WELCOME, SAMSUNG

Ann Marie Kennon annmarie@georgetownview.com SAMSUNG Everything IS Bigger in Texas THE LARGEST ECONOMIC DEVELOPMENT DEAL IN LONE STAR HISTORY

At the Table with Samsung

by Ann Marie Kennon‑

Aerial view of Samsung's north Austin plant (credit: Samsung)

When Williamson County Judge JUST HOW Bill Gravell met with BGR Group corporate consultant Jerry Strickland last January to discuss pandemic testing and vaccinations, he made a connection that would impact Williamson County for generations. BGR Group represents multiple large corporations. Strickland later called to ask the Judge if the County would be interested in making a corporate pitch for a $17 billion project.

“He gave me 36 hours to respond,” Judge Gravell says. “I sent out emails with details about the company, and received affirmative responses from Leander and Taylor. While Taylor is now receiving international attention as the awardee, I am incredibly proud that Leander was one of the top six locations in the world.” He notes Leander did not go further only because Samsung had larger requirements for land to create a significant space buffer at the site. BIG IS IT? The Samsung Taylor plant will have 6,000,000 square feet of floor space. For comparison, the Austin Amazon Distribution site, Tesla Giga, and Austin Apple headquarters —together—would fit inside five times.

Partnerships

While Judge Gravell was the point man, the scaled agreements are the product of work and cooperation by people and agencies at all levels. Much work and commitment was provided by the City of Taylor, Taylor ISD, Williamson County, the State of Texas, and the Federal Government. There is also a utilities partnership with EPCOR, a Canadian company that provides clean water and energy to communities in Canada and the United States.

The Judge explains, like everything from home construction to military bases, access to water in Central Texas is something city and county leaders must ensure during negotiations at every level. “We couldn’t take away from our existing water supplies here. We knew we had to be innovative and creative.”

To facilitate the need, Williamson County’s negotiating team brokered the meeting between Samsung and EPCOR, which will funnel millions of gallons of water into Williamson County from adjacent Milam County. “EPCOR will be bringing in water from an alternate water site that won’t take away from our residents,” the Judge says. He is also pleased that the benefit to Williamson County will be two-fold; “Not only will we have tax revenue from Samsung, and water for generations, EPCOR will be paying the tax on the half-billion-dollar infrastructure that will bring the water from that alternative source.”

SAMSUNG IS THE LARGEST-EVER ECONOMIC DEVELOPMENT CORPORATION PROJECT IN THE STATE OF TEXAS, AND THE LARGEST FOREIGN-BORN IN THE NATION. “EVEN MORE THAN JOBS AND TAXES, THE HOUSING, ANCILLARY RETAIL, AND SERVICE BOOMS HAVE ALREADY BEGUN." ~JUDGE BILL GRAVELL

Additionally, in support of the project, the Texas Department of Transportation has pledged $67 million for construction and upgrades to local roads.

“Seismic” Economic Impact + Year 4*

The Taylor plant will produce the most advanced semiconductors in the world but, today, what those will be is unknown. Judge Gravell explains, “This type of technology grows and changes so quickly that the only thing the Samsung folks know is that they will be building semiconductors. Their current factory replaces $100200 million in equipment every year to keep up with evolving science and development. As such, specifics of design and capability will change many times before construction is complete in 2024 so even the machines that will build the semiconductors have not been built yet.”

YEAR 4 OF THE AGREEMENT IS SIGNIFICANT AS IT IS THE EXPECTED DATE OF THE RIBBON CUTTING—MANUFACTURING WILL BEGIN, AND SAMSUNG WILL BEGIN EARNING REVENUE AND PAYING TAXES

Samsung’s taxes in Year 4 will be paid to Williamson County, the City of Taylor, and Taylor ISD. Taylor Mayor Brandt Rydell’s team also negotiated $300,000 in philanthropic donations to the City of Taylor, per year, for the next 30 years, for a total of $9 million in gifts to benefit education across the board.

Aside from the potential tax benefits, Taylor Superintendent Dr. Devin Padavil is encouraged by Samsung’s public assurance that they will significantly invest time and resources into the ISD. “Taylor ISD and Taylor, Texas are honored and proud to be selected as the home for the new Samsung Semiconductor Plant in North America. Our partnership with Samsung will provide us an opportunity to transform the lives of our students through learning opportunities, internships, resources, and financial support. We are preparing our children to contribute and compete in a global society and, in many ways, Samsung is bringing a global society to them.”

Judge Gravell adds, “I voted in favor of this agreement primarily because of the opportunities it will give to the students in Taylor schools. In addition to the more than $245 million estimated tax revenue the school district will collect, Samsung will hire 24 paid interns. This will give them opportunities with an international company that would not have otherwise been possible.”

Williamson County Judge Bill Gravell, Taylor ISD Superintendent Dr. Devin Padavil, Taylor City Manager Brian LaBorde, Taylor Mayor Brandt Rydell

In the meantime, he anticipates the construction force to peak at 12,000 workers and, in Year 4, Samsung will hire 1,800 direct employees earning $65,000 and up for technical and administrative positions. He says, “I expect very high employment numbers even after the facility opens; their plant in Austin has between 3,000 and 6,000 daily contractors. While their production process is nearly fully automated, it is running 24/7 so there are people providing everything from machine and HVAC maintenance to cleaning and landscaping.”

