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