News Story

Video Shows President Obama, Top Politicians Praising Failed Green Company

Obama, Granholm, Levin, Stabenow and Energy Secretary Chu all praised troubled battery manufacturer

A video that has gone virtually unseen highlights the high-powered political rhetoric and unrealized promises put forth by President Barack Obama and Michigan’s top Democratic politicians regarding the heavily subsidized and now-troubled A123 Systems battery manufacturer.

The video, which had just over 600 views since it was posted in Oct. 2010 on YouTube, has Obama, U.S. Secretary of Energy Steven Chu, former Michigan Gov. Jennifer Granholm and U.S. Senators Carl Levin and Debbie Stabenow singing the praises of the now-troubled advanced battery manufacturer A123 Systems.

A123 Systems, which opened its lithium-ion battery manufacturing plant in Livonia in September 2010, saw its stock plummet to the lowest price ever at 82 cents this week. The previous high was nearly $26.

A class action lawsuit was filed against A123 Systems this week on behalf of shareholders  alleging a violation of federal security laws. According to Business Week, the lawsuit claims A123 Systems withheld information about defective batteries from shareholders who bought stock between Feb. 28 and March 23, 2012. The company estimated last month that the cost of replacing the defective batteries would be $55 million.

Last month, the company reported losing $90 million in 2011. It also laid off 125 of its reported 1,000 Michigan employees last year.

The company has become a poster child of government subsidies for green energy initiatives. The state of Michigan gave A123 Systems $100 million in MEGA tax credits. A123 Systems also received another $41 million in tax breaks and subsidies from the state. The Department of Energy awarded A123 Systems a $249.1 million grant as part of the federal "stimulus program."

Even with all the government subsidies, the company has suffered several setbacks.

But in 2010, politicians painted a far different future for A123 Systems.

In the video, Gov. Granholm’s press conference on A123 Systems was interrupted by a phone call.

It was President Obama on the line to remind the audience that it was his American Recovery and Reinvestment Act that enabled A123 Systems to be the “first American factory to start high-volume production of advanced vehicle batteries.”

Secretary Chu said in the video that he hoped A123 Systems could create “thousands of jobs.”

“It really does make me feel really happy, proud that we are starting things, giving jobs, creating new jobs and hopefully the first 300 are just the beginning. Another 300 and another 300 …thousands of jobs," he said. "It’s going to be great.”

Sen. Levin predicted “thousands of jobs” by 2011. Gov. Granholm said it made Michigan the “advanced battery capital of North America.”

The video highlights the political rhetoric behind Michigan’s green crusade, said one environmental policy expert.

“This shows the utter dysfunction of politicians’ efforts at economic development via media events and ribbon cuttings,” said Paul Chesser, associate fellow for the National Legal & Policy Center, in an email. “Just because they say a business will work, and they throw millions of taxpayer dollars at it, doesn’t mean it will be a success. Elected officials who conduct their policy planning this way exhibit tremendous arrogance.”

Senators Levin and Stabenow didn’t immediately provide comments when messages were left at their offices. A123 Systems Spokesman Dan Borgasano didn’t immediately respond to an email seeking comment.


Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.