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Obama sends stimulus aid to foreign firms
Question of the Day
Nearly half of the $2.4 billion in federal grant money awarded Wednesday to stimulate the U.S. economy and boost the production of hybrid and electric vehicles went to six companies with ties to places as far away as Russia, China, South Korea and France.
President Obama announced the grants during a visit to Indiana and said the funds would create domestic jobs and instigate more "green" manufacturing in the United States. But because so few American companies have the necessary technology, much of the money will initially go toward manufacturing electric vehicle batteries overseas.
Three grants went to General Motors Corp., one for $105.9 million to help produce high-volume battery packs for the GM Volt automobile. But cells for the packs will be built in South Korea and by "other cell providers to be named."
The largest single grant, for $299.2 million, went to Johnson Controls Inc. for the production of nickel-cobalt-metal battery cells and packs at plants it plans to build in Holland, Mich., and Lebanon, Ore. Johnson has partnered with Saft Advanced Power Solutions LLC, a French company, to develop the batteries. Saft, which makes its batteries in France, also won a separate $95.5 million grant.
A123 Systems Inc., which received $249.1 million, is looking to construct manufacturing plants in Romulus and Brownstown, Mich., to build battery cells and modules, but now produces its batteries in China.
KD ABG MI LLC of Midland, Mich., received $161 million for the production of manganese oxide cathode and graphite lithium-ion batteries in that state. It is a joint venture between U.S.-based Dow Chemical Co., South Korea's Kokam Co. and some venture capital firms.
Compact Power Inc. in Troy, Mich., won a $151.4 million grant to produce the new batteries and build factories in Michigan. It is the U.S. subsidiary of LG Chem Ltd., a South Korean company.
And EnerDel Inc. of Indianapolis, which received $118.5 million to build lithium-ion batteries at plants it owns in Indiana, is a subsidiary of companies controlled by a Russian oligarch.
Of the grants awarded for 48 projects, the lion's share -- $1.07 billion -- went to the six companies with foreign ties and are meant to produce advanced battery and electric drive projects.
"If we want to reduce our dependence on oil, put Americans back to work and reassert our manufacturing sector as one of the greatest in the world, we must produce the advanced, efficient vehicles of the future," Mr. Obama said.
According to the Energy Department, which oversees the grant program, GM will receive more than $240 million in three grants, while Ford Motor Co. will get $92.7 million and Chrysler Group LLC will receive $70 million.
"This investment is an important step toward creating and building an industry in the United States that addresses market requirements and long-term opportunities for growth and new jobs in this country," said Johnson Controls President Alex Molinaroli.
Johnson Controls-Saft began operations at a lithium-ion cell manufacturing and battery assembly facility in Nersac, France, earlier this year and expects to have its U.S. operation under way before the end of 2010.
"This grant is another exciting step towards creating an American battery infrastructure, which may reduce our dependence on foreign oil and increase our nation's energy security," said A123 President David Vieau. "The capital provided by the DOE's investment will help us speed our growth and better compete in global markets."
Dow hopes to begin construction on plants in Michigan to build the batteries.
Prabhakar Patil, chief executive officer at Compact Power, said in an interview with The Washington Times last month concerning his company's foreign ties, "Any business that wants to be successful has to have a level of independence and, ultimately, the ability to sustain itself. And you have to be prepared to do it without government intervention."
He said he hopes the company will be independent of LG Chem by 2012. He said LG Chem recognized early that the United States would be a "strategic priority" in the production of lithium-ion batteries and has given him the "level of independence to make that happen."
EnerDel has two plants in Indiana and has said it could begin production as soon as the grants were awarded.
The Washington Times reported in July that, according to U.S. Security and Exchange Commission (SEC) records, Boris Zingarevich, a wealthy Russian timber magnate, is listed as the "indirect beneficial owner" of an offshore company in the British Virgin Islands known as Bzinfin, SA, that held 57 percent of the outstanding common stock of Ener1 Inc., the parent company of EnerDel.
The SEC records also showed that Bzinfin SA held 66 percent of the shares of Ener1's parent company, the Ener1 Group, an $11 billion privately held investment and advisory firm in Fort Lauderdale, Fla.
In announcing the awards during a stop in Indiana, Mr. Obama said the "battle for America's future will be fought and won in places like Elkhart and Detroit, Goshen and Pittsburgh, South Bend, Youngstown -- in cities and towns across Indiana and across the Midwest and across the country that have been the backbone of America."
He said the awards were part of the stimulus package aimed at "not only putting people back to work in the short term, but laying a new foundation for growth and prosperity in the long run" to produce jobs.
"So that's why I'm here today -- to announce $2.4 billion in highly competitive grants to develop the next generation of fuel-efficient cars and trucks powered by the next generation of battery technologies all made right here in the U.S. of A.," he said.
"For too long, we failed to invest in this kind of innovative work, even as countries like China and Japan were racing ahead. That's why this announcement is so important: This represents the largest investment in this kind of technology in American history," he said.
The president made no mention of the fact that only EnerDel has facilities up and running in the United States to produce the batteries, and that the other firms build their products overseas. Much of the technology in developing the new batteries, including the lithium-ion battery, was developed in Asia.
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