LG Chem Extends Furloughs In Michigan. Domestic Battery Cell Manufacturing For Volt Delayed

SEP 3 2012 BY STAFF 30

LG Chem has had employees In Holland, Michigan on “rolling furloughs” since April, and it appears that will continue indefinitely.

Faced with slower growth than expected in the plug-in vehicle industry, and a second shutdown of Volt production on the horizon (which was not related to demand for the vehicle, but due to the addtion of the new Impala to the plant), LG Chem has told its employees to expect further rounds of unpaid leaves at the $303 million dollar facility to continue into the foreseeable future.

Aerial CG View Of LG Chem's Holland, MI Plant

The 600,000+ square-foot, battery cell plant was expected to be fully operational by “mid 2012,” with up to 400 employees, and have the ability to produce batteries for about 200,000 hybrid and electric cars.

“The furloughs are the result of a re-timing of the start of battery cell production as the electric vehicle market develops,” the company said in a statement sent to the Holland Sentinel.

The first round of furloughs began on April 30th, and LG Chem told its employees ahead of the long weekend on Thursday that the slowdown would continue.

Currently, the plant is working on a revolving three-fourths of their regular schedule, and the furloughs involves all 200 of the plant’s workers.  According to LG Chem, health care benefits programs will still be active, and employees are eligible for unemployment benefits when not at work.

As for when the plant might return to full operating mode, and begin production, the company was unsure.

“As market conditions shift, LG Chem will begin production when demand increases and will operate the plant on a full time schedule as soon as possible.  That will ultimately depend on market conditions and consumer demand.”

The plant’s two largest contracts are currently with General Motors (Volt) and the Ford (Focus Electric).  US fabricated cells are now not expected to be seen inside the two plug-ins until early 2013.

Employees At LG Chem's Newest South Korean Facility Will Continue To Export Batteries To North America. For Now.


Categories: Battery Tech, Chevrolet, Ford, General

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30 Comments on "LG Chem Extends Furloughs In Michigan. Domestic Battery Cell Manufacturing For Volt Delayed"

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This is a problem that could be easily fixed by limiting the Federal $7500 tax credit to NA built batteries..

There shouldn’t be a tax credit unless it is directly funded by a tax. Why do rich people want a government which is 16,000,000,000,000 in debt to underwrite their purchase of an expensive status car?
Either EVs are economic or not, if Greeniacs need a nice ride to project themselves, let them do it on their own dime.

Everyone who buys a new Volt is not eligible to receive the $7,500 credit. If you are not paying federal income tax, you won’t get the credit.

Still way less than the amount our governments spend on subsidizing oil.


Good idea – let’s raise the gas-tax to compensate.

Heck – even if the plug-in tax credit goes away – let’s raise the gas tax enough so that the taxes collected by them actually pay for all required road maintenance.

The tax credit IS funded by a tax. I pay about $40K to the feds each year, and until I started buying ev’s, I had NOTHING to show for it. So Now I only have to pay $32,750 ? Some benefit. Its like a crook telling me he’s not going to steal quite as much from me today, but he’ll be back next year for his ‘traditional cut’. They spend $4Billion a year at least in Afghanistan. Hope come you guys never complain about that? I’m really sick of paying high taxes. And If I have to buy more EV’s to get a discount, I for one am going to BUY MORE EV’S.

The LG Chem & Volt suspensions are both due to demand – to insist otherwise is so contorted that it reminds one of Pravda.

Shawn, you sound like an “energy independence” ( 2008’s “Drill Baby Drill!”mantra relabled ) Republican. I am a lifelong Repbulican-Independent and I’ve voted Republican 98% of the time for decades. This said, I’m not voting for Romney this time. Every time during the primary, when a candidate reached top polling – they suddenly started sounding like a Texas oilman. This year since neither Obama nor Romney asked for federal campaign funds – the sky is the limit in campaign finance. It is said they will both spend over 1 billion dollars beyond the $138 million you and I are dishing out in taxpayer money for this year’s Rep. and Dem. National Conventions. Without campaign finance reform ( bipartisan McCain-Feingold was REPEALED! ) we will be suckers for whomever funds these grossly expensive political campaigns – anyone who believes otherwise is a fool. We cannot drink the G.O.P. Kool-Aid that drilling in AK, and near-shore drilling and exploration (+Canada pipeline) will solve our energy woes. It’s ridiculous, read the stats – they’re WRONG. All of the above will rape our coastlines, cause iradicable pollution ( BP Gulf Coast ring a bell?) and here’s the kicker: STILL only produce 20% of today’s… Read more »

Lots of truths here by all. We are fascinated by the emergence of EVs because we all see where this ends and it is all good. Meanwhile, the industry has to survive the modest beginnings. I agree with Shawn that the EV tax credit should better resemble other alternative energy tax credits. That is not a major change. Very good point James on the reasonable current requirements for hybrid batteries.That will help the growth of the EV market sustain and I also applaud the original Prius as an excellent step in the right direction.

