In 2010, Mr. Obama attended a groundbreaking ceremony in Holland, Mich., for a battery factory owned by LG Chem Ltd., a South Korean company, and proclaimed that said such grants would “unleash private sector growth” and called the factory “a symbol of where America is going.” The plant was half funded by
government taxpayer grants and was estimated to add 440 jobs building batteries for GE’s Volt and other such cars. Today, that plant has only 150 workers, some of whom are hourly and are furloughed one week a month.
At least Obama was right about one thing – the plant is a symbol of where America is going – down the tubes.
When demand for the plant’s batteries didn’t meet expectations, the company filled orders with cells made at a factory in South Korea, leaving the Michigan plant largely idle, according to the report by the Department of Energy’s Inspector General, Gregory Friedman. The inspector general said that to avoid layoffs at the factory LG Chem paid idle workers $1.6 million in the third quarter of last year, about half of which was covered by its U.S. grant, even though there was nothing for them to do. The workers played board games, watched movies, and volunteered at local animal shelters during regular work hours.
Friedman said that “until the shift in production takes place or some alternative use for the plant is developed, U.S. taxpayers will receive little direct benefit from a plant for which they provided up to half of the funding.”
The inspection report on the Electric Drive Vehicle Battery and Component Manufacturing Initiative grant came a day after President Barack Obama lauded
U.S. efforts to invest in alternative energy.
To save face, Kathleen Hogan spokesman at the Department of Energy said in a written response to the report that the funding for LG Chem was part of an effort to “continue to grow the manufacturing sector in the United States.” She said the electric vehicle industry “hasn’t grown quite as quickly as expected,” but will become “an enormously valuable and growing market.” What an understatement. The Michigan plant was to have the capacity to produce enough battery cells to equip 60,000 vehicles a year but GM sold 23,641 Volts in the U.S. 2012.
Friedman’s report said that while LG Chem had said it planned to move battery production to Michigan from South Korea, there was no explicit requirement for it to do so in order to receive federal funds. The company built three of five planned production lines, but underestimated labor costs—apparently unaware of a requirement that it pay prevailing wages—and no longer has enough grant money to complete production.
The facility has produced some test battery cells, but none have equipped Chevrolet Volts. LG Chem officials told Mr. Friedman’s office that shifting production to Michigan now would “result in financial losses on battery cells produced in the U.S.,” according to the report.
Rep. Lamar Smith, a Texas Republican who is chairman of the House Science Committee, called the LG Chem case an “outrage.” “The president wants more money to fund more pet projects, but it is clear that his administration hasn’t been responsible with what they’ve already been given,” Mr. Smith said in a
What can I say – arrogance produces waste.