Company That Got $240M in Stimulus
A struggling Massachusetts-based company that makes batteries for electric cars and got $240 million in stimulus money is being saved from bankruptcy by a Chinese billionaire who could move operations overseas.
A123 Systems received a $241.1-million grant from the Obama administration three years ago and more than $125 million in State of Michigan tax credits in the hopes that the company would create jobs, while leading the country away from conventional gas-guzzling vehicles and toward clean energy.
But the lithium ion battery maker is now poised to hand over the reins to Wanxiang Group, a Chinese firm, which agreed in a tentative deal last August to invest up to $450 million so that it can take over as much as 80 percent of the company.
Since 2009, the Waltham, Mass.-based company has lost a reported $857 million, laid off workers and recalled its products. A123's stock price has plunged from $4.44 about a year ago to 26 cents this week.
"They were wrong," Jarrett Skorup, a research associate with the Mackinac Center for Public Policy, said of the Obama administration. "The problem is that policymakers decided to be in the business of picking economic winners and losers and unfortunately they've picked the losers far too often."
"It’s money that we’ll never get back," Skorup said of the massive amount of stimulus cash. "It was grant money so there were not a lot of strings attached to it."
The battery maker's precarious position is due to many factors -- most notably one that is beyond the company's control: a lack of demand for batteries that charge electric vehicles...
A123 Systems supplies batteries to customers, including California luxury carmaker Fisker Automotive. The deal with Wanxiang Group -- owned by Chinese billionaire Lu Guanqiu -- also raises the question of whether the manufacturer will be forced to move to China. A representative from A123 Systems did not return a request for comment on the matter.
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Editor's Note: Another example of a global redistribution of American taxpayer dollars.
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