Wichita project could bring 2,000 jobs and $1.8B investment, but CHIPS Act funding is key

Kansas is giving more than $300 million in state APEX incentives to Integra Technologies to build a new semiconductor factory in Wichita.

The Wichita megaproject could bring 2,000 jobs and more than $1.8 billion in capital investments to the state’s most populous city.

But a few chips need to fall before it’s a done deal.

Integra CEO Brett Robinson said in an interview with The Eagle that the business expansion hinges on a massive government subsidy package involving hundreds of millions in local, state and federal tax dollars aimed at boosting domestic microchip manufacturing.

“Essentially, the federal government wants to make sure that wherever these things are getting built that the local community in the state supports the semiconductor industry,” Robinson said.

Kansas has already committed $304 million in APEX funding, the state’s most aggressive economic development incentives program, which was created last year to lure Japanese tech firm Panasonic to build a new battery plant in the state.

But the company won’t get that money unless it secures federal funding from the CHIPS and Science Act, which requires companies to secure local and state incentives. Integra won’t say how much money it’s seeking from the federal CHIPS and Science Act — but it’s expected to be larger than the state’s contribution. Local subsidies have not yet been announced.

Local incentives could depend on where Integra decides to build. It has not yet chosen a site and Robinson would not commit to building inside the Wichita city limits.

“It’s in the Wichita region is what we’re saying,” Robinson said.

Integra, which has operated in Kansas under different names for nearly 40 years and is based in Wichita, has 250 local employees and about 250 in Silicon Valley. He said he’s confident the company can hire 2,000 new employees, despite a workforce shortage.

“We’re confident we can find the employees,” Brett Robinson said. “Our intention is to reach out into the community and find those who have had barriers to employment in the past, utilizing these groups (local education partners and the workforce training center). We will also reach outside the state of Kansas and bring people in.”

Robinson, who has worked for Integra for 33 years, said the average salary for the 2,000 new employees will be around $51,000, but that is based on higher-paid engineers and executives and lower-paid entry-level employees.

“The bulk of our positions are entry level, high school or GED equivalent, and then we will train,” Robinson said. “But there will be a large number of engineers and related technical employees. We’ve got to grow our corporate headquarters staff — so sales, HR, finance, IT.”

He would not say how much entry-level employees are paid.

Integra is an employee-owned company. While shares of the company are based on salary, no one owns more than 3 percent of the company, Robinson said.

“There is no way to buy Integra stock,” Robinson said. “The only way to get it is to work here and work for 1,000 hours a year. So every year you complete 1,000 hours of service, you own a little more of the company.”

Second megaproject

Kansas Democratic Gov. Laura Kelly and leadership from the Republican-controlled Kansas Legislature voted unanimously to approve the agreement with Integra, the second APEX deal brokered in two years.

“Integra’s investment will have ripple effects throughout Wichita and the entire state,” Kelly said at a press conference after the agreement was signed.

The project gained bipartisan approval with GOP legislative leaders Senate President Ty Masterson and House Speaker Dan Hawkins, from the Wichita area, applauding the project Thursday.

“We’re excited to have a Wichita company, somebody that’s here already and expanding and committing to Kansas,“ Masterson said. “Honestly, when it comes to economic development, probably the only thing we disagree on is actually who’s driving the train because it takes enabling legislation for any of it to happen.”

“Our region hasn’t seen something this transformative in years,” Hawkins said. “The possibilities for Wichita are endless.”

APEX subsidies include refundable tax credits, training costs and payroll tax breaks to a company and five of its suppliers. The incentives can add up to hundreds of millions of dollars in public money.

To receive the subsidies, the company must invest a minimum of $1.5 billion within five years and commit to stay in Kansas for at least 15 years. It must also employ at least 1,600 full-time employees each year for 10 years. The state was steeply criticized for omitting job requirements in its deal with Panasonic.

