Breaking: Another Green Company (Which Received $249 Million in Govt. Grants) Bites the Dust (see Update)
By Tom Blumer | October 16, 2012 | 09:49

Read more: http://newsbusters.org/blogs/tom-blumer/...i#ixzz29TxYzWYB

(See Update re President Obama's statement in 2010.)
Eric Savitz at Forbes relays news this morning that "A123 Systems has filed for bankruptcy protection in federal court ... Late yesterday, the battery company had warned that it was about to default on several loan issues, noting that a bankruptcy filing was a possibility; but it still seems startling to see them file just hours later."
What does (or did) A123 do? It "makes rechargeable lithium-ion batteries for electric cars." Savitz can't resist casting the bankruptcy in political terms in his third paragraph:
Don’t be surprised to see this turn into a Solyndra-style political football; A123 had received $249 million in grants from the U.S. Department of Energy.
That's grants, not loans (though loans which aren't getting paid back might as well be grants).
To Savitz, it's really not that important that we've seen another quarter-billion taxpayer dollars go "poof!" It's that it's a another "political football." Zheesh.
Yesterday, Bloomberg reported that "A123 announced in August that it was working on a deal with Wanxiang Group Corp., China’s largest auto-parts maker, for financing in exchange for a majority ownership stake." Now it would seem (I am told by a friend that Fox News has alluded to this possibility) that Wanxiang can scoop up the assets and technology at fire-sale prices.
The company is based in Waltham, Massachusetts, which, given the Bay State's track record, makes me wonder how much money state and local governments dumped into the failed enterprise.
UPDATE: From Bloomberg's report today:
Obama's Call
President Barack Obama called A123 Chief Executive Officer David Vieau and then-Michigan Governor Jennifer Granholm during a September 2010 event celebrating the opening of the plant in Livonia, Michigan, that the company received the U.S. grant to help build.
“This is about the birth of an entire new industry in America -- an industry that’s going to be central to the next generation of cars,” Obama said in the phone call, according to a transcript provided by the White House. “When folks lift up their hoods on the cars of the future, I want them to see engines and batteries that are stamped: Made in America.”

Almost every startup green company lasts as long as the Fed grants and loans. It is absolutely absurd, if a business cannot show on paper that it can turn a profit without a grant, it should not get one. Yet, these are the companies that get them.

It is one thing to operate a profitable company, that uses green technology to further enhance their viability, visibility, profit margin, or reduce impact. It is another to create a make-believe green company that manufactures a product, at a loss, for a make-believe green market. The former should get the grants to expand or improve systems, the latter should never be considered.

I know of a few companies (ran by master grant-writers) who I would take bets on that will be filing for Banko in the next 3 years. The owners have certainly paid themselves pretty well by now. They are generating expensive green products, for a market that is unwilling to pay for them. Yet these companies are continually talked about in the newspapers and business journals, as they do a great job of self promotion.

I should not disparage this system too much, as my company has turned profits from several of these wild-eyed green ideas, at least in the preliminary phases. But when we would look at these projects and ask "Where is the money going to be made" it was always clear that it would be made from the fed-grants, and then everyone would walk away from it once it operated without the safety net.

You're going to rot your brain if all you do is read, then cut and paste tidbits from right leaning websites all day long. The same can be said for anyone scouring liberal leaning websites for "the truth".

Centrist, what a concept,


Fishy

Here is a better written article.

http://www.bloomberg.com/news/2012-10-16...bankruptcy.html

Looks like they received a $6 million grant in 2007, and then the $249 million grant in 2009. They used a total of $132 million of that grant, as they were required to spend dollar for dollar on the construction of two plant. $107 million was not distributed to date.

Chapter 11 BK allows for a re-organization, and the business will likely sell of some of its assets to remain afloat and settle issues with their priority lenders. Whether this company is dead or not has yet to be determined. Looks like they have a partial buyer for some of their assets.

Not a big fan of throwing money at something just because it is a green project at all. As a banker, without a solid plan that will produce self sustaining cash flow, I can't see any reason to support any grant or govt. guaranteed loan for any company.

