Council hears details of proposed $1M incentive package for NXP Semiconductors

A Dutch semiconductor manufacturer with two factories in Austin has applied to receive the city’s first major economic incentive package since 2017.

City Council heard details at Tuesday’s work session about the proposed agreement with NXP Semiconductors N.V., which is looking to invest $290.8 million to remove and replace four of its five production lines in Austin. The company employs 2,768 people locally and has facilities on Ed Bluestein Boulevard just east of U.S. Highway 183, and in Oak Hill just west of Escarpment Boulevard.

The proposed incentive package under the city’s Chapter 380 policy would total just over $1 million and include a $631,000 base payment, $158,000 for workforce training, another $158,000 to encourage economically disadvantaged hiring, and $79,000 to encourage sustainable business practices.

Staff from the Economic Development Department said the city’s financial benefit from additional property taxes minus the cost of the incentives would be $1.53 million.

The local package, which is required for the company to qualify for up to $45 million in federal incentives, would require NXP to follow through on the planned hiring of 53 new workers and the projected total capital investment. The company would also have to meet the city’s requirements on livable wages and goals related to utilizing minority- and women-owned businesses.

Public hearings on the incentive package are scheduled for Sept. 14 and 21, with Council set to decide the matter on Sept. 21.

After Tuesday’s presentation on the package, Mayor Kirk Watson and Council Member Vanessa Fuentes pushed NXP representatives to make a commitment to child care at its facilities. Philippe Montillet, American human resources lead for NXP, said the company offers child care in neighboring buildings because of the potentially hazardous materials handled in the production processes. Montillet added that the company’s investment isn’t high enough to trigger the federal requirement for a formal child care plan, but it is working through contracts and the offering of subsidies for employees to hire day care providers from around the community.

Fuentes said she wants NXP to go beyond dialogue with its employees to learn about the broader child care needs in Austin and determine how it can play a role in meeting those needs.

“I would encourage NXP to work with local stakeholders to better understand our local child care needs and the landscape that we have when it comes to child care accessibility,” she said. “You’ve been a demonstrated community partner, and that goes a long way. What I’m trying to think through with this lens of potentially approving an incentive package is how is it addressing our community’s top needs, our community’s top priorities? Just to underscore, I really would appreciate if y’all would consider talking to local stakeholders like Success by Six and Early Matters (Greater) Austin. They have incredible surveys and toolkits around child care accessibility and needs that we have in Austin.”

Watson signaled that the city could have more incentive deals to consider in the near future when he told Montillet Council needs to hear detailed answers to its questions about child care or any other community interests that could involve the company.

“We also have to be thinking who’s going to be next at that podium. And we would like to be able to talk about things specifically like child care, because we want to set an example about (how) we want Austin to be seen as somebody that’s willing to work with industries like yours. At the same time, we have some specific needs in Austin, and that’s part of what we’re attempting to address.”

The city’s last Chapter 380 incentive agreement was a nearly $7 million package of city and state money given to Merck Corporation, a pharmaceutical company that was expected to grow its local workforce to about 600 people. The company backed out of those incentives in 2019 after it failed to meet the gradual hiring requirements, with neither the city nor state ever handing over any money to the company.

Photo by Stas Yosupov, CC BY-SA 3.0, via Wikimedia Commons.

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