News Story

MEDC Boss Says Agency Changing; Has Long History of Backing Bad Companies

A look back at five MEDC-backed failures

Michael Finney says the Michigan Economic Development Corp. has turned over a new leaf.

"Gone are wild bets on unproven technologies," the president and CEO of the quasi-governmental and private entity said in a recent press release.

Finney's comments came in response to what he called, "overheated news reports," of an Auditor General report that said only 19 percent of the original jobs projected by the MEDC came to fruition. Finney said that the report also concluded the program was "effective."

The state's 21st Century Jobs Fund, which the MEDC oversees, was created by the state in 2005 using $1 billion in funds from the tobacco settlement and was supposed to create jobs. Finney said the 21st Century Jobs Fund that existed from 2006 to 2010 when Jennifer Granholm was governor was intended to "stretch the definition of what is possible."

"The MEDC of today is a very different operation," he said in a press release

The MEDC has a long history of making questionable deals and not being open about how tax dollars are spent. Michigan Capitol Confidential takes a look back at five of the least successful deals from the last few years made by the MEDC on unproven technologies.


The lithium-ion car battery maker was touted by former Gov. Granholm and President Barack Obama as a company that would transform Michigan. At one point, the MEDC had a video posted on its website of President Obama congratulating then-Gov. Granholm on the company's battery plant opening in Livonia. The video was taken down by the MEDC (Michigan Capitol Confidential saved a copy).

"I'm looking forward to continuing to see the great work that you guys do in the years to come," President Obama told the crowd.

The failure of A123 Systems is now well known. The company filed for bankruptcy in October 2012.

As of November 2012, A123 Systems had spent $115 million of a $249.1 million federal grant and also spent $8.8 million it received from the Michigan Economic Development Corp. for reimbursements of costs via a Center of Energy and Excellence Grant. The company also used an MEDC tax credit to offset $2.6 million owed for the Michigan Business Tax.


The company was supposed to produce environmentally friendly siding products. The MEDC gave it $1.65 million with the expectation of creating 62 jobs at facilities in Novi and Auburn Hills.

"The 21st Century Investment Fund is an important component of our aggressive plan to diversify Michigan's economy," then-Gov. Granholm said in 2008. "This investment will help grow a high-tech Michigan company and create new jobs."

The state received $55,373 for its investment before Microposite terminated its staff in June 2009 and went out of business.

The 21st Century Jobs Fund progress report stated that no jobs were created.


Fisher Coachworks was going to create lightweight hybrid buses that would get more than double the miles per gallon than other hybrid buses.

In 2009, then-Gov. Granholm said the company was part of the "new energy economy for Michigan."

Flint's Mass Transportation Authority had tabbed Fisher Coachworks to make two $1.1 million electric buses for it with money from the American Recovery and Reinvestment Act.

But by 2011, Fisher Coachworks was out of business, never completed a bus and the state wrote off $1.6 million from a loan it gave the electric bus manufacturing company. Flint was left to pursue a $2.4 million hydrogen bus.


Mascoma Corp. was awarded a $20 million grant from the state's Centers of Energy Excellence in 2008 and another $100 million from the federal government. The idea was to use technology to convert biomass into ethanol. In 2008, the company pledged 70 jobs by the end of 2012. The company reported to the MEDC on Feb. 29, 2012, that it had created three jobs for the $20 million grant.

In August 2013, it was reported that Valero Energy, which was supposed to provide up to $50 million in financing for the Mascoma facility in Kinross Charter Township, was no longer involved in the project.

In Mascoma's filing with the SEC, Mascoma lists as a risk factor that it has "no experience in the markets in which we intend to operate." That’s not unheard of for companies to list when dealing with unproven technologies.

"This company, and their partners, will create jobs in Michigan," former Gov. Granholm said in Oct. 2008.


Most of the attention that comes with film subsidies is from the media reaction to Hollywood stars coming to town. Speedshape was a Michigan company used by Hollywood to claim $1.8 million in film incentives to do post-production work in 2011 after filming was done on the movie Spy Kids 4.

Speedshape received $4.5 million from The Weinstein Company in 2011 and the Michigan Film Office trumpeted the deal in a press release.

But Speedshape didn't stick around long after getting the $4.5 million.

It closed up shop in early 2013, breaking its lease without paying $250,000 in rent at its Bingham Farms office and also without paying Oakland County $20,296 in personal property taxes.

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.