If you want to be taken seriously, find a real article to make your point with, not some horribly slanted hit piece.

7 wind farms on hold
Kitsap Sun article

When we looked at the Grayland wind turbines on a tour of Grays Harbor they discussed the cost, and the payback over time, and it penciled out. Then I asked about any grant funding and tax credits they had received, and after factoring that into the mix, the wind turbines were not sustainable.

I think wind power has a place in the future, but it needs to be self reliant, and sustainable.

I have done small portions of preliminary design work for a couple of different "wind farms" none of which have gotten past preliminary design and a lot of money spent on talking about wind farms.

All of which were essentially lining up for their subsidy, and when they got hung up in whatever environmental or nimby roadblock and realized they wouldn't hit the grant window gave up the ghost.

Ha Ha I posted that at the same time as Andy. We had a small part in some of the preliminary design for those as well. Funny we both have a perspective on why they stalled based on our expertise. Both are probably more right than wrong. My thoughts are more sinister, in that the developers knew going in that the farms weren't sustainable, but a lot of people could make good short-term cash off the grants.

.

At least with the Grayland wind farms you have Coastal Community Action Program reaping the benefits, and putting the money back into the community, positively impacting the lives of those they serve. You can't say that about a lot of other wind farm owners.

I do agree though, about folks lining their pockets with this green project stuff, like the gnu wood folks up on the hill.

I agree we need to reseach it, and make it a part of our power supply, but it needs to be self sufficient and competitive. It is nowhere near that at this point in time, especially when compared to the cost of LNG and hydro.

PSE charges a pretty good surcharge if you want your energy to be from a "green" source.

If the current administration can make the energy we use today way more expensive then green energy will be competitive.

Nice to see you on board salmofelcher oil is subsidized by people's lives .

If government doesn't fund alternative energy research, who will? The governent funds all kinds of research, not just alternative energy. And most of that research, at least initially, doesn't produce the next miracle drug or miracle anything, let alone a silver bullet for energy. One of the things about research is that it takes a lot of it to produce a breakthrough in most every technology.

If government doesn't fund alternative energy research, we're just stuck with the existing sources. That assures increased energy costs across the board due to increased demand, world wide. It isn't far fetched to conclude that wind and solar energy will become cost-effective as the marginal costs of conventional energy continue to increase.

Locally, natural gas and electricity keep leap-frogging one another as the more economical based on the rate of incremental and marginal source cost increases. That's why we close the windows in the winter instead of just turning the heat up.

I loved Romney's remark last night about making the US energy independent within 5 years. Then it wasn't quite energy independent, but that we would obtain all our energy from North America. Romney has a secret plan to annex Canada and Mexico, I tell ya'.

Venture capitalists are betting on emergent companies all the time.

Subisdizing alternative energy research is completely different than getting a subsidy for a for-profit project that does not pencil out financially.

Even failed research provides value to the scientific community and the taxpayer (they got something for the money), whereas failed subsidized projects provide money to specific individuals and firms with minimal value (the direct economic impact of the development) to the taxpayer.

Not sure why the change. You didnt mention how much they recieved. Is it a capital cost or cost of operations, that comes up short?

Thanks Hank. You always come thru . . . with a C&P. A little brain fade this morning I guess. My daughter's ex-boyfriend works for a venture capital company in your fair city that does just that.

RR,

Would you prefer the elimination of all energy subsidies then? You know, like the oil subsidies financed via US military protection?

Id prefer the oil companies paid for the protection, so we have accurate accounting and pricing. It also takes away a liberal talking point, that they never intend to fix, just polarize voters.

http://naturalresources.house.gov/news/documentsingle.aspx?DocumentID=311029

Obama energy rhetoric doesnt add up

you are tipping over

Well past tipped.

If our gas prices weren't massively subsidized by our own tax dollars we'd be paying $8 a gallon.

Fish on...

Todd

P.S. Not just tax dollars, but American lives and American credibility, too.

Without the infusion of grant money and tax credits, the debt service would have been more than the cash flow from operations could service. The principal amount of the debt and debt service would have been much higher than the project could sustain. Basically, without a huge free down payment on the project there would be no ability for the project to produce excess cash flow that goes to CCAP.

