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Lilly, Amazon Pump Billions Into Indiana’s Industrial Resurgence

(Bloomberg) -- An industrial renaissance is fueling record capital inflows into Indiana, putting the Midwestern state on pace to surpass last year’s almost $29 billion in investments.

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Eli Lilly & Co. last week pledged to spend $5.3 billion in the state to expand a site that makes a key ingredient in the weight-loss and diabetes drugs that have exploded in popularity. The investment comes on the heels of an $11 billion announcement by Amazon Web Services, the state’s largest-ever capital commitment.

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The companies aren’t alone. Toyota Motor Corp. is pouring $1.4 billion into the state for the assembly of a new electric vehicle, and Google is building a $2 billion data center in northeastern Indiana. The Hoosier State expects to lure at least $27 billion in committed capital investments by mid-year, with much more to go before the end of 2024, said Governor Eric Holcomb.

“Our reputation has become a state that offers low cost of doing business and living, access to high talent,” Holcomb said in an interview at the Indiana Global Economic Summit last week. “We talk about this unprecedented momentum, and smart investment chasing smart investments, being around other smart investments. That’s the flywheel effect that Indiana has created.”

President Joe Biden is pouring trillions of federal funds into the US economy through the Bipartisan Infrastructure Law, the Inflation Reduction Act and the CHIPS and Science Act — all enacted since late 2021. The efforts to encourage local manufacturing, which can also curtail what the US sees as China’s outsized influence in key sectors, is a focus of Biden’s reelection bid.

The second-term Republican governor and his state have been a major beneficiary, enticing advanced manufacturing businesses like biotechnology, aviation and renewable energy to the state. Investment is up from just $8.8 billion three years ago, and $5.6 billion at the height of the global pandemic in 2020, according to data from the Indiana Economic Development Corporation.

“If you rewind the tape, back in 2005 we had to get our financial house in order,” Holcomb said. “We were delaying payments to local governments, we were broke. So we got our financial house in order, and then we started to grow our economy.”

Tech Hub

The governor is positioning Indiana as a hub for new technologies including life sciences, electric vehicles and renewable energy. The state has approached the US energy, commerce and defense departments to secure federal grants “to the tune of billions, multiple billions” for everything from micro electronics to hydrogen and in biotech, Holcomb said.

“When we talk about manufacturing, we’re talking about advanced manufacturing,” he said. “We’re always looking at where the industry is going to be decades out.”

Drug giant Lilly will expand a site in Lebanon that makes tirzepatide, the active ingredient in Zepbound for weight loss and the diabetes blockbuster Mounjaro. The company will receive more than $1 billion in state tax rebates and training grants tied to the facility. For Chief Executive Officer Dave Ricks, incentives aren’t everything.

“I think the next level that’s important really in choosing a state is: Is there a strategy long-term to support biopharmaceuticals?” Ricks said in an interview. “If we just build a site and we’re in an island, it’s not effective. We want our suppliers to come. We want ongoing workforce development. We want a strategy around that.”

Indiana’s Heartland BioWorks in Bloomington, a consortium focused on regional biotech, was designated by the Biden administration as one of the 31 “tech hubs” in the US that show potential for rapid growth. The state — together with Illinois and Michigan — last year won $1 billion in federal funds to create a Midwest Hydrogen Hub.

The project, backed by a coalition of 70 partners, could see BP Plc produce blue hydrogen at the company’s refinery in Whiting. The British oil major is currently evaluating the plan.

“Whiting is over 130 years old, and our worry was, what does our future look like?” said BP’s Amber Russell, senior vice president of refining, terminals and pipelines. “Now we can actually see the future for another 130 years.”

Amazon will build new data centers in St. Joseph County as part of the investment expected to create 1,000 new jobs, the company said in April. Toyota’s investment in its Princeton facility will create as many as 340 jobs by the end of 2025, and Google’s data center in Fort Wayne will power the company’s AI innovations and generate 200 new jobs.

“We offer performance-based tax incentives, and nothing is out the door unless the jobs are created,” Holcomb said. “But what we hear from companies time and time again is, ‘You may not have offered us the rosiest of incentives in the short term, but in the long term, this is where our teammates or our employees are going to want to live.’”

--With assistance from Lucia Kassai and Madison Muller.

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