Obama-Promoted Battery Plant Moves to 'Rolling Furloughs' As Company Pulls Back on Jobs Projections
LG Chem received $151 million from feds, $100 million from state
Two years ago, when President Obama visited the LG Chem battery plant in Holland, it was hailed as part of the transformation of Michigan to a “green economy.”
The battery plant, which supplies batteries for the Chevy Volt, got $151 million from the U.S. Department of Energy.
Today, $133 million of that $151 million has been spent, but since April, the company's 200 workers have been on "rolling furloughs" because the electric vehicle market has failed to blossom as promised by many.
In 2010, the plant was projected to create 443 new jobs within five years. Those projections have been shelved as the company says it can't predict when the furloughs will stop for its current employees.
"Ultimately, market conditions and demand for lithium-ion batteries are going to determine when the company is going to be able to launch production and grow," said LG Chem Spokesman Randy Boileau. "The company has said the Holland facility will play an important role in its global strategy for the batteries."
The Holland battery plant was one of two high-profile green projects heavily subsidized by the government that drew presidential attention, but now are struggling.
A123 Systems, which has a lithium-ion battery manufacturing plant in Livonia, received $249.1 million in federal government money. It laid off employees and its future was in doubt until China recently invested $465 million in the company.
The electric vehicle market in the U.S. has not taken off as some have hoped.
GM has sold 13,497 Chevy Volt s through August this year, or about .001 percent of the total 9.7 million cars and light trucks sold in the first nine months of 2012, according to Autodata Corp. GM sold 2,831 Volts in August of 2012, up from 302 sold in August of 2011.
"Michigan and the federal government deemed that electric car batteries were the future and spent hundreds of millions of tax dollars trying to make it so," said James Hohman, a fiscal policy analyst with the Mackinac Center for Public Policy. "Policymakers shouldn't waste taxpayer dollars on the industry du jour; they should level the playing field."
The Holland battery plant also was approved for up to $100 million in state tax credits.
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.