Report: New “Battery” Manufacturing Jobs Fall Short In Michigan

MAR 17 2014 BY JAY COLE 20

In 2009, grants and tax credits between the Federal government and the state of Michigan to battery makers totalled some 1.404 billion dollars for the advancement of battery production in the state.  That money has not had near the results that were originally expected as reported by the Detroit Free Press this week.

“We got the cart before the horse,” said Dave Cole, chairman of the Ann Arbor-based Center for Automotive Research told the Detroit publication this week.

LG Chem's Facility In Holland Came Under Public Fire For Not Building Batteries On DoE Money, But Having Card Games Instead (via WOODTV 8)

LG Chem’s Facility In Holland Came Under Public Fire For Not Building Batteries On DoE Money, But Having Card Games Instead (via WOODTV 8)

How bad as it been?   A123 Systems went bankrupt, we saw the dissolution of partnerships with Dow Chemical and Johnson Controls, and LG Chem’s much heralded plant to supply batteries to the Chevrolet Volt only recently started producing cells after numerous (and quite embarrassing) delays – and at a production level far below was originally submitted.

The result to date, as tallied by the Detroit Free Press, is far from the “thousands of jobs that were promised,” while observing that Tesla’s “Giga factory” destined for the southern United States only demonstrates the failure more clearly, while puts pressure on what battery production infrastructure is currently found in Michigan

Tesla’s “Giga factory” likely will change the way automakers look at battery technology. Once fully operational, Tesla is expected to more than double the world’s production of lithium-ion batteries and cut the cost of making them in half by 2020.

That could eclipse smaller scale battery production in Michigan and elsewhere. Even the most fervent proponents of GM’s Chevrolet Volt — powered with battery cells made at LG Chem’s plant in Holland — admit that growth has not met expectations.

Re-cap of individual battery programs in Michigan:

  • A123 System (Livonia, MI) – secured $249 million DoE grant and $100 million in Michigan credits for 5,000 battery facility.  Detroit Free Press reports employment peaked in 2011 at 1,000, but quality issues forced the company into Chapter 11, and was bought out by Chinese part giant Wanxiang.  A123 collected $132 million before funding was discontinued
  • LG Chem (Holland, MI) – received $151 million in federal and state incentives for battery facility to employ 443 people by this year.  The plant is now currently operational, but only after a lot of coercion and shaming from the DoE and the public (LG Chem also received more than a million in fines), but today still only runs a skeleton staff of 125 people.
  • Johnson Controls-Saft (Holland, MI) Even though their partnership ended in 2011, Johnson Controls maintained its Holland plant via a $299 million federal grant. The plant was to employee about 500 people, but a company spokesperson pegged that number at about 225 at the moment.
  • Dow-Kokam (Midland, MI)  Again, another failed partnership.  In this case Dow sold out to Townsend Ventures.  That plant, which received a $161 million DoE grant and $42 million from the state in credits, currently has 225 workers (from and estimated project number of 885) and a Townsend executive Rick Cundiff told the Detroit Free Press that it is running at 10% of capacity.
Teslaa's Giga Factory Will Be Located in One Of These 4 States - Putting Pressure On The Now Very Small Operations In Michigan

Teslaa’s Giga Factory Will Be Located in One Of These 4 States – Putting Pressure On The Now Very Small Operations In Michigan

Despite these results former Gov. Jennifer Granholm, who now teaches at the University of California wasn’t about to admit defeat from the projects her administration green lighted in 2009.

“Just because the jobs haven’t happened ‘yet,’ it doesn’t mean that cracking the code to vehicle batteries was the wrong strategy” – email to the Free Press

Check out the whole in-depth article at the Detroit Free Press

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20 Comments on "Report: New “Battery” Manufacturing Jobs Fall Short In Michigan"

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I would imagine the real problem has been slower than expected sales of EVs. (based on expectations from 5 years ago)

Also it isn’t entirely fair to compare battery purchasing from Tesla since their cars use considerably more battery cells than cars with smaller battery packs like the Volt.

I do have to wonder how the future 5-years expectations do not follow the prior 5-years of actual adoption rate, being lower and slower. Forcasting large future growth is still not possible until we see a few more years of near-immediate growth. Then take away incentives and figure out how growth will occur. There is still a lot of questions to be answered when looking at the future of the EV as a “mass market” vehicle.

Electric KIA Soul and VW Golf are coming to the market and will likely be big sellers. This is the transition from “hey look; it’s an EV!(MiEV/Leaf)” to regular cars. I think “normal” cars will sell better then stand out from the crowd cars.

I think the Focus would sell great if it was at a lower price. I mean really; put a different brand battery in it if the one in it really costs so much!

Hope you’re right but I’m not convinced either of those companies will necessarily produce that many for the U.S. market for a while. Their purpose could still be for PR and compliance so they can sell models they can make more profit on.

Sure it is fair to compare them against Tesla who uses bigger batteries because the Big 3 Detroit Auto makers could have made cars with larger batteries too! They just chose to do that.

“the real problem has been slower than expected sales of EVs”

I respectfully disagree.
The mistake would have been less obvious if sales had been good, but winner and location picking based on what the government would like rather on what makes sense clearly shows that governmental economic action must be limited to setting the stage and not writing the play.

