Plant that got $150M in taxpayer money to make Volt batteries furloughs workers
President Obama touted it in 2010 as evidence "manufacturing jobs are coming back to the United States,” but two years later, a Michigan hybrid battery plant built with $150 million in taxpayer funds is putting workers on furlough before a single battery has been produced.
“Had it been private investors rather than government bureaucrats making the decision, there either would have been a reality check about the industry."
- Paul Chesser, National Legal and Policy Center
Workers at the Holland, Mich., LG Chem manufacturing facilities have been placed on rotating furloughs, working only three weeks per month based on lack of demand for lithium-ion cells. The facility, which was opened in July 2010 with a groundbreaking attended by Obama, has yet to produce a single battery for the Chevrolet Volt, the troubled electric car from General Motors. Production of the taxpayer-subsidized car has been plagued by work stoppages, and the effect has trickled down to companies and plants that build parts for it -- including the batteries.
“Considering the lack of demand for electric vehicles, despite billions of dollars from the Obama administration that were supposed to stimulate it, it’s not surprising what has happened with LG Chem. Just because a ton of money is poured into a product does not mean that people will buy it,” Paul Chesser, an associate fellow with the National Legal and Policy Center, told FoxNews.com.
The 650,000-square-foot, $300 million facility was slated to produce 15,000 batteries per year, while creating hundreds of new jobs. But to date, only 200 workers are employed at the plant by by the South Korean company. Batteries for the Chevy Volts that have been produced have been made by an LG plant in South Korea.
The factory was partly funded by a $150 million grant from the U.S. Department of Energy. LG also received sizeable tax breaks from the local government, saving nearly $50 million in property taxes over 15 years and another $2.5 annually in business taxes. Landing the factory was hailed as a coup when shovels first hit the ground.
“You are leading the way in showing how manufacturing jobs are coming right back here to the United States of America,” Obama told workers at the ground-breaking ceremony. “Our goal has never been to create a government program, but rather to unleash private-sector growth. And we're seeing results.”
Randy Boileau, a spokesperson for LG Chem in Holland, told FoxNews.com that battery production is expected to pick up once Volt assembly lines in Detroit resume production on Oct. 15. He said the facility has spent the past two years building infrastructure and conducting pre-production “test runs.”
“The market conditions haven’t been as favorable, but this hasn’t slowed down plans one bit,” Boileau said. “LG Chem has repeatedly said that this facility is a critical component for them globally.”
Boileau pointed out the workers who are on furloughs one week a month are eligible to collect unemployment for that week, and he said the company covers the contributions to their individual benefits during the period.
The Volt has been plagued by low sales since it first rolled off the line three years ago. Orders have picked up for 2012 but are still well below projections.
Chesser said no amount of government subsidies can counter the practical problems posed by plug-in cars.
“Electric car batteries do not perform much better than they did 100 years ago," he said. "Research has not conquered the battery storage issue, and therefore the electric transportation ‘stimulus’ did not boost the ‘technology of the future,’ but instead a century-old technology as far as performance and capability goes.”
He added that the LG Chem plant's problems show that the unpopularity of electric cars despite heavy taxpayer subsidies has had more widespread negative effects than most realize.
“Billions of dollars were put into Volt research, and Ford received $5.9 billion in stimulus loans to retrofit plants to produce [electric vehicles]," Chesser said. "The battery companies like LG Chem that were supposed to service them have no customers to speak of. Their existence was solely based on access to taxpayer money.
“Had it been private investors rather than government bureaucrats making the decision, there either would have been a reality check about the industry, or only those who made individual decisions to invest would have lost their money, not taxpayers.”
Read more: Plant that got $150M in taxpayer money to make Volt batteries furloughs workers | Fox News
Re: Plant that got $150M in taxpayer money to make Volt batteries furloughs workers
A struggling Massachusetts-based company that makes batteries for electric cars and got $240 million in stimulus money is being saved from bankruptcy by a Chinese billionaire who could move operations overseas.
A123 Systems received a $241.1-million grant from the Obama administration three years ago and more than $125 million in State of Michigan tax credits in the hopes that the company would create jobs, while leading the country away from conventional gas-guzzling vehicles and toward clean energy.
But the lithium ion battery maker is now poised to hand over the reins to Wanxiang Group, a Chinese firm, which agreed in a tentative deal last August to invest up to $450 million so that it can take over as much as 80 percent of the company.
"It’s money that we’ll never get back."
- Jarrett Skorup, Mackinac Center for Public Policy
Since 2009, the Waltham, Mass.-based company has lost a reported $857 million, laid off workers and recalled its products. A123's stock price has plunged from $4.44 about a year ago to 26 cents this week.
"They were wrong," Jarrett Skorup, a research associate with the Mackinac Center for Public Policy, said of the Obama administration. "The problem is that policymakers decided to be in the business of picking economic winners and losers and unfortunately they've picked the losers far too often."
"It’s money that we’ll never get back," Skorup said of the massive amount of stimulus cash. "It was grant money so there were not a lot of strings attached to it."
The battery maker's precarious position is due to many factors -- most notably one that is beyond the company's control: a lack of demand for batteries that charge electric vehicles.
"It failed because there's not enough demand and also because there are companies outside of the U.S. – some in China -- where they're able to produce the equipment for cheaper," said Skorup.
Read more: Chinese billionaire to scoop up failing car battery maker that got $240M from feds | Fox News
Re: Plant that got $150M in taxpayer money to make Volt batteries furloughs workers
This is what bothers me about all this 'alternative energy' stuff. Michigan has a proposal (Proposal 3) on the ballot this election to amend the State Constitution to establish a standard for renewable energy and, frankly, I'll be voting against it.
Not because I'm against the environment or alternative energy, not at all, but because I'm against politicians favoring/selecting which renewable energy sources we will pursue as opposed to the free market.
Case in point: Solyndra. Case in point: these EV battery manufacturing companies in MI & MA. Case in point: the Chevy Volt.
Several years ago, when the economy started crumbling and fuel prices rose, I saw community colleges pushing students from electrical/mechanical engineering degree programs into newly, govt. mandated 'alternative energy' degree programs. I advised many an electrical/mechanical engineering student not to leave their programs of study for a new 'green energy' degree for the following reasons:
1) There were no jobs in the 'green energy' field and probably wouldn't be for 10-15yrs ... if then.
2) You can get a job in the alternative energy field with an electrical/mechanical engineering degree, you can't get a job in the electrical/mechanical engineering field with an 'alternative energy' degree.
3) The corporations that are pursuing manufacturing in the alternative energy business are not primarily located locally or even in the US.
4) States such as MN that had heavily pursued 'alternative energy' in the past were actually dismantling their windmill farms as they were found not to be cost-effective nor did they prove to be the increased source of energy they were made out to be.
5) The colleges were being asked to shepard students into these new degree programs as a condition to receiving elevated grant monies from the Federal Government, not because there was a demand for alternative-energy engineers.
6) The curriculum in the alternative-energy degree programs was laughable.
I do not know of a single student, to this day, who transferred their degree program into one of these 'green energy' degree programs who was able to find a job in that field or use that degree to find employment ... and many of them were being funded by state/federal education programs ... more taxpayer money wasted.
We need to pursue renewable and alternative energy sources, but not with the Federal Govt. picking the winners or losers & throwing billions of taxpayer money down the tubes.
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