry business to compete with the likes of Taiwan Semiconductor. You, like most Ohioans (not you, who I believe still lives in Mexico), are drinking the economic Kool-Aid. I believe that at this point, along with the markets overall, that Intel is a speculative gamble. I'm not optimistic, because American politicians and even the media refuse to focus on the reasons for American economic decline and lack of manufacturing competitiveness.
Most stocks outside of the energy sector have fallen in recent weeks. It's not related to individual performance.
No Kool-Aid required. This isn't Foxconn and there are very real economic impacts that have been measured by this type of investment, and it's not coming from cheerleaders from Intel, the industry or the state.
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Here's another article explaining Intel's predicament and massive gamble to save itself. Note that Intel no longer is the semiconductor industry's behemoth, and unlike its competitors, is relying on a PROSPECTIVE (and likely inadequate) U.S. federal government bailout. Isn't that just thrilling and worth a $2 billion bet of precious Ohio resources?
It's true that Intel has lost its dominant edge over the last few decades, but that's partly because previous company leadership chose to move away from it, and before the current CEO, was considering getting out of chip manufacturing altogether and just outsourcing it. Clearly, though, they have decided to do the opposite, and with the growing global threats in areas of dominant manufacturing, particularly in Taiwan, this is overall a positive move both from national security and US economic interests. Intel isn't exactly a tiny, fading company, regardless.
Intel will build the first 2 fabs regardless of the outcome of federal aid, though. It will begin construction this year no matter if the $52 billion passes. That's already baked in. As for the expansion of the 6-8 other fabs, there hasn't been a lot of information about that, either way, but given that the CEO seems very serious about establishing Intel as a semiconductor leader again, it seems they're much more willing to put their money where their mouth is on this.
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Semiconductor literate Ohioans would have been infinitely more thrilled if Ohio had committed $2 billion to TSMC for an American manufacturing center. Remember, Intel currently is a nobody in the foundry business.
I'm not sure I agree with that, as TSMC as a whole is threatened by China's territorial expansion desires given they are based in Taiwan. Intel is at least home-grown, and while they do have international operations, I would argue they present more long-term stability being headquartered and having more manufacturing nearby.
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Apparently???? Neither you nor I nor almost all Ohioans know nothing about this deal, nor about Intel's requirements. Anything that Intel will say now is tainted. The only way to ever learn about this deal is have a new Ohio administration that would investigate the deal, likely a possibility only if the deal collapses and wastes $2 billion. As I've explained, the failure of the Ohio fab project is a possibility, and as a long-time Intel investor, I'm not heartened by the market's reaction (down over 5 percent) to Intel's receipt of the $2 billion Ohio financial give-away.
The CEO and others have been quoted as giving away some of the things they were looking for in a site, so we do have some idea. Perhaps not every single detail, but at least some of the main ones that were cited as to the reason the Ohio site won over all the others. And it didn't come down specifically too monetary incentives either given that at least one state was offering more.
I suspect this has more to do with this not going in the Cleveland area, because if it was, I think you'd be finding a very different way to frame this whole thing.
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All of this is true, but the reality is that the federal government is running massive deficits and hasn't yet committed to subsidizing the semiconductor industry and high tech, and it's doubtful it can afford to do so adequately on a sustained basis given inflation (resulting greatly from years of the Fed monetizing federal deficits), its existing deficits, and massive economic demands on future revenues (e.g., climate change, Medicare, Social Security, Medicaid, ad infinitum).
The government always runs massive debts, but federal debt doesn't work the same way as someone's credit card or mortgage. There is no such thing as being able to "afford" something in the same way that the average person views it. Regardless, if you wanted to cut spending, there are plenty of arguably better places to do that than infrastructure and business growth.
Most of the current inflation is directly connected to Covid and the resulting supply shortages and other economic impacts. Record inflation is hitting nations across the world from Asia to Europe to South America regardless of their debt situation.
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I will only be thrilled when the federal government bites the bullet and takes steps (value-added tax, rationalizing national healthcare expenses) to restore American manufacturing competitiveness, which isn't even on the agenda. A necessary first step is controlling drug prices so we don't pay much more than the rest of the world. Likely a large majority of national politicians pay lip service to this goal, but never do anything about it.
I agree that drug and medical costs in the US are horrific (one reason more Americans than you probably would believe retire south of the border), but I'm not sure what the connection here is with Intel.
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You and most Ohioans are lauding this deal only because you lack a basic economic knowledge of the new American reality and 21st century global semiconductor industry. Do you forget my posts of years past warning of stagflation (see post 22 in the following link)? Well the piper now is at the door, and even if Congress passes and funds (not a certainty) the $53 billion "Chips for America Act," I'm not certain it changes Intel's likelihood of success at entering the foundry business, but Ohio clearly is BETTING that Congress will act AND Intel will succeed in the foundry business. The market so far is betting that Intel will fail. Compare Intel's valuation (e.g., 10 P/E) with competitors Nvidia (74) and AMD (35), or Taiwan Semiconductor (29).
I'm not sure how you could know my economic knowledge. Your suggestion that the US will somehow run out of money at some point and won't be able to afford things indicates you're not the expert you clearly seem to think, because it doesn't work that way. Debt is an issue, no doubt, but perhaps not in the ways you think.
If we're judging recent stock performance, both Nvidia and AMD have seen significant price declines since late November last year. Intel and TSM has been largely flat. So what is the market telling us?
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Right. Ohio's Republicans who clearly negotiated this deal are never going to discuss, let alone admit, that they've hung an ever-heavier (inflation-adjusted tolls) anchor around the neck of the northern Ohio economy. More ridiculously, northern Ohio political and media leaders don't even want to discuss this obvious economic burden.
I know you've been talking about this for years and I don't necessarily disagree, but you can't just shoehorn it into every discussion. It's unrelated to the Intel deal and didn't seem to play in any role.
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One last thought: $2 billion is less than $200 for every Ohioan. Of course, $200 is precious to many Ohioans, many of whom are financially challenged, and invested wisely, $2 billion could produce a significant positive return. As explained, I worry the Intel deal is a poor one, but at least New Albany, haven of the wealthiest Ohioans in central Ohio, will get some great new infrastructure!
I see no real reason to think this won't work out well for the state, honestly. Central Ohio will clearly benefit the most, but I don't think for a second that this will be anything but positive for the state overall. Could I be wrong... sure, anything's possible, but there's too much going for this development, IMO.
I normally despite corporate welfare and relocation incentives, because they rarely benefit the area which the corporation blackmail...er, negotiates, but I think this case is an exception. This isn't Amazon, which only builds distribution facilities which create blue-collar and a few middle-management jobs, otherwise add nothing else to the area. Intel will create partnerships & corresponding jobs with affiliates in the area (similar to a Honda), a mutually beneficial relationship with Ohio State, and, probably most importantly, put Columbus and the Midwest in general on the map as a center for tech and could make it a tech destination like Austin or Atlanta (weather aside).
It's best to view this deal through a long-term lens.
Interesting fact: both the OSU President and the Intel CEO have master's degrees in Electrical Engineering from Stanford. I'm sure having a good research partner in OSU was a selling point.
(for clarity OSU President has a master's and PhD in EE from Stanford, Intel CEO Pat Gelsinger has a master's in EE and Computer Science from Stanford)
I guess it all adds up to make central Ohio a clear winner
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