In a news release, Integra said its expansion “would create at least 2,000 new jobs over the next five years.” It added that it would build a state-of-the-art headquarters and production facility that would be up one million square feet.

The project could also create more than 3,000 additional jobs in the Wichita area, according to estimates provided by the state Commerce Department.

The contract does not have any wage or salary commitments.

Robinson said the company wanted to grow in Kansas and that the incentives provided through APEX made Kansas’ offer competitive. Robinson said he could not say what other states Integra was considering because of existing non-disclosure agreements.

“This will be the largest expansion of its kind in the country,” he said.

Staying in Wichita

Robinson said Integra plans to stay in Wichita for the long haul.

“Today, our financial forecast is going out through 2040, and there is no scenario that causes us to leave this new facility,” he told The Eagle.

The project is being approved under the same mega-incentive program that allowed Kansas to offer $829 million in tax credits to Panasonic for building an electric vehicle battery plant in De Soto. Under that agreement, Panasonic could receive $500 million without hiring a single worker as long as they invest $4 billion in the plant.

The bill was passed specifically for Panasonic but allowed the Commerce Department to negotiate a megaproject once a year as long as the policy is in place. Under the current law, the Wichita project would be the last one to receive incentives under the bill, which is scheduled to expire next year. Commerce has asked lawmakers to extend the policy.

Integra breaks the mold of what lawmakers and the Kelly administration said they were aiming for with the incentive tool. The goal of the tool, officials said, was to draw new industries to Kansas.

Integra is already based in Wichita.

However, Kansas Commerce Secretary David Toland said the Integra expansion still fit within the mission as a longstanding company that had offers to leave the state.

“When APEX was passed it was passed with the idea of growing the economy,” Toland said. “The primary way to do economic development is with existing companies.”

Wichita Mayor Brandon Whipple said he’d been aware of Integra’s potential expansion for years.

“It started out as a dream, then a goal and now a reality,” Whipple said. “CHIPS passed, and now it gave our economic development an opportunity to truly, truly go after this.”

As with Panasonic, the negotiation of this deal was cloaked in secrecy. The State Finance Council unanimously approved the deal without identifying the company or saying what was in the agreement before casting a vote.

Officials with direct knowledge of the Wichita-area project said anyone, including elected officials, briefed on the incentives negotiations was under a strict gag order and had to sign a nondisclosure agreement to be involved in negotiations.

APEX sunset

The announcement comes as the Kelly administration asks lawmakers to extend the APEX program past its scheduled expiration date in 2024.

Kelly and Toland, touted the project as a major win for Kansas, coming just months after the state beat Oklahoma to land the Panasonic deal.

Rep. Stephanie Clayton, an Overland Park Democrat, called it proof that the Legislature’s efforts to pass APEX last year were paying off.

“It’s working, it’s doing what it’s supposed to do, which is attracting businesses, very large ones, to Kansas,” Clayton said.

But some lawmakers expressed frustration that the state moved so quickly to offer millions in incentives to corporations.

Rep. Sean Tarwater, a Stillwell Republican, said he was excited about the project but concerned about what it might mean for the state’s budget and workforce.

“We’re gonna have a hard time finding 4,000 people for the first one let alone more people for this one,” he said.

“We’re on the hook for $800 million to Panasonic. I’m not sure how large this deal is but our budget can only withstand so much. We most likely will be in a recession,” Tarwater said.

Rep. Troy Waymaster, a Bunker Hill Republican who chairs the House Appropriations Committee, said approval of the project may adjust the state’s budget plan and reduce the amount of money Kansas can put in its rainy day funds this year.

He said the state’s ability to weather additional APEX projects would depend on the economy.

“If things were to continue as the way they are now, yes (more projects are feasible),” he said. “If we hit a recession then it’d be more problematic.”

Contributing: Kevin Hardy, Jonathan Shorman and Jenna Barackman of The Star

This story was originally published February 5, 2023 at 6:11 AM.