Subsidies for a product, system, or technology that has proved viable withouth the subsidy does not bother me. See: any real bank and who they loan to. The green subsidies for new projects that don't pencil out financially (see Dogfish's posts) do. What happens is someone see's that there is a "green" subsidy available for X,Y,Z type projects. So they create a bunch of paperwork, studies, grant applications, meet with their representative and etc to get their hands on the money. They do this knowing all along the whole system they have created cannot stand on its own financially.

Subsidies from the government are not a problem for me. Hell, my family is farmers, but subsidies for make believe projects just to say we are doing something "green" are a problem. Do not mistake subsidy for a project with research. Research provides data that is of some value for the greater good, while subsidizing a make believe project only makes a few very rich at the expense of everyone else. No one should be in favor of these ideas.

Now Salmo G> Would you prefer the $8.00 a gallon gas to make alternative energy pencil in closer to fossil fuels? Or leave the protection racket in the ME?

Your lame response has nothing, even less than nothing to do with the graph showing how much federal land energy production has dropped and two lame responses, do not make it any less wrong and thats saying somethin.

As for your response, lets see the math. Our war ships are probably out there for more than oil.
In addition, our # 1 source of oil is Canada and # 2 is Mexico. ME crude is a bit farther down the line. The amount of gasoline and taxes per gallon needed to pay for naval security is probably minor. Producing more oil here, would lower it further, because supply coming here would be sold to someone else and we would not require as much naval support.

Oil jobs are some of the highest pay and a small tax would go a long way to paying off the debt.

RR,

Not that I would appreciate $8/gal gas, I would take that over the ME oil industry protection racket. I'm totally opposed to that. That's quite a stretch as the definition of "national defense" goes.

Thanks for clarifying the diff between subsidizing a financially failing project and research.

Sg

Good answer. I wonder how many Americans would agree (if it was that simple)?

I think most Americans think gas should still be $0.30 a gallon. I also think most Americans prefer denial and delusion and American Idol over math, science, and the history of western civilization.

So long as its brown folks (you know, all those unGodly muslims) who are dying, or someone else's sons and daughters, then cheap gas is worth it.

If right wingers really want everyone to have "skin in the game", then screw making poor people pay income taxes...make rich people send their kids to the ME to "fight for the freedom to have cheap gas".

Fish on...

Todd

I felt roughly the same way during Vietnam Todd. It never works out that way. I think Biden was the only member of Congress who had a kid in the Iraq and Afghanistan wars. Atypical.

Well, let's be honest...having cheap gas and helping to solve the poverty problem by giving poor kids the chance to have a great job and travel overseas (even if a few tens of thousands end up dead, or worse), is a win-win proposition.

So long as you're not one of the poor kids. Or their parents. Or their kids.

Fish on...

Todd

That appears to be the way the 1/10th of 1%ers view the situation.

No source...just a guess on what it would cost if we figured in what we're paying for the wars in the ME and the warships in the Persian Gulf, and the planes on those carriers, and the pilots, and the seamen, and the training, and the bases and camps that support them.

All for gasoline.

It's probably a lot, lot, lot more than $8/gallon if you figured in all the treasure and lives we spend to keep it at $4.

Fish on...

Todd

Pentagon uses a massive % of our national consumption of petrol resources. Be sure and add that to the rest of the human and material resource costs.

Hank,

Some of us draw a distinction between national interest and national defense. Of course, those who believe that the business of America is business often come to a different conclusion.

I don't mean to promote isolationism, but if one condones "protecting the national interest", which includes global business, then there is no limit on what and where the US gov't. may interfere. I favor limits on gov't. intervention beyond our borders. Actually, within our borders too, for that matter.

Sg

SG finally said something I agree with after all these years.

The problem is that folks should just be honest about what they are supporting, and why.

Pretending that we are fostering "freedom" in the ME is just a flatout lie...or, if you think it's not a lie, then it's flatout foolish.

