News Story

Federal 'Stimulus' Spent $34.5 Million In Michigan For Only 183 Total Jobs

14 companies spent over $188K per job

If jobs are any measure, 14 Michigan "green" companies that were awarded $34.5 million in taxpayer funded grants and loans aren't generating much heat.

According to the Michigan Economic Development Corp., the companies have reported a total of 183 jobs. While a final report will not be issued until June, calls and emails to the companies indicate the total number will not be much higher.

The state awarded the grants and loans in 2009 and 2010 under its Clean Energy Advanced Manufacturing Program. The money came from federal stimulus funding under the American Recovery and Reinvestment Act. The federal government handed out a total of $3.1 billion for state energy programs, of which Michigan got $82 million.

Michigan Energy Office Manager Robert Jackson defends the program by saying it was not designed to create jobs but to help established manufacturers retool for the future economy, namely alternative energy. Of the 14 companies on the list, the majority are in the wind turbine business.

Employment, however, was front and center when the awards from this stimulus program were announced.

“The awards being made today will create good jobs,” U.S. Rep. Sander Levin, D-Royal Oak, said in a June 2010 press release.

Former Gov. Jennifer Granholm devoted one of her radio addresses to the subject, even mentioning a specific jobs number for one of the award recipients, Ventower Industries of Monroe. Ventower received a $2.25 million grant and more than $1.56 million in government-backed loans. Gov. Granholm said the company was projected to create 130 direct jobs and 40 spin-off jobs.

Ventower, which makes wind turbine towers, currently employs 49.

Another company, Astraeus Wind Energy Inc. of Eaton Rapids, got a $7 million grant and a loan of $1.54 million and has created 11 jobs. If no other workers are hired, those jobs were created at a cost of $776,364 each.

Astraeus co-founder Roger Cope also defends the program, saying he believes the program gives the state its only opportunity for energy independence and that without government subsidies the alternative energy business has an extremely hard time getting off the ground.

“Banks these days are not loaning money and venture capitalists have no interest in manufacturing,” he said. He points out that some of the greatest technological advancements have come from the aerospace and medical industries, which were subsidized by the government for years. He said he believes the same could be true in alternative energy.

To be sure, businesses from all industries get government loans and grants and those that applied for and got these "green" energy government loans and grants were doing what was best for their businesses in taking advantage of available resources.

The real problem is that the government is creating these programs in the first place; the companies aren't to blame, said Fred Smith, president and co-founder of the Competitive Enterprise Institute.

“Government has poor ability to pick the winners on the frontier sectors of the economy. It got excited and over-promoted an issue and everyone got excited, even Fortune 500 companies,” he said.

Calls and emails to several of the 14 companies went unanswered. Officials from Innotec Inc. of Zeeland, said because the company is private, there is little information it can share publicly. Innotec makes LED lighting components. It received a $1 million grant and $200,000 in government-backed loans. It added 14 people since receiving the money.

Officials from Grid Logic Inc. in Lapeer said the company used its $3.5 million grant and $3.04 million in loans to raise private funding and build an advanced manufacturing facility. Company officials said Grid Logic has developed a new line of products for the electric utility industry, which led to a “substantial” contract. It expects to increase sales and add staff. The company currently employs 20 people.

Two of the 14 companies, Great Lakes Industry in Jackson and Polar Seal in Grand Rapids appear to have had their awards revoked.

Other grant and loan recipients include: Amptech of Manistee ($300,000 grant/$273,000 loan for seven workers); Eaton Rapids Castings of Rochester ($1.36 million grant/$650,000 loan for six workers); Energetx of Holland ($3.5 million loan for 56 workers); Heat Transfer International of Kentwood ($2.2 million grant/$550,000 loan for seven workers); KC Jones Plating of Warren ($150,000 grant/$150,000 loan for six workers); LOC Performance of Plymouth ($1.5 million grant for an unreported number of jobs); LUMA Resources of Rochester Hills ($500,000 grant/$325,000 loan for 12 jobs); and Merrill Technologies of Saginaw ($3 million grant for an unreported number of jobs).

One of the difficulties in alternative energy industry is the unpredictability of energy prices from other sources.

Because of new drilling techniques, developed in large part in the private sector, natural gas prices have dropped to record lows. Natural gas inventory is so high that some experts are predicting the U.S. may run out of places to store it. Wind and solar power account for less than 2 percent of energy production, according to the U.S. Department of Energy. The wind-power industry is currently lobbying for a $7 billion renewal of its production tax credit and pushing to increase renewable-energy mandates nationally and in individual states, including Michigan. There is an effort to increase the mandate in Michigan to 25 percent.

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.