A123 Systems Won't Get Rest of Federal Grant if Owned by Chinese Company
December 11, 2012 11:24 AM
comment(s) - last by
A123 could lose the rest of its $249 million grant
We can put this under the "Duh" files:
won't receive the remaining amount of its federal grant if Wanxiang Group is approved as the new owner.
, which spoke to an unnamed official from the U.S. Department of Energy (DOE), the DOE will cut A123 off from its $249 million grant the company received in 2009. A123 has only used $133 million of the grant so far.
The official, who noted that all parties were aware of this consequence during last weekend's auction of A123, said that the grant requires equipment and facilities funded by taxpayers to stay in the United States.
DOE also has the right to compensation if it doesn't approve of Wanxiang's purchase of A123. Wanxiang Group said it would respect the DOE's wishes, no matter the outcome.
Many have been very critical of
A123's purchase by a Chinese company
. Some concerns include the fact that taxpayer dollars were wasted on a grant for a company that is now in China's hands, and the fact that A123 has contracts with the U.S. Department of Defense (meaning, China could potentially get a hold of sensitive U.S. military information).
However, Wanxiang Group didn't purchase the government contracts with the DOD; Illinois-based Navitas Systems did for $2.25 million.
Chinese firm Waxniang Group won the auction for A123 Systems on Saturday for about $260 million. The sale is expected to be approved by the Delaware Bankruptcy Court today.
Back in mid-October,
A123 Systems officially filed for bankruptcy
and agreed to sell its automotive business assets to Johnson Controls -- a company that optimizes energy efficiencies in car batteries, buildings and electronics. However, Johnson Controls clearly lost the bid to Wanxiang last weekend. If the sale for Wanxiang isn't approved, Johnson Controls said it would like to bid again.
Before October's bankruptcy filing, A123 was missing its loan payments. It had received $249.1 million in grants from the U.S. government in 2009 to develop green, electric car batteries. It was discovered that the U.S. government gave A123
a $1 million grant
the day it filed for bankruptcy.
A123 Systems suffered a huge kick earlier this year when it announced a $55 million battery replacement program for Fisker Automotive's Karma. The vehicle had issues with the batteries' hose clamps.
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RE: Common sense?
12/11/2012 4:46:38 PM
Common sense? Hah! far from it!
This is protectionism at it's finest and we all know where that leads to.
Just think about the message it sends. Technology wise, it doesn't matter. The chinese will already own the company at that point, they will already have access to it's technology.
Money wise however, american companies doing business in america do get government grants but chinese companies doing business in america (remember, just because the chinese own it and it's tech doesn't mean the factory suddenly gets teleported across the ocean) do not. That's just blatant protectionism.
Not only is it bad for the chinese, it's bad for US citizens as well. The chinese will still buy the company, but how likely do you think it is now that the chinese will just close down the US factories and move production to china after they've got the tech? If A123's business plan to become profitable depends on that loan (time to build up the business and take care of the first kinks in the cable) and the chinese are denied that loan, then it's not profitable for them and they'll shut it down. They'll still buy the company for the tech they do want that but what other choice will they have?
If you where the chinese goverment how would you respond to this? Why, with your own protectionism methods ofcourse. I can't remember whatfor but they already banned US beef for a while some time ago.
Don't forget though! it was the US that fired the first shot by raising tariffs on chinese solar panels, who had become so cheap becuase of a artificially inflated market the US was amongst the nations responsible for, due to the push for "green" energy.
It would show far more common sense to let them have the grant and the tech (they are still paying for it mind you!) as a show of faith in your suposed business partner of choice. You already have it, and considering A123 went bankrupt i seriously doubt the tech is a secret worth protecting.
Maybe it would get the chinese to start buying US treasuries again, which they haven't done in a year. Probably because of bullshit like this.
RE: Common sense?
12/12/2012 4:01:29 AM
The corporate brainwashing that led America to where it is today is strong in this one,
the Chinese routinely subsidies their companies for long term nationalistic goals and demand anyone doing business in their country must share their IP is excused as just part of the cost of doing business,
but if Americans refuse to give their hard earned tax money to foreigners it is called protectionism.
The short term corporate whore, profit only matters mentality, even if you sell out the very country that enables you is what is destroying this country and those that drink the corporate Kool Aid think it's just good business.
"A politician stumbles over himself... Then they pick it out. They edit it. He runs the clip, and then he makes a funny face, and the whole audience has a Pavlovian response." -- Joe Scarborough on John Stewart over Jim Cramer
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