“THIS AGREEMENT IS A WIN FOR WILLIAMSON COUNTY BECAUSE IT IS PERFORMANCE-BASED. WILLIAMSON COUNTY FIRST COLLECTS ALL TAXES ON THE ASSESSED VALUE OF THE COMPANY AND DOES NOT GRANT BACK ANY FUNDS UNTIL PERFORMANCE MEASURES HAVE BEEN MET. THIS ALLOWS US TO BE COMPETITIVE IN RECRUITING LARGE COMPANIES WHILE HOLDING THEM ACCOUNTABLE TO THEIR PROMISES.” ~PCT 4 COMMISSIONER RUSS BOLES

Samsung’s tax payments—in year 4— will be twice as much as the top ten largest tax-paying companies in Williamson County, combined.

Local and Regional Impact

Mark Thomas, president and CEO of the Taylor Economic Development Corporation said, “A $17 billion investment would have an impact on a very large community. The impact on a community with 20,000 residents is unprecedented. The world has heard about this already and we’re seeing inquiries increase. It put Taylor on the map. High-tech companies will ask, ‘If the largest high-tech company can come here, why can’t we?’ It will open the door for that.”

Judge Gravell says, "Williamson County has again proven to be a leader in attracting the world's top technology companies. To Samsung, I want to say, 'Welcome home.' We want to thank Governor Abbott for his amazing leadership and help on this project. With the addition of Samsung on the east side of our county, Apple on the west side, and Dell Computers World headquarters in the center, Williamson County is now home to the technology superhighway of the world."

Thoughts on Negotiations

Judge Gravell recalls being exhausted at the end of negotiations every day. “It was stressful and very complicated; I went home many nights thinking it would never happen.”

He frequently quotes JFK; A rising tide lifts all boats, but says of Samsung, “This is a controlled tsunami. It is a legacy not likely to be topped and I am still wondering how we got here. I’ve never worked so hard in my life as I have in the last nine months. I don’t believe I’m arrogant but I am pretty proud that my grandchildren will pass by the Samsung site and say, ‘My Pawpaw helped bring this to Williamson County.’”

He reflects on these and other extraordinary circumstances during his first four years as Judge. He believes it might make sense to write a book about it; not just about the biggest deal in American history with foreign investment, but a guide to landing it. “A global pandemic, Texas’ worst snowstorm, the largest deal ever, and a new multi-million dollar children’s hospital. God only puts us in those places that give us the experience to get through to the next thing.”

photo courtesy Bill Gravell

photo courtesy Bill Gravell

Key to National Security

The concentration of fabrication facilities in East Asia creates supply chain risks. Trade disputes, military conflicts, or other disruptions in the region could significantly affect U.S. access to semiconductors.

In 1990, China had no chip manufacturing capabilities. Today, their government is excessively subsidizing semiconductor production, putting them on track to be the global leader in chip manufacturing by 2030. This trend makes increasing U.S. production of semiconductors critical to our own national security.

In March 2021, the National Security Commission on Artificial Intelligence found:

After decades leading the microelectronics industry, the United States will soon source roughly 90 percent of all high-volume, leading-edge integrated-circuit production from countries in East Asia.

This means the United States is almost entirely reliant on foreign sources for production of the cutting-edge semiconductors critical for defense systems and industry more broadly, leaving the U.S. supply chain vulnerable to disruption by foreign government action or natural disaster. (Source: NSCAI.gov)

Fortunately, Senator John Cornyn and others in the Senate are working, with bipartisan support, on the CHIPS for America Act, which will boost domestic manufacturing and lower the risk of supply chain interruption or corruption. Proactively, the American Foundries Act will provide grants and economic development incentives for research and development. The fortification to be gained from these bills led to their inclusion in the FY 2021 National Defense Authorization Act.

Why it Matters

Williamson County Judge Bill Gravell says, “National security is the number one reason to support this project. Semiconductors are the brain of every electrical device; from your thermostat to your pacemaker to our stealth bombers. We should not have to depend on countries we don’t trust to produce things we use to protect ourselves. Further, when the next pandemic or ice storm occurs, I want the things we depend on for survival to be made in the USA—I want the most advanced semiconductors in the world to be made in our backyard.”

What if...?

The Judge frequently asks others to consider the scene at empty car dealerships as an example of the means by which China may be able to control our economy. Providing fewer chips will prevent manufacturers from completing production on many products Americans take for granted, which will handicap our GDP and widen the nation’s global trade gaps.

“Consider how reliant we are on technology and the Internet,” the Judge says. “Our business environment, health care, communication, and education are critically dependent on devices. Samsung is from South Korea—a friendly nation—and we must consider the electronic brains in our cell phones also go into our tanks and planes. Those we purchase from China may be made to be hackable. Perhaps they will be programmed with malware and designed to fail at critical times, leaving our businesses dark, unplugged, and forcing us to send ever-increasing revenues overseas.”

Unified Support

Given all factors, it is significant that the partners in the Samsung agreement are not just in Taylor. Judge Gravell adds, “This isn’t fighting to bring a new car or furniture manufacturer to America. This goes all the way to the White House and is being aggressively pursued by both parties. In Williamson County, we are twice fortunate— prosperous and protected—that Samsung will be here.”

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