Bid For A123 Systems By Chinese Firm Draws Critics | December 17, 2012 Issue - Vol. 90 Issue 51 | Chemical & Engineering News
 
 
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Volume 90 Issue 51 | p. 10 | News of The Week
Issue Date: December 17, 2012

Bid For A123 Systems By Chinese Firm Draws Critics

Technology: Congressional leaders decry sale of bankrupt battery maker, the recipient of U.S. funds, to a foreign firm
Department: Business | Collection: Sustainability
News Channels: Environmental SCENE
Keywords: advanced batteries, Recovery Act, manufacturing, bankruptcy
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A nanophosphate coating is added to A123 Systems’ cathode material.
Credit: A123 Systems
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A nanophosphate coating is added to A123 Systems’ cathode material.
Credit: A123 Systems

Republican members of Congress are sounding off about the auction of bankrupt advanced battery maker A123 Systems to the Wanxiang Group, a Chinese auto parts manufacturer. Significant government support had been provided to the battery maker as part of the American Recovery & Reinvestment Act of 2009.

“The results of this auction further expose the folly of the Administration’s attempts to pick winners and losers and provide huge subsidies to force the commercialization of technologies,” says Sen. Lisa Murkowski (R-Alaska), ranking member of the Senate Committee on Energy & Natural Resources. Other critics in Congress include Rep. Marsha Blackburn (R-Tenn.), Rep. Paul C. Broun (R-Ga.), and Sens. Chuck Grassley (R-Iowa) and John Thune (R-S.D.).

Murkowski and colleagues highlighted their concerns about ownership of A123’s assets and technology being transferred to a foreign company. They say such transfers may fuel a loss of U.S. technological leadership and may have national security implications. The sale—which is actually to a U.S. subsidiary of Wanxiang Group—is subject to approval by the Treasury Department’s Committee on Foreign Investment in the U.S.

In 2009, the Department of Energy awarded A123 a $249 million Recovery Act grant as part of a federal effort to create a domestic supply chain for advanced electric vehicles. The company used $133 million of the grant in a cost-sharing investment to build manufacturing plants in Livonia, and Romulus, Mich.; A123 filed for bankruptcy this year. The remaining grant money will not be dispersed.

DOE points out that both the plants and the jobs will remain in the U.S. “The Energy Department worked through the bankruptcy process to ensure that the plants and equipment that were partially paid for by the Recovery Act would remain in Michigan, generating jobs and opportunity for American workers,” DOE spokesman Bill Gibbons tells C&EN.

Wanxiang bid $256.6 million for A123 in an auction supervised by the U.S. Bankruptcy Court for the District of Delaware.

The sale includes A123’s automotive, grid, and commercial businesses including technology, products, and facilities in Michigan, Massachusetts, and Missouri, as well as a cathode powder plant in China. The firm’s contracts with the U.S. military will be acquired by Navitas Systems, an Illinois-based firm, for $2.3 million.

 
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Comments
Chad  (December 17, 2012 2:43 AM)
It is rather stunning to watch someone argue against free trade and accepting the results of an auction, engage in the most cross form of protectionist politics, and complain about the government "picking winners and losers" all in one sentence.



Rick  (December 17, 2012 7:19 AM)
The bankruptcy of A123 has raised a lot of issues. Yes it would have been great to see this company thrive, but now it is time to see what can be done to save the American jobs we are all concerned about. Wanxiang wants to hire almost everyone that is working for A123. JCI only wants a percentage of those working in critical positions (doesn't sound good for the employees that are still at A123). Wanxiang America is a US company like many other companies that came over to the US. They pay US taxes, employ US workers, and invest in US companies. If this technology was so critical to national security then why didn't the government do more to keep this company going or help it in other ways. If this deal does not go thru, there are going to be some more unemployed people. I guess it is in the nations security interest to make a bunch of hard workers unemployed. Let the politicians explain that one!
Melody Bomgardner  (December 17, 2012 2:04 PM)
Chad and Rick - thanks for your thought-provoking comments. I agree that it can be difficult to sort out the various motives both of policies and of their critics. We'll keep tracking this story!
Paddock76  (December 22, 2012 5:39 PM)
How ironic !

Our Federal Government subsidizes a preeminent battery maker only to have another government ( in this case, China) reap the benefits post -bankruptcy. This I the precedent we are trying o avoid, not to emulate .


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