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Subscribe to RSSBattery manufacturer A123 Systems, which got nearly $250 million in grant money under President Barack Obama’s 2009 stimulus program, filed for Chapter 11 bankruptcy protection Tuesday morning – just in time for Republican Mitt Romney to add the firm to his indictment of Obama’s green-energy program. In the first debate with Obama, Romney used the collapse of solar firm Solyndra to attack Obama’s energy agenda.
Herwig Prammer / Reuters
Energy Secretary Steven Chu
“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,” said Romney spokeswoman Andrea Saul on Tuesday.
But A123, based in Watertown, Mass., but with manufacturing plants in Michigan, got funding under the administrations of both Obama and President George W. Bush. The firm got a crucial influx of early money from the Bush administration in 2001 and 2003. In fact, the firm might not have been alive in 2009 to get its Obama stimulus funding if it hadn’t been for earlier subsidies under the Bush administration.
In a speech at a business conference on Sept. 4, 2008, then-Energy Secretary Samuel Bodman noted that in 2003 his department had made an award under the Small Business Innovation Research (SBIR) program to A123 Systems for work on lithium-ion batteries.
“While this company now has major private investors, on many occasions the company's founders have described this SBIR grant as their first source of outside funding,” Bodman said. “And the results, now just five years later, are remarkable. This company now employs over 1,100 people who produce batteries with an unprecedented combination of power, safety and long life…”
He added, “I've had the pleasure of visiting A123 Systems, located right outside of Boston, and I can tell you firsthand that this company is doing terrific work.”
According to Jan. 21, 2010, testimony by current Energy Secretary Steven Chu before the Senate Energy and Natural Resources Committee, A123 Systems received SBIR grants in 2001 and 2003 totaling $850,000 to refine its lithium-ion battery technology.
Bush also laid the foundation for Obama administration subsidies to alternative-energy firms when he signed into law the Energy Independence and Security Act of 2007. (GOP vice presidential candidate Rep. Paul Ryan voted against the bill, partly due to an earmark in the measure that he said would benefit one forestry company.)
The 2007 law created, but did not fund, the Advanced Technology Vehicles Manufacturing (ATVM) program. In the summer of 2008 as the automobile industry was beginning to fall on hard times, Midwestern lawmakers proposed $3.75 billion to activate the ATVM and make loans to U.S. vehicle and battery firms.
When Obama became president, one of his highest priorities was to spur manufacturing of alternative-energy technologies and vehicles. The Energy Department used ATVM grants as a way to subsidize green-energy firms. On Aug. 5, 2009, Vice President Joe Biden announced $1.35 billion in DOE grants to spur advanced battery and electric vehicle manufacturing. A123 Systems got $249 million of that money.
“Terrific news," said Sen. John Kerry, D-Mass. "A123 Systems is doing the kind of cutting-edge work we need to get our manufacturing industry back on track and create jobs here at home… These grants are a wise investment that will pay many dividends."
That summer of 2009 was a buoyant time for the firm, which launched its initial public offering in September, raising $390 million. “The IPO entered venture capital lore, a beacon for clean-tech entrepreneurs everywhere,” reported Climate Wire. The stock surged from its IPO price of $13.50 a share to more than $28 before 2009 ended.
The firm also got another Energy Department grant of $5 million to determine whether its batteries could store emergency power for the electric grid.
In January 2010, A123 was one of the firms benefiting from another stimulus cash influx – as the Labor Department announced the state of Michigan would get $5 million in grant money to train workers in green-energy skills.
In September 2010, Obama called Michigan Gov. Jennifer Granholm to congratulate her and A123 Systems for opening the largest lithium-ion battery manufacturing plant in the United States in Livonia, Mich.
"It is incredibly exciting to see how far you guys have come,” Obama said, in remarks reported by the Detroit News. “This is about the birth of an entire new industry in America -- an industry that's going to be central to the next generation of cars.”
But there were skeptics.
By early 2011 one stock analyst, Theodore O’Neill, now at Litchfield Hills Research, told Climate Wire that A123 was heading for “a giant train wreck” in the next few years. He said the tiny numbers of U.S. battery-powered vehicles would not create enough demand for A123 to make a profit.
By this summer GOP lawmakers were raising the alarm about a Chinese firm taking majority ownership of A123 Systems. “We need to be sure that when the federal government invests close to a quarter of a billion dollars in grants to a company, that the technology developed as a result of this taxpayer support doesn’t end up in China,” said Sen. Chuck Grassley, R-Iowa.
But that Chinese investment didn’t happen, and on Tuesday A123 filed for bankruptcy. A larger firm, Johnson Controls, will buy its factories in Michigan.
