Green Money Wasted on Green Energy in Tulip Town

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A recurring theme underlying many of the threads I put up is that government and corporate partnerships are bad no matter how they are arranged.  And yet, these schemes grow more pronounced in each passing year as big business and big government grow closer, and laws are crafted so as to choose winners and losers in the marketplace, where unfortunately the losers turn out to be you, me, and the honest, small companies that would rather have government off their backs.

                         Groundbreaking in Holland with Former Governor Jenny Granholm:  Digging Graves for Taxpayer Money

This is just one of the many stories that has both an international, national, state and  local component.  It involves a South Korean chemical company named LG Chem.  LG Chem is a manufacturer, supplier, and exporter of petrochemical goods, IT&E Materials and Energy Solutions.  Among its energy solutions is making batteries for electric vehicles like the Chevy Volt and for the Ford Focus Electric.

President Barack Obama led the 2010 groundbreaking event in Holland for the federally-funded LG Chem battery plant that was designed to manufacture lithium-ion batteries for electric cars.  He touted it as the future of Michigan and clean energy.  The federal government gave LG Chem $151 million without a written promise to shift battery production to Michigan from South Korea.  WOOD TV uncovered some amazing things this last October, leading to a federal audit, check out the video in this link:

Volt no jolt: LG Chem employees idle

Just in case you missed it in the video, this battery plant is set to drain money from the taxpayers at all levels:

Federal:  The U.S. Department of Energy provided a $151 million grant, part of Obama's Recovery Act.  The company had 200 employees (now 150) , and the company's most recent federal filing shows 100 of them are funded through the Recovery Act grant.  The company has spent $133 million so far, most for construction and equipment, records show. About 40% has gone to foreign agencies.

The company also spent more than $533,000 of that federal grant for the groundbreaking and federal records show taxpayers spent $7 million to train workers and have paid more than $700,000 for workers' health and dental insurance.

State:  There's millions of dollars more at stake for LG Chem if it doesn't keep its job numbers up. The state approved a $25.2 million job-creation state tax credit over 15 years, and a battery cell state tax credit worth $100 million over 4 years. Both are tied to job creation.

Local:  The City of Holland created a Renewable Energy Renaissance Zone, allowing LG Chem to operate free of property taxes for 15 years -- if it reaches 300 employees within 5 years. That's another $48.5 million.  The city expected the plant's payroll to pump $270 million into the local economy over 15 years, and to create up to 1,500 spin-off jobs.

However, in an audit released last month, the inspector general’s office for the Energy Department issued a report saying LG Chem had failed to sell a single electric car battery since receiving the grant in 2009 – as well as $175-million worth of state and local tax relief – but had paid $1.6-mllion to employees who spent their time volunteering for animal shelters, watching movies and playing video games.

At the time of the report, an LG Chem spokesman said there hadn’t been enough demand for electric car batteries to make production in Michigan feasible. GM – which had been the intended buyer of the Michigan batteries – had been purchasing its lithium-ion batteries for the Volt from LG Chem’s production lines in South Korea instead of Michigan.  Pure Michigan, GM?   As a result of the audit, LG Chem was to pay back $842,000 in misspent funds.

Despite the audit, and all the lost local revenue Holland Mayor Kurt Dykstra decided to blame the battery market rather than the battery-makers.  Oops, let's not forget the Holland plant hasn't made a single battery as of yet.

"When you're (trying to create an industry) and the market doesn't develop quite as fast as what you hope it would, it causes disruptions in the industry, but I still think that long-term we're in a better position to have a company like LG in Holland than we are to not have it in Holland."

Such a position by those in government is exactly what has gone wrong in America.  Government leaders believe they should be creating and regulating industries, mimicking the socialistic policies of Karl Marx rather than anything envisioned by our founding fathers and free market pioneers that made America the successful experiment it had been until our recent decline.  Which coincided with all of these progressive business experiments stressing government-corporate partnerships.

                                    Holland Mayor Dykstra and USA President Obama charging into a brave new world

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Or, you could say it works only for the central planners; they always seem to do good in socialistic societies. 

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In a related story, another green industry in Hudsonville of Byron Township (SW of Grand Rapids) has closed just months after announcing a $2.5 million expansion and plans to add 90 workers.  Altronics was formed in 2010 to build parts for small wind turbines, and to distribute small wind turbine systems. At the time, it had just 10 employees.

It announced its expansion plans after winning a contract to build The Honeywell Wind Turbine. Instead of the much larger wind turbines that need 8 to 10 mph winds to create energy, these smaller turbines need winds of 2 to 3 mph, company officials said.  They blamed the closing on the ongoing struggles with green energy.

http://www.woodtv.com/dpp/news/local/kent_county/turbine-plant-closes

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Meanwhile in Battle Creek... United Solar Ovonic parent Energy Conversion Devices built a 268,000-square-foot plant in 2008, it received about $120 million worth of incentives from the federal, state and county governments [via GWBush and Jenny Granholm regimes]

At the time, the company promised about 350 renewable-energy jobs and the possibility of a second plant. But Energy Conversion Devices ultimately had to file for bankruptcy a year ago after suffering a severe blow from the U.S. economic downturn and a loss of key solar economic incentives in Europe.

Enter the now leaner and meaner auto supplier industry, represented by Magna International Inc.

This time around,  Magna receives a $1.6 million performance-based Michigan Business Development grant from the Michigan Strategic Fund. The city of Battle Creek is also behind the project with a 50 percent real property tax abatement and 100 percent personal property tax abatement, both for 12 years. 

http://www.crainsdetroit.com/article/20130219/NEWS01/130219848/magn...

Ironic isn't it, auto part making jobs that are the antithesis of green jobs take over the factory.  But they still get the healthy incentives courtesy of state and local taxpayers.  Isn't it a shame when the government regulators of trusts become part of the trusts.  Teddy Roosevelt would be rolling over in his grave.

 

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Let us not also forget Muskegon's Fortu powercell plant closer to home:  in the summer of 2009 it was said the two-phase development was projected to create 745 jobs with an overall $670 million investment. Community leaders, job seekers, contractors and industrial suppliers were thrilled when the Michigan Legislature in December 2009 created a special $135 million battery tax credit for fortu's Muskegon development. 

http://www.mlive.com/business/west-michigan/index.ssf/2012/01/batte...

Since that article over a year ago, no news; which is bad news once again for government investment in industries, and in particular, the fanciful whimsical world of green jobs.  Green industries will develop, but let them grow organically at their own pace.  If they are not economically sound, they will just be a drain for good money to flow down through. 

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Here's another economic development update on LG Chem: 

LG Chem has temporarily stopped production of its lithium-ion battery cells -- less than two
months after it started -- because the company was using a chemical not approved by the US Environmental Protection Agency, a company official confirmed Friday... The plant, built in part with a $151 million U.S. Department of Energy grant, started with a presidential groundbreaking in July 2010, with plans to produce lithium-ion battery cells for the Chevrolet Volt. The company hoped to begin production by mid-2012.

But with sluggish Volt sales, the plant hasn't produced a single cell for sale.

http://www.woodtv.com/news/local/ottawa-county/lg-chem-battery-prod...

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Politicians just love to have there face in the papers. Besides, it isn"t their money

Same old sh$t, different day.