Again, as I said above, if folks really internalized what our gasoline costs us, then they might actually accept $8/gallon gas, since I suspect we're all individually paying far more than that as it is, we just pay it in taxes that fund our military-industrial comples, whose main job seems to be to keep gas prices lower.

That doesn't even begin to describe what soldiers and their family members are paying to make sure we get that cheap gas.

We have the most expensive gas in the world, because besides the dollars we pay, we pay for it in the form of wars, support for despots (Saudi Arabia and Egypt highest on the list, and far from the only ones), and the very lives of our soldiers.

Pretending that we are supporting "freedom" and that we already pay too much for gas are fantasies that will have to end sooner or later.

Fish on...

Todd

The draft is gone. You are rarely honest. Its beyond you, in your delusional state of mind. Stereotypical mind set that only poor kids volunteer for the military. Worse yet is your attitude that people on this site, do not care about those kids.

Dirt bag.

It has nothing to do with the draft, shitferbrains.

Look at the average income of our soldiers...they aren't Mitt's kids. If there were a draft and Mitt's kids were being drafted we wouldn't be exporting "freedom" at the rate we have been.

Hank, not only do I not like it, but I don't pretend that it's "freedom" we're peddling when we go around blowing up countries. Those who pretend it is are as fullofshit as FnF.

Fish on...

Todd

Not sure of the demographic of the mod military however everyone I know currently serving come from wealthy back grounds. The only thing poor about them is they are young enough to be fooled by fake patriots. They are willing to take a fighting stance because their parents raised them to be good Americans which means not questioning the system. Anyone that joined the military today thinking they were keeping America safe has been fooled. God bless them for trying to do the right thing but they are living and in some cases dying a big fat lie. They are protecting the wealth of people. Our country is only in danger of not being able to buy as much shat made in China from Walmart and driving there cheaper. My nephew is in Helmand province right now. His parents are Fox News watching Rush Limbaugh loving ditto heads that believe their son is in danger to protect them from the al queder storming the beaches of lake Washington in Bellevue. They also believe we are making Afghanistan a better place for non combatants. Since when is that the constitutional duty of or military? I think we should have a strong military but they should be parked at our borders and only be used to defend the US. If chevron needs security they can hire it.

I was agreeing with you, and taking it one step beyond by reminding anyone who thinks that we are spreading "freedom" that they are fuckin idiots.

Fish on...

Todd

Right, because there is no draft. They volunteer. A neighbor of mine, came back and went to work for a construction company making great money and all he talked about was going back to the ME in 2006. You don't solve the poverty problem by sending kids overseas. You solve it by graduating, not doing drugs and not letting them date and shack up with Aholes twice their age. You don't make it easier for fathers to leave the family and substitute government. But that is what progressives do. They are so smart, they have to solve every problem and as long as they end up in charge, its collateral damage. But its not your fault, its always someone elses fault. Even guys who have yet to win the Whitehouse.

Suppose we instituted a defense/war tax on imported oil... Say that tax FUNDED the ME defense budgets (vs roads, which the $0.50 tax does now)... Gas would be near $8 a gallon... Which would certainly cause changes in the economy...

But let's say we -- at the same time -- gave a sizable tax break to everyone in the same amount of a normal persons usage of gas. Let's say $3000/person... So in the end, most people would end up vaguely even...

a) suddenly alternative energy/fuels would be much more attractive, becuase they'd be price competitive.

b) we'd MUCH more rapidly become energy independent, because domestic oil and alternative sources would be viable.

It does seem by having subsidized gasoline we are kind of perpetuating the problem... I'm sure there are tons of problems with this logic (including the obvious impact on the transportation sector) but wouldn't something like this make some sense?

It's not a problem for Big Oil, it's perpetuating the profits...which is why we will continue to subsidize them, while they keep us addicted to oil...

Fish on...

Todd

P.S. FnF, the more you write, the more it's obvious that you are as ignorant as a rock, and a stupid rock at that. Turn off Rush Limbaugh and FoxNews, there's an actual world out there, full of stuff like "reality"...you could use it.

How comforting, you understand my plight. You may now go fishing.