In an interview Tuesday, O’Neill said, “The Fisker Karma was the only car taking the A123 batteries. And I started calling around to dealers and as late as November of 2011 the dealers still didn’t have cars to sell. So you had A123 going ahead and building a 600,000-square-foot manufacturing facility for which there’s no end market. It’s not clear to me how much the Department of Energy is to blame for having A123 expand as rapidly as they did in advance of actual demand or whether it was all (A123’s chief executive) David Vieau” who erred in his forecast. “It’s probably a little bit of both,” he said.
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Ask any long time investor, companies fail left and right no matter where their funding comes from. Mitt 'Rim Shot' Romney probably knows this as well as anybody. Yes, tax payers money in this case; in other cases share holders or pensioner's money. Other tax payer investments such as in the aero-space industry have paid off handsomely. Let us not forget the billions of tax payer money invested in the last Iraq war as being wasted as well, not to mention, most of all, the blood of US Soldiers. Then there is the Viet Nam war..... Hindsight is always 20/20 you know.
grrrrl4ever==So your saying it's still Bush's fault? How in the world can you compare throwing tax payer money into a technology for a battery and a war? Kinda running out of people to blame?
I love how you despreate Righties are going off on these insignificant talking points. You can't deal with the fact that the economy is recovering and O is doing a good job. I loved watching you all @!$%# your pants when the unemployment rate dropped below 8%
7.8% is a good start o wait thats right California didnt send in their unemployment numbers, I mean what would that number be if CALIFORNIA was included in the final numbers???
back to the article though BUSH 850,000 the company stays in business OBAMA 250,000,000 company files bankruptcy..... hmmmmm
dahood:
You obviously do not know how BLS estimates the unemployment rate. California was included.
DaHooD===I would like to think that someone in the Government could see that this company was in bad shape and that they would not throw more money into a failing company. Yet we see under this administration that us asking a little to much.
So let me get this straight... this company got roughly $850,000 from the Bush administration back in '01- '03. They got $249,000,000 in '09 from Obummer. And now after only 3 years, they are bankrupt! Boy he can sure pick them.
Can you imagine the parties the executives threw after being handed that check? Legendary.
...it should NOT be up to the government to determine which company gets backing and which do not. let the companies go to the banks or venture capitalists and present their ideas. remember what milton friedman said: if the government were to be placed in charge of the sahara desert, within five years there would be a shortage of sand! or look at the i.r.s. and its failure at running a nevada whorehouse where liquor was sold!
A lot of companies are going bankrupt-So what ?? Bush gave them $850,000 dollars and Obama gave as well-What does this prove,that they were both wrong ?? Why blame just Obama,especially when he gave way less than Bush !!
If you are seriously putting 850k and 250MM in the same category, YOU should run for office...you'll fit right in.
Maria,
Bush gave them $850,00 which made them a viable company. They were able to go public and raise $390M so why would the government give them money if they were able to raise it privately.
Tonight I am sure Obama will be crowing about saving the auto industry. What he won't be saying is how 7 out of 10 GM cars are built outside the country and mostly in China and how most of the jobs saved were outside the country. He won't be bragging about borrowing 40 cents on the dollar from china to save all those jobs in china.
He also won't be talking about how he screwed all the delphi workers only because they weren't in the union. He won't be talking about how he threw contract law out the window and screwed the bond holders. He won't explain the reason they were in trouble in the first place was the legacy costs they couldn't afford from the contracts the unions forced them into and his solution was to GIVE the union half the company.
He brags about GM being #1 again when they were #1 for about a week only because Toyota was basically shut down from the Sunami not because GM was doing so great.
Facts Matter!
Yes,they do-Too bad you have NONE !!! Romney has out sourced thousands of jobs to China and caused MANY companies to go under-The latest one in Illinois,which he makes millions from.
Where is the blame for the company itself-Maybe some mismanagement ??
And don't you think they entity who just handed them a quarter of a BILLION taxpayer dollars should have been monitoring their usage of the money? Maybe even ...get this... only giving them the amount of money necessary when presented with concrete plans on how it would be spent.
They got $250 million with apparently zero oversight... I'm surprised they even kept the doors open for 3 years. They probably just tired of showing up for "work" once every 3 months.
Republican comments = revisionist history
Will they throw Hillary under the bus again and have her take the blame for this? or will they just keep blaming Bush?
Ahhh, there it is.
"In fact, the firm might not have been alive in 2009 to get its Obama stimulus funding if it hadn’t been for earlier subsidies under the Bush administration."
If Bush hadn't saved them I couldn't have destroyed them while wasting a quarter of a billion in taxpayer money. Sincerely B.O.
850 grand from Bush 250 million from Obama...
The numbers just do not seem the same.
All tax payer money borrowed from China thank you Washington. To bad Maria's young daughter gets to pay the bill the rest of her life and her kids life. By a future of less that cost more....
