Chinese Said To Turn Obama's Stimulus Lemons Into Lemonade
One of the stimulus-funded alternative energy companies that National Legal and Policy Center reported about most the last few years was A123 Systems, which the Department of Energy awarded $279 million to crank out special batteries for electric vehicles.
The examples of government failures in picking successes in industries and economies are countless, with President Obama’s plan for subsidies of a million electric cars on U.S. roads by 2015 serving as Exhibit One. He was only off by several hundred thousand.
But that doesn’t mean that vultures can’t consume the carcasses left behind, which is exactly what the Chinese did with A123. As Bloomberg reported last week, the multinational automotive parts corporation Wanxiang Group is running the company to try to meet market demands and is “having better luck.”
Whether “fortune” is leading A123 to an ultimately healthier place is still undetermined, but Wanxiang chairman Lu Guanqiu is at least demanding better behavior and efficiency than Obama and his DOE hacks did. Whereas company officials wasted investments by making electric cars for rich people like the Fisker Karma, while enriching themselves with bonuses and raises when A123 tanked, Lu has demanded efficiency and responsibility.
Wanxiang made Jason Forcier (pictured) – a holdover from pre-bankruptcy – CEO of the re-established A123 Systems. He was told to cut expenses without compromising research and development. According to the Bloomberg report, he reduced health care benefits for the remaining employees and eliminated frills like free food and a cappuccino machine.
“We were running this place like we were Apple or Google,” said Forcier.
Isn’t that special. After receiving at least $279 million in Recovery Act grants, $141 million in tax credits from the State of Michigan, and several contracts with the U.S. military, Forcier now admits that he and his A123 executive comrades “worked” in extravagance. This was while the batteries it had delivered for automobiles produced by business partner Fisker were recalled and even catching fire. Amid rounds of layoffs, as the company grew increasingly endangered and its stock plummeted, then-CEO David Vieau and top executives saw their own compensation grow handsomely.
Among those in management was Forcier, who at the time was Vice President of Automotive Systems. In early 2012 his pay increased 32 percent from 2010, to $350,000. Later, as its bankruptcy process moved forward, approximately $3.7 million in bonuses were doled out to top A123 officials.
Apparently all that recklessness represented “bad luck” to Bloomberg, and Forcier, which they say has turned around under Wanxiang. But the current CEO seems to have an odd understanding of exactly what constitutes fortune and misfortune, based upon his comments. He recounted for Bloomberg how A123 struggled to find a “profitable niche” throughout its battery-making history in the early to mid 2000s – until, you guessed it, there was another stroke of luck.
“Along came the best thing that ever happened to A123,” Forcier said, “which was the recession in America.”
How fortuitous! In Forcier’s logic, the suffering of his country and his citizens was just the break that A123 needed, as it led to policy prescriptions by Obama and then-Michigan Gov. Jennifer Granholm to pour billions of taxpayer dollars into renewable energy and electric vehicles.
Unfortunately A123 didn’t have an automobile partner other than some sort of agreement with Chrysler, which didn’t work out because of its own woes and the…recession! So Forcier and A123 turned to heavily subsidized luxury electric automaker Fisker.
“Unfortunately for A123,” Bloomberg reported, “the Karma was bad,” but much of the reason why it was bad was A123’s batteries. The two companies, burning taxpayer resources by the minute, fired away at each other as they went down in their bankruptcies – you know, “the best thing that ever happened to A123.”
Now A123 is producing its biggest orders of vehicle batteries for companies in China, while one analyst says there is opportunity for the company to take market share in the “microhybrids” industry – in other words, more glorified golf carts.
Early in President Obama’s first term, as he touted the stimulus and visited its beneficiaries or invited them to the White House, he hosted CEO David Vieau with a Rose Garden press conference to promote the A123 grant.
“Truth be told,” the president said, “A123 was looking to build that factory in Asia. But because it received that grant, it chose the State of Michigan for its largest and most innovative plant yet….So this is what’s possible in a clean energy economy.”
Had the American government not meddled in business decisions, A123 could have ended up where the demand for its products was. But instead they pursued “luck,” and found the wrong kind.
Paul Chesser is an associate fellow for the National Legal and Policy Center and publishes CarolinaPlottHound.com, an aggregator of North Carolina news.
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