A123 Bankruptcy Protection Filing Turns Political

BOSTON — A Waltham-based battery maker once seen as a leader in the emerging electric car industry filed for bankruptcy protection Tuesday. The filing fits a Republican narrative about unwise federal investment in green technologies.

This Aug. 6, 2009, file photo shows A123 Systems Inc.'s high power Nanophospate Lithium Ion Cell for Hybrid Electric Vehicles batteries in Livonia, Mich. (Paul Sancya/AP, File)

This Aug. 6, 2009, file photo shows A123 Systems Inc.’s high power Nanophospate Lithium Ion Cell for Hybrid Electric Vehicles batteries in Livonia, Mich. (Paul Sancya/AP, File)

In 2009, A123 Systems won a $249 million U.S. Department of Energy grant to build batteries for electric cars at a new plant in Michigan.

A year later, President Obama was in the Rose Garden, hailing the Waltham company as he asked for more green sector stimulus funds.

“Truth be told, A123 was looking to build that factory in Asia,” Obama said. “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.”

But as happened with another big bet Obama made on a green company — solar cell maker Solyndra — the government investment has gone bad. After weathering a big product recall, and missing a debt payment earlier this week, the company has filed for bankruptcy protection. Mitt Romney’s presidential campaign pounced on the news, calling it another “disastrous” Obama failure.

Industry analysts have varying opinions about whether government funds are needed to goose the green sector, but Theo O’Neill says venture capital investors don’t have any better record. Still, O’Neill, an industry analyst at Litchfield Hills Research, says private investors may be better than government at keeping track.

“At the time they granted the stimulus funds, it looked like the major car companies were going to adopt electric vehicles in a larger way,” O’Neill said. “And then no one sort of followed through a year or two later to discover that the market wasn’t materializing at all as they expected. And they could have nipped that in the bud.”

The Bush administration made a much smaller investment in A123 too, as did Massachusetts — which expects to recover what it’s still owed. The CEO of the Massachusetts Clean Energy Center, Alicia Barton McDevitt, says while green tech markets may be proving slow to develop, taxpayer investment is still justified.

“It’s true that there have been headwinds, but I don’t want to ignore some of the significant progress that has been made,” McDevitt said. ” A123 alone has opened three facilities in Massachusetts and there are over 300 workers.”

The company’s payroll at its facilities in Waltham, Westborough and Hopkinton is more than $27 million. But Barton McDevitt says that, as the bankruptcy proceedings get under way, it’s unclear just what will happen to those high-paying, high-tech jobs. A123 officials declined requests for comment.

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  • bdcstrong1

    Looks like another one of Obama’s Green Company’s goes bankrupt and forget about ever getting that 250 MILLION dollar loan back! Nice way to create jobs, NOT…

    • Yooperwillie


      Must be new math …………… !

  • jefe68

    Seems both sides of the political spectrum invested in this.
    The story here is not about failure, it’s about mistakes.
    I have an idea. lets do what Romney wants to do, nothing but tax breaks and see what happens.
    Lets cut everything from education to the funding of the FDA. And watch and see if it produces anything in the way of jobs. 

    Green technology is going to happen, it has too. We can’t keep using fossil fuels forever, it’s a finite. Not mention the little problem of climate change. I notice that the right wants to demagogue President Obama, like petulant frat boys, but as Bill Clinton said, Romney’ arithmetic just does not add up in terms of making anything work economically.
    In fact one might say Mitt Romney’ plan is nothing more than a flim flam.

  • karlostj

    Remember when businesses failed and the only people who got stuck with a lousy investment were the people who actually invested? Now the Government invests your future tax dollars on your behalf, and this time we all fail!

  • http://profile.yahoo.com/NG4UZC44SCTIJ3RGLUVMO645ZM Rudolf

    Was the Federal money a grant, as reported in the article, or a loan as stated by commentators? And did A123 only really draw down half of that? If they go the bankruptcy route, do the taxpayer’s get their money from any sale of assets?
    The government does not seem to be a good picker of technology winners.

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