The PHEV carries the bulk of load of the next growth phase. It is a slow road to the first million EVs for sure but it has begun. I am envious of the “Hold” mode for the 2013 Volt. Heat is a great bi-product of generating energy from the ICE. This simple change elegantly allows heating both person and battery in cold weather thus increasing the winter battery range and making better use of the PHEV battery without adding or altering anything to the present design.

Not to portray Shawn as such as his views aren’t clearly known, but when I hear these right wingers chant ‘cut taxes, cut spending’ and then criticize the existence of the $7500 tax credit, I am puzzled to put it kindly.

A tax credit is not government spending. It just means government has a bit less to spend in return for actions by consumers that stand to be beneficial to our country in many ways.

This is fairly disappointing. I wonder what the minimum cells manufactured per month needs to be to get that factory open and the cells made in the US. The Focus Electric is still very limited in terms of markets Ford sells it in, so it’s not going to move huge volumes this year. The Volt is up and down based on gas prices and incentives.

LG’s U.S. fortunes certainly cannot rely on FocusEV or any other compliance machine. LG will have to secure contracts for hybrid batteries and be ultra-competitive on price. LG needs to be on-message with their current success. A123 has been riddled with disappointment and full of promises of future tech capability. They were bought out by a Chinese firm after moving most of their production to China anyway. LG won the GM Volt contract with superior, more reliable chemistry – period. A123 stockholders ( ahem-cough cough-sorry Jay! ) have to admit LG won the Volt contract hands-down with a better battery. LiFePo has worked great with hand tool batteries, but in vehicles have been shakey at best. I’ve seen other companies who used A123 products switch to Li ION due to the same results GM found when they matched the two technologies together. Add the fact LG is a financially sound corporation that doesn’t solely rely on batteries to succeed. Li ION has proven to have the attributes needed in an EV – more power density and more cost-effective. The daunting dilemma LG faces with it’s U.S. production facility is the same situation facing the entire EV industry at-large. Can they… Read more »

I agree, I think LG Chem is the better battery.

The thing that gets me is we have a chicken-egg problem here. LG doesn’t want to open the factory to the very low volumes its currently seeing in the US, meanwhile, based on previous statements from GM higher-ups, switching to a domestically made cell can bring the cost of a Volt down $1,600-3,200 ($100-200/kWh). And as we saw in August, if you take $3,000+ off the price of a Volt, people buy them in record numbers! A Volt that cost $29,999 after rebate (which is only $1500 less that current sticker) is going to be easier to sell to people. GM can keep half the savings as higher profit margins, and pass the other half on to the customer.

To me, the sooner that LG opens the factory, the sooner GM can reduce the battery price, the sooner they can cut the sticker price and get volumes up. The higher the volumes go, the lower overhead costs are per unit, the cheaper the car, etc etc etc.

We just need that one leap of faith. Maybe I’m being overly optimistic though.

James said:
“LG won the GM Volt contract with superior, more reliable chemistry – period. A123 stockholders ( ahem-cough cough-sorry Jay! ) have to admit LG won the Volt contract hands-down with a better battery.”

Hehe, no worries. It was purely a speculative play for fun, (=

(I should note I don’t actually own any shares of A123, I cleared those out well over a $1….what I currently own is some severely underwater calls/leaps, lol)

$0.50 seemed like a bargain, until it went lower… 😉

If people must know, lol:

I have options to buy A123 shares at $1.50 in 2013. Cost me 10 cents a pop apiece, and are currently worth…drum roll please. Nothing, (=

/need a heck of a press release to break even

Here, in 2012, the A123 battery would be fine in the Volt. In 2008, it didn’t have the current-day 20Ah pouch cell (prismatic) ready in time. LG Chem’s 2.7V LiPoly 15Ah in the Volt could easily be replaced by two strings of 107 A123 20Ah cells and give the same mileage. Different wiring and software logic would be needed. However, what about the new EXT battery cells next year? Those could be used in the next-gen Volt and LG Chem would have to counter with similar LiFEPO4 chemistries.

