(The Center Square) – Texas taxpayers are funding another trillion-dollar company expanding manufacturing operations in the state.
Gov. Greg Abbott joined Eli Lilli leaders and officials at a groundbreaking ceremony at Generation Park in Houston where its new $6.5 billion active pharmaceutical ingredient (API) manufacturing facility is being built.
It’s the largest investment in API manufacturing in Texas history.
The new project “adds to Texas’ record-breaking job growth and further strengthens our position as the best state in the country for business,” Abbott said. “Lilly’s $6.5 billion capital investment expands our healthcare dominance in the Lone Star State. Strategic investments like this one strengthen our global supply chain for healthcare and medicines right here in Texas.”
Lilly Chair and CEO David Ricks said the new facility “will help change the game for tens of millions of people suffering from overweight, obesity and its consequences like diabetes. We will make and ship Lilly's latest products from Texas to people here at home and around the world."
The facility is slated to manufacture “small molecule medicines across therapeutic areas, including cardiometabolic health, oncology, immunology and neuroscience” and its first oral, small molecule GLP-1 receptor agonist, orforglipron, for weight loss. In April, the U.S. Food and Drug Administration approved orforglipron under the brand Foundayo.
Lilly says the project will create 615 new high-wage jobs in the greater Houston area, including engineers, scientists, operations personnel and lab technicians. Constructing the six-building complex spanning more than 800,000 square feet, is expected to generate 4,000 construction jobs, it says. The facility is expected to be operational in five years.
The facility comes at a cost to Texas taxpayers in the short and long-term. Eli Lilly, with a market cap/net worth of $1.04 trillion and enterprise value of $1.09 trillion, received a Texas Enterprise Fund (TEF) grant of $5.5 million. The project was also approved through the Texas Jobs, Energy, Technology, and Innovation (JETI) program, enabling the trillion-dollar company not to pay an untold number of millions of dollars in school district property taxes for 10 years.
The JETI program gives tax breaks to corporations at the expense of school districts and local taxpayers, critics argue. It allows a company to enter into an agreement “for a 10-year school district maintenance and operations (M&O) tax appraised value limitation of 50%, based on qualifying job and capital investment minimums. Projects located in qualified Opportunity Zones are eligible for an additional 25% limitation on taxable value.”
Critics argue TEF is corporate welfare and companies would expand operations in Texas anyway because of Texas’ business friendly policies. The grants impose additional costs on cities “in the form of reduced revenues and increased liabilities,” and there’s no meaningful measurement to quantify incentives to economic well-being, the Better Cities Project has argued, The Center Square reported.
The Texas Public Policy Foundation argues TEF should be eliminated and has proposed an alternative solution, noting that “The interstate subsidy race represents an ever-spiraling stairway to more government intervention in the market.”
Despite tax revenue losses to the local school district, San Jacinto College Chancellor Dr. Brenda Hellyer said, "Eli Lilly's manufacturing investment in Generation Park is a tremendous opportunity for the Houston region” and for the college “to develop the skilled workforce needed to support the growth of biopharmaceutical manufacturing.” She said their partnership will “expand industry-informed education and hands-on training pathways that prepare students and incumbent workers with the technical skills these advanced manufacturing careers require” and “build a strong, sustainable talent pipeline."
Lilly says it’s investing $12.5 million to support San Jacinto College to advance chemical synthesis manufacturing careers, including expanding the college’s equipment and facility capacity to produce technicians, operators, maintenance professionals, and other manufacturing talent. It’s also supporting curriculum development, instructor readiness and preparation and training, and donating $2.5 million to the San Jacinto College Foundation to support scholarships for eligible students.
The company also says it’s using artificial intelligence to advance its efforts. The new facility will use “machine learning, AI, digitally integrated systems and advanced data analytics to drive right-first-time execution. Digital automation will be embedded throughout the site to streamline operations and ensure a reliable supply of safe, high-quality medicines,” it says.
Lilly is the latest trillion-dollar company receiving taxpayer money to expand operations in Texas. SpaceX, valued at more than $1.7 trillion, received $30 million in TEF grants and two local school districts are losing millions of dollars in property taxes through the JETI program, The Center Square reported.