Are you sure about that money being borrowed from China? Maybe that was money that was paid in taxes by U.S. citizens and the money used to finance the unjustifiable tax cuts for the rich was money borrowed from china...... just sayin'
A bipartisan program that financed a number of business so the U.S. would not fall behind in high technology. In right wing whacky land it's all Obama's fault. But let Romney and Bain borrow massive amounts of money to buy a company - and that borrowed money is now a debt of the purchased company - then borrow massive amounts of money on behalf of the company in order to pay themselves profits, then charge fees for their "advice", then steal the pension money of the workers, then "harvest" the company - read bankrupt - fire the workers and send the jobs to China and the right wing says that is simply business. What a bunch of loons and liars.
So Aunt Anna,it was okay when Bain got a bail out from the fed ???
what would happen if instead of trying to take each other down we all started working together to improve the situation
Democrats would go extinct.
Romney is a bully to the moderator, just like before. That's not presidential, he's a bully, just like when he cut the kid's hair in college, HE'S RUDE
Hey fool, but you believed in everything Biden said and the way he did it, right? Dumbazz.
Romney the liar. He only supports the top 1%. He doesn't care about the little guy for sure. O is the only choice we have.
I'd say Obama has done a hellova job , given all the GOP obstructionism in congress...
Nobody said you were very intelligent.
Romney is back-peddling & lying as usual.
Romney is soooo pompous!
domd is dumb as the donkey and full of DS (d as in donkey and not b as in bull)
"A123 Systems received SBIR grants in 2001 and 2003 totaling $850,000... In fact, the firm might not have been alive in 2009 to get its Obama stimulus funding"
So Bush saved the company with TWO SEPARATE grants totaling LESS THAN $1 MILLION and they survived for SIX MORE YEARS...
Along came Obama who handed them $249 MILLION and they died WITHIN THREE YEARS!
Obama gave them 250 times as much money as bush!!! Your money, your children's money, your grandchildren's money.
Thanks NBC for highlighting the difference between Bush and Obama.
P.S.
And the media still calls it "stimulus"... just terrible.
Bush invested early to see if R&D could produce the batteries. Obama invested when it was known that the company would fail. Obama did the same with Solyndra. He was told by his advisers that the company would fail and still gave a half billion.
Come-on guys. No SBIR grant is going to be any where near a quarter billion dollars. Only Obama and his cronies are so profligate with taxpayer money. This is only the second of what probably will be many more disastrous wastage's of our money by the Obama gang.
So, Bush gave them $0.85M, and yet Obama gave them $249 MILLION, and you think that's the same? You must be a mathematician for OBAMA. You do recognize, sir, that Obama wasted more than 250 times more money than Bush did on A123, right? Or does that not comport well with your liberal agenda of disinformation? Come on. how stupid do you think we are? Look out for the American people, and quit shilling for the Democrat party.
I live in Livonia, Mi., right near a A123 plant,
Had such big hopes.
You cannot legislate these things.
Free market WILL decide.
The Fed is a putz for thinking it could legislate this....
A bad idea is a bad idea no matter who has it. Here is the difference. Bush had his bad ideas four years ago. Obama took those same bad ideas and added his own but he wants us to ignore his own bad ideas and forget that he embraced some of Bush's bad ideas and then give him four more years to do? Well more of the same because all is asking for is more time.
I dont really like Romney but I will vote for him because at least he will do something different. Why? Because while Obama is an idealouge out of his depth, Romney is a pragmatist. Romney does work bipartisan, because it works to his advantage. Obama wants to transform the country. And it is not working, we are at each others throats and are falling apart. Romney wants to manage the company, meaning he wants to manage the bottom line and the bottom line are we the people which means that what we want will drive what he does because in the end Romney doesn't care to transform the country, he wants be the CEO for as long as he can, and just like any CEO, he must work to hold the confidence of the shareholders or in this case the voters.
It all comes down to this. Obama does what he wants when he wants it and damn the consequences but Romney can be controlled by majority will and that is how democracy works.
Obama and Romney the same.
I call them "Obamney".
Bush screwed up, he was voted out. Obama screwed up, vote him out.
Time for a change.
would like to know the salaries of management pre & post gov't grant infusion. Betcha, after the grant money and contrary to balance and income statement results, management thought...hey we must be doing good if we received grants so lets up the salaries and bonuses to reflect this.....
It's even worse than that. Even though we are going through tough economic times, government officials don't miss a beat when it comes to giving themselves raises.
We live in a system of government that taxes the individual into poverty, then takes the tax money and re-distributes it to our “lords” -- those who operate the federal government. Peasants faced a similar struggle during the years of the early English feudal system. Your bad year was not the concern of your “lord.” The lord was paid either way.
By looking at the benefits, the pay scale, and amenities endowed upon the lords of today, no one would believe the US was in economic peril. This needs to change. This year Congress received a $4,700 cost of living pay raise, bringing the Congressional minimum wage to $174,000 per year. It will not end there. Unless Congress specifically votes against its annual pay raise, these Cost of Living Allowances will continue to automatically increase for as long as the body exists.