FnF, I invited you on another thread to join the "reality based" world...I know it's about as far away and as foreign as Pluto for right wing dumbasses, but the world would be a far better place if they were to ever get there.

Fish on...

Todd

How the hell do you know, what families TJ knows. He could know one person and make that statement.
The guy hasn't even been elected yet and you want to judge his kids for not serving. What makes you so special?
I've worked for several Mormon families and they know the value, all kids have to their parents. Show me in the Constitution where it mandates military service?

As a veteran that served honorably I did not meet one guy in that was from a very wealthy family and I think this is part of what Todd is saying.

Some of the only options for younger people without financial means is to enlist and get an education or training through our military, something families with money do not have to worry about.

Fishy

Being an officer means that you already have a degree which broadens your range of options, unless they earned their commission in the field or are a warrant officer.

Fishy

Hank,

Of course the economy is a national interest. And yes, we do use our military to protect both the national interest and the interest of select multi-national corporations. I think we should not. Because we do, we have encouraged by subsidizing the development of the global economy at great cost, socially and economically to our domestic national interest. Like Todd posted, if the oil companies want security for their overseas business interests, let them hire it. This would reveal the actual cost of ME oil, and in and of itself provide incentive for US energy independence.

I do support national energy independence. You might be old enough to remember WA Senator Scoop Jackson, who as a result of the 1973 Arab oil embargo advocated national energy independence. He was one of the most powerful members of the Senate, and it seemed like there was a lot of momentum at the time to head down that path, as there have several times since then. Yet it never happens. Do you wonder why? I do, and I'm convinced that energy independence is not in the interest of the multi-national oil companies, and those companies have the clout to steer the federal gov't. in whatever direction they wish, which is to continue to import subsidized ME oil because it's more profitable for them than an energy independent US would be. What are your thought's on the matter?

T. Joad,

Pay attention and you'll see that I'm quite agreeable where logic and justice are the objectives.
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Interesting regarding military demographics. I was under the impression that the all-volunteer military over-represented the poor and minority demographic, just as it did during the draft.

Todd,

Why even egage with FnF? As KK would say, not a lot of mental furniture there.

Sg

What a dumba$$ thing to say. Only poor serve?????? You can not be that stupid. I guess you said it so you likely are. I guess that is what passes as the normal thinking in latte' land.

I come from middle class family and most of my buddies did as well. All those I know and there are many many including brothers and sisters that served did so because that was the way we were brought up. Friends were the same. Most of us grew up on ranches and farms where we worked from the time we were old enough to chase cows and buck hay. We were mostly anti-govern but very very patriotic.

I guess when you come from liberal land you only serve if you are poor and have no options. But in rural America and there is a lot of rural america out there you serve because your parents/uncle/grandparents/brothers/sisters/freinds did.

F-u citiot loosers who veiw all those that grew up the way I did and volunteered to serve with such distain.

Docspud,

You responding to my post? If so, please re-read. I most emphatically did not say that ONLY the poor served. Rather, the poor and minorities serve in the military in a proportion higher than their demographic in US society over-all. I'll give you credit for being smart enough to understand what that means until I see otherwise. In case you don't, it means that while blacks make up about 12% of the US population, the military consists of more than 12% black service members. And the wealthiest 1% of Americans serves at considerably less than 1% of all service members, etc. That's not so hard, is it?

Sg

no, he was not responding to you, Salmo.

Another green company bites the dust. [Re: AuntyM]

Docspud, I would say you have Aunty wrong. No doubt, shell get around to you.

Definitely not you salmo. Not AM either. Mostly BWP and stink. Todd I have heard enough from to think he knows better but likes to troll.

1. “American soldiers are more educated than their peers. A little more than 1 percent of enlisted personnel lack a high-school degree , compared to 21 percent of men 18 to 24 years old [in the general population].”
2. “Contrary to conventional wisdom, minorities are not overrepresented in the military service.”
3. “The facts do not support the belief that many American soldiers volunteer because society offers them few opportunities. The average enlisted person or officer could have had lucrative career opportunities in the private sector.”