June 24, 2009 More state funding for GlobalFoundries $15M grant to chipmaker apparently part of promise related to labor union deal
By LARRY RULISON, Business writer
ALBANY -- New York state is giving GlobalFoundries Inc. another $15 million.
It's apparently part of a promise the Paterson administration made to the Sunnyvale, Calif., chip manufacturer to get it to agree to a deal with labor unions on a $4.2 billion plant that will be built at the Luther Forest Technology Campus in Malta.
The new grant was announced Tuesday afternoon by Empire State Development Corp., the state's economic development arm.
Earlier this month, Gov. David Paterson helped negotiate a so-called project labor agreement between unions and the project's general contractor, M+W Zander, to ensure that most of the laborers working on the $800 million building "shell" will receive union wages and benefits.
The state has already promised GlobalFoundries $1.2 billion in cash and tax breaks for the Malta project.
The Times Union reported earlier this month that as part of the negotiations, GlobalFoundries was promised an additional $15 million for "unplanned costs."
It's unclear if that promise was ever included in the agreement, also known as a PLA. The document has never been made public.
Announcement of the new money for GlobalFoundries was contained in a news release outlining allocations under the state's Jobs Now program.
ESDC spokeswoman Katie Krawczyk said it is anticipated the governor will include the $15 million in the 2010-11 executive budget. She said ESDC was not involved in the PLA.
GlobalFoundries will not see the money up-front. "The additional funds are not payable until construction is substantially complete," Krawczyk said.
The grant is tied to 260 jobs that have been added to the project by GlobalFoundries since the state originally announced the $1.2 billion package in June 2006, according to the ESDC press release.
Back then, it was Advanced Micro Devices Inc., that planned to build the plant. But last fall AMD spun off its manufacturing to GlobalFoundries, a joint venture with an investment fund controlled by the Emirate of Abu Dhabi.
The chip fab was expected to cost $3.2 billion and employ 1,205 people when AMD announced it three years ago.
In October, AMD said the fab would be more expensive and would employ 1,465 -- 260 more than originally expected.
The ESDC news release said the grant was provided because of the additional jobs, although it stressed that they "are not a commitment." The release also states the money will go toward financing machinery and equipment for the project.
GlobalFoundries spokesman Travis Bullard could not be reached for comment Tuesday. A spokesman for Paterson also could not be reached.
AMD currently is GlobalFoundries' only customer, with its chips manufactured in existing chip fabs in Dresden, Germany. The state's incentive package to GlobalFoundries includes $650 million in cash that will be provided on a quarterly basis, likely beginning in the fourth quarter this year.
GlobalFoundries must bill the state for work that it completes.
The company is planning a groundbreaking in Luther Forest by late July, when the first concrete will be poured. The building shell, at 1.3 million square feet, is expected to take two years to complete.
GlobalFoundries then will install the expensive manufacturing "tools" that are used to imprint integrated circuits onto 12-inch silicon wafers. Tool installation will take another year, and the factory is expected to be at full production by 2012.
Larry Rulison can be reached at 454-5504 or by e-mail at lrulison@timesunion.com.