I hope GM can use both A123 and LG Chem in years to come involving more and more Voltec and “Bigtec” (Bigger Voltec) assemblies. Imagine a Traverse with an EREV design, 200KW electric motor, 34kWh of cells, 2.0L genset. Something like that is in the works (in my opinion – I sure hope it is). If Chevy is not working on family-class Voltecs, I’d be very surprised.

correction: >> 3.7V 15Ah. (not 2.7V)

I hope they are thinking big also. If they think battery prices are going to rapidly drop, then I want BIG batteries, like 150 kwh minimum. The main reason I bought a Roadster was the HUGE (at the time) battery.

At least Tesla has the guts to offer a 85 kwh option for their newer products ( I believe my Roadster is 53 kwh). And if batteries get cheaper and more energy dense, I say go really big. 400 kwh would not be too big for a ford f-350 or a lincoln expedition.

If the Volt and FFE are not using US made cells, what are these workers working on when they’re not temporarily laid off?

This presses home the point that GM really needs to expand the Voltec platform. CUVs are the hot segment now. Cruze/Orlando-based MPV5 has already been shown. C-Max and Fusion hybrids and Energi PHEVs are almost upon us, but will people buy them at $40,000+? – the big question that needs to be answered is – if we build them will they come? THE GREAT WHITE HOPE – Trucks. Right now, the batteries in a VIA pickup truck make it cost $80,000. Get some sort of electric assist in a fullsized truck platform and make it affordable ( People do buy $40,000 trucks on quite a regular basis ) – and the LG plant would hum along at capacity. Hybrid trucks and PHEV trucks of all sizes and capabilities would be the tipping point in America and we all could foresee a future wherein our children can breathe fresh air and many of our sailors, soldiers and airmen could come home. There is a lot of pressure to build these things in China. What with cheap labor, large amounts of lithium stocks and the ever-present leverage that China’s huge potential market brings to the table. S. Korea and China do not… Read more »

This is larger than the left or right. This is a global affair. I definitely agree with James’ assessment of lobbyist which will push the drilling etc. but I don’t think the tax credits will go. It would draw too much attention to the lobbyist. A fiscal conservative myself, yet too independent to swear an allegiance to either political party and quite frankly, this is larger than politics. I am with you James on voting energy “now” and in the future, but either way it does not kill the EV. Look at the progress in India, China, Russia, France, Germany, UK, Australia,Canada, etc. It has begun globally, but not at the originally projected pace. Shawn, give James a break for the rest of the holiday! lol

nothing like a leetle Greeniac smsh to get things rolling a bit.

I don’t get it. Why don’t they start making the cells here in the US instead of Korea. Then the plant workers would have something to do.

Hey George,

The plant is so large, I’d imagine (just my own WAG) it doesn’t scale down cost effectively, especially as it has its own set of overheads as it operates as its own entity as CPI (Compact Power) both in Holland and in Troy.

Probably a lot cheaper to just take on cell orders out of the ‘Lucky Goldster’ operations in SK. Thats what I would do if I was them anyway.

50,000 kW of cells a month from a plant that can push about 300,000 is not very well utilitize…but still doable, provided it is consistant.

However, I imagine they want to smooth out the ups and downs of production, right now only have one big customer in GM (thats overbuilding demand atm, and going on hiatus for a month) which makes that problematic.

Just this months Volt production is 44800 kwh. These cells need to be made in the Holland plant!!
If not there will be a huge outcry from US politicians and taxpayers.
Why in the heck are we sending these orders to SK?
It makes no sense.

LG really could care less if their packs are going into a Volt headed inside the US, or to Australia, or into a Euro-Ampera…all they care about is the volume. GM actually placed about 80,000 kW this month (4,851 Voltec platforms-3,688 Volts/1,163 Amperas). That is way more than enough to justify the Holland plant, and I think if GM would guarantee that much per month you would see it up and running today. No question. Maybe even half that much. Unfortunately the indust is moving closer and close to JIT practises, which makes it really tough on vendors that don’t have a diversified base. However, as I said earlier (and something A123 knows all too well), it is the valleys in between the big orders along the way that really mess you (and your profits) up. GM doesn’t need any new inventory from LG/CPI probably over the next 6-7 weeks, and quite likely they are projecting and placing orders for considerably less than this going forward. A ‘normalized’ order from GM is for about 2,000 to 2,500 packs in a month (33mW to 41 mW). I’m sure LG would love to supply out of Holland full time right now, but… Read more »

Jay quote:
“GM actually placed about 80,000 kW this month (4,851 Voltec platforms-3,688 Volts/1,163 Amperas). That is way more than enough to justify the Holland plant, and I think if GM would guarantee that much per month you would see it up and running today. No question”

Then the Obama admin needs to do what Herm said and make it so these batteries are made in the USA!!

(Of course there is probably something written in the contract that keeps them from doing that….but only your hair dresser knows for sure) 🙂