The Kansas Department of Commerce claims thousands of jobs created by a pair of large projects and billions in economic impact, but the data used to determine the projections of the Attracting Powerful Economic Expansion (APEX) program are suspect.
Governor Laura Kelly signed APEX into law in February of 2022 to attract Panasonic to build a battery plant in De Soto and Integra Technologies to build a semiconductor manufacturing facility in the Wichita area.
In the 2023 annual report to the Kansas Legislature, obtained by the Americans For Prosperity Foundation – Kansas, and provided to the Sentinel, Commerce claims that Panasonic will create 8,000 total jobs — 4,000 with Panasonic and 4,000 indirect jobs. The report also claims that: “Each $1 of Kansas APEX incentives will generate $26.06 in estimated economic impact.”
The report further claims that Integra will create 5,155 total jobs — 1,994 with Integra and 3,161 indirect jobs and: “Each $1 of Kansas APEX incentives will generate $218.53 in estimated economic impact.”
The data Commerce used stems from a pair of studies by Wichita State University that were “designed” by Commerce, but Commerce spokesman Patrick Lowry insists they were “independent.”
“The Wichita State University Center of Economic Development and Business Research conducted independent economic impact studies for both APEX projects,” Lowry said in an email. “I have attached executive summaries of the studies that detail the methodologies used.”
Cherry-picked data used for Integra, Panasonic estimates
In the studies, it’s clear that — rather than being “independent” — Commerce’s Chief Counsel Robert North was guiding the project.
- Integra: “The Kansas Department of Commerce, Robert North, Chief Counsel, led the project scope, developed the simulation estimates, and provided overall guidance. Nadira Hazim-Patrick (another Commerce employee) provided project details for the economic and fiscal impacts.”
- Panasonic: “The following people were responsible for the successful completion of the impact study, which includes the data collection and economic modeling. At the Kansas Department of Commerce, Robert North, Chief Counsel, led the project scope, developed the simulation estimates, and provided overall guidance.”
Additionally, the studies use a different number from each respective study to calculate the economic impact, and neither of the economic impact estimates seems credible. The 26 t0 1 return on investment with Panasonic is hard to imagine being credible, let alone the 218:1 projection for Integra.
Moreover, the methodology section shows that the economic impact of both programs is — at the very least — overstated.
The studies are not estimating new net economic activity but rather any economic activity around the plants.
“There are two approaches to measuring the economic impact of this type of project: measuring net new or all economic activity,” the reports read. “This project scope was to estimate the economic contributions of a new industry to the regional economy; thus, all of the employment, wages, and estimated sales were considered new economic activity.”
In other words, much of the impact will simply be moving existing money around rather than generating new activity. It is also unlikely that the estimates are reduced by the opportunity cost, which is the economic benefit that would result if money for incentives were spent on something else.
“The economic impact estimates from the Department of Commerce might sound good at face value, but Kansans should know they reflect bad policies,” AFPF-KS State Director Elizabeth Patton. “Hardworking taxpayers should understand these estimates are meant to protect the power and reputation of the Commerce Department and its pet projects.”