“Also it isn’t entirely fair to compare battery purchasing from Tesla since their cars use considerably more battery cells than cars with smaller battery packs like the Volt.”

Here I also disagree.
This has nothing to do with what each car needs.
The s needs more kWh than the leaf, 85 kWh vs. 24 kWh. Does this mean that Tesla needs more batteries than Nissan?
Tesla ca. 25000 cars.
Nissan ca. 100000 Leafs.
Tesla: 25k x 85 kWh = 1,7 million kWh
Nissan: 100k x 24 kWh = 2,4 million kWh.

This is why the states involved with bidding for the Gigafactory need to tie incentives to the number of people employees working at the factory producing cells and packs. Its the financially responsible thing to do. And Tesla shouldn’t turn up its nose at it – the states are interested in employment and building the tax base, and without it, the deal isn’t worth it.

Do you guys remember the article I did on the Argonne paper and the Giga factory.? In that Argonne paper Argonne quoted the square feet required for a factory that big. I then went and looked to see the square footage of the LG Chem plant in Michigan and the Michigan plant had just as many square feet as the Argonne paper’s giga factory.

Go figure. It really is a crying shame that better use can’t be made of the Michigan plant.

Perhaps but it’s probably the case that Michigan is not perceived as a good candidate for the gigafactory because of the desire to “walk the talk” and use renewable energy sources. It’s not inconceivable that Elon doesn’t want any association with the old line auto makers and Michigan is a bit to close. Finally, I suspect unions also play a role though Michigan is officially a right-to-work state.

Well other than GM Volt, the Detroit auto giants declined to push plug-in vehicles. GM’s Volt was a decent effort. But Ford’s Focus Electric was an outsourced kludge. But even that was better than Chrysler who did nothing until the finally release a few hundred Fiat 500e cars that they whined about being forced to produce. (OK, at least we FINALLY got something better from Ford with the Energi vehicles but they took a long time, they are not advertised much, they take up trunk space, and their batteries are too small.)

So yeah, if you don’t make and market plug-in cars, you are not going to need batteries.

This article speaks directly as to why Elon Musk will never let a dealer network sell his cars. They don’t care about EV’s and have no clue how to sell one.

Over $1 Billion of Taxpayer money wasted on government handouts.

I completely disagree. It was expected for some of the projects to fail. But the backing helped provide consumer confidence for the EV market and helped some of the winners succeed. The EV market is now real and is not going away. And good thing too because it is the best option we have for reducing our oil usage.

I completely disagree. None of those factories made any significant contribution to the potential adoption of alternative drive systems by the American Public. They were nothing more than political paybacks and crony capitalism at their worst.

“expected some to fail” That’s what venture capitalists think. The government should not be playing that role.

Plus, there really haven’t been any successes so even their modest hopes (that some might succeed) weren’t met. Simple fact is the Administration wanted to have big splashy job creation events but didn’t do the homework to figure out if there would actually be a need for the companies they were funding. Government is spectacularly bad at this sort of thing.

Teslas in California Help Bring Dirty Rain to China As more environmentally conscious Americans do their bit to help clear the air by paying up for an eco-friendly Prius or a sporty Tesla, a damaging form of polluted rain is falling in China. The link is graphite, a vital component in batteries used in Tesla’s Model S, Toyota’s plug-in Prius and other electric cars, as well as in electronic gadgets including iPhones. It’s mostly mined and processed in China where graphite pollution has fouled air and water, damaged crops and raised health concerns. Now, in response, Chinese authorities are closing dozens of graphite mines and processors in a bid for cleaner air even as global demand for the commodity is surging. “There’s little question that the Chinese are between a rock and a hard place environmentally,” said Josh Landess, an advanced transportation analyst with Bloomberg New Energy Finance. “There’s an obvious irony that the disruption it’s causing is within the clean vehicle and transportation industry.” The graphite outcry is the latest among environmental flashpoints in China that have ranged from lead poisoning to acid spills and “unbearable smog” in big cities. And while the clampdown may help improve the quality… Read more »

What a stupid “Blame the victims” article. It is China’s lack of regulation and enforcement that is causing the problems, not the people buying EVs. I use a bank but that doesn’t mean it is my fault when someone is killed in bank robbery.

Tesla does not get their graphite from China. Per an Elon Musk tweet regarding the article:

“The amount of graphite in our car is small, comes from Japan and is mined in a very clean way.”

Like every natural resource China has produced:
dime-a-day labor, NO None Nada environmental protection, bomb the market with impossibly cheap to compete with product, then when all other suppliers die (but Only then), they ‘suddenly’ perceive a problem with their business model and stringently control supply and raise prices. Leave it to our ‘experts’ at Bloomberg to write the article with the 179 degree slant they dreeamed up.

and not just China – Free Trade Ain’t, in these cases, and should be grounds for trade war, but debtor nations do not have that option.

I tend to agree with the governor. Let’s give it another 5 years and see how things look. While these seeds may have been premature, it may make all the difference for Michigan if PHEV’s start to ramp up in larger quantities through 2020.