A123 Bankruptcy Gives Romney New Example of Green ‘Loser’
bloomberg.com/news/2012-10-16/a123-bankruptcy-gives-romney-new-example-of-electric-car-loser-.html
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A123 Bankruptcy Gives Romney New Example of Green 'Loser'..A123 Bankruptcy Gives Romney New Example of Green ‘Loser’
By Angela Greiling Keane - Oct 16, 2012 6:48 PM ET
Republican presidential candidate Mitt Romney called the bankruptcy filing by battery maker A123 Systems Inc. (AONE), which received a $249.1 million U.S. grant, an example of President Barack Obama’s failed green-energy policy.
“A123’s bankruptcy is yet another failure for the president’s disastrous strategy of gambling away billions of taxpayer dollars on a strategy of government-led growth that simply does not work,” Andrea Saul, a Romney campaign spokeswoman, said in an e-mailed statement today.
A worker moves crates for batteries on an assembly line at the A123 Systems lithium ion automotive battery manufacturing plant in Livonia, Michigan. Photographer: Jeffrey Sauger/Bloomberg
The electric-car battery producer’s filing today, hours before the second presidential debate was to take place, gave Republicans fresh ammunition to criticize Obama’s record on the economy. A123 wasn’t one of the green-energy companies Romney called “losers” in the first debate with Obama two weeks ago, in discussing choices of U.S. aid recipients.
A123, based in Waltham, Massachusetts, received the U.S. Energy Department grant from Obama’s economic stimulus package in 2009 to build a factory in Michigan.
Romney singled out Fisker Automotive Inc., Tesla Motors Inc., Solyndra LLC and Ener1 Inc. during the Oct. 3 debate as “losers.” Solar-panel maker Solyndra filed for bankruptcy last year, and Ener1, parent of a battery company that received a $118 million Energy Department grant, sought bankruptcy protection in January.
‘Another Failure’
“President Obama has been very strategic and aggressive in pointing to the auto bailout as an example of what the government did right,” Julian Zelizer, a history and political affairs professor at Princeton University, said in an interview. “This is the reverse. Romney will bring this out as an example not of corruption as in Solyndra but as an example of failed investment.”
Under Obama, the government has invested about $5 billion in the U.S. electric car industry through loans to auto companies including Fisker and Tesla, grants to companies such as A123, and tax credits of as much as $7,500 for customers who buy plug-in cars. Some of the current administration’s investment is a continuation of programs begun during RepublicanGeorge W. Bush’s presidency, before Obama took office in January 2009.
Republican Support
The company, which started with processes developed at the Massachusetts Institute of Technology, sold its first products when Romney was the state’s governor. It received U.S. grants in 2003 and 2007 under Bush’s administration. The 2003 grant, from an Energy Department program for small businesses, was A123’s first outside funding, then-Energy Secretary Samuel Bodman said in a 2008 speech.
A123 Chief Executive Officer David Vieau met with Bush at the White House in 2007, according to an A123 press release and White House video of the event.
A123 was one of the companies named in a letter from the Michigan congressional delegation supporting stimulus grants for battery suppliers. Signers of the May 2009 letter to Energy Secretary Steven Chu included Representative Fred Upton, a Republican who later criticized Energy Department green-energy loans, and then-Representative Thaddeus McCotter, a Republican who resigned in July.
They cited the state’s support for companies including A123 and Johnson Controls Inc. (JCI)and asked that the U.S. government follow suit.
A123 was given $125 million in refundable tax credits from the state of Michigan that it never collected, said Mike Shore, spokeswoman for the Michigan Economic Development Corp. The company did collect a $10 million state grant, he said.
Fisker Batteries
A123 supplied lithium-ion batteries for Fisker’s $103,000 luxury plug-in Karma, which was panned by Consumer Reports after it stopped running in the middle of a test drive. That led to a recall by Fisker, which has also been backed by the Obama administration, that cost A123 $55 million and helped put it on the financial brink.
“A123’s promising technology has a long history of bipartisan support,” Dan Leistikow, an Energy Department spokesman, wrote today in a blog post on the agency’s website. “In 2007, the company received a $6 million dollar grant as part of the Bush administration’s efforts to promote advanced battery manufacturing, and the company has used $132 million of a 2009 grant from the Department of Energy.”
Jen Stutsman, an Energy Department spokeswoman, declined to comment beyond the blog post.
Political Contributions
A123 officials have contributed to Democratic political candidates including Obama, according to the Center for Responsive Politics, a Washington group that tracks campaign finance.
Vieau gave $2,300 to Obama’s campaign less than a month before the 2008 election, and has contributed to other Democratic candidates and groups, including Senator John Kerry and Representative Edward Markey, both from Massachusetts, and Louisiana Senator Mary Landrieu, according to data from the center.
Gururaj “Desh” Deshpande, an A123 board member, was one of 26 people appointed in 2010 to a White House advisory board on technology innovation and entrepreneurship. Others appointed included Steve Case, a co-founder of AOL Inc., and Jerry Yang, a co-founder of Yahoo Inc. In that role, Deshpande attended a ceremony in April at which Obama signed his jobs bill into law.
Grassley, Thune
Representative Darrell Issa, the Republican chairman of the House Oversight and Government Reform Committee, today called A123 “the latest cautionary tale against the administration using taxpayer dollars to sponsor pet projects and then running from responsibility when they’re not successful.”
Republican U.S. Senators Charles Grassley, an Iowa Republican who is his party’s ranking member on the Senate Judiciary Committee, and John Thune, a South Dakota Republican, last week questioned A123’s plan, announced in August, to give Wanxiang Group Corp., China’s largest auto-parts maker, a majority stake in exchange for financing.
A123 is abandoning the Wanxiang plan and agreed to sell its automotive business to Johnson Controls for $125 million, Vieau said in a statement today.
The bankruptcy raises questions about whether A123 should have received the grant, Grassley and Thune said in a statement today.
“The bankruptcy raises the prospect that the taxpayers will get little or no return on their investment in A123 and will lose millions of dollars,” they said.
