Fisker Automotive Forced to Put U.S. Employees on Furlough
March 28, 2013 12:16 PM
comment(s) - last by
Fisker is trying to save a few dollars while it looks for investors
Fisker Automotive's spot between a rock and a hard place looks to be safely secure as it continues looking for financing solutions, and has to make major cuts in the meantime.
Fisker has placed its U.S. workers on furlough this week to try and keep costs down while it searches for an investor. This means that the U.S. workforce will have a temporary, unpaid leave until the company gets back on its feet.
"This is a common practice, particularly in the automotive industry, to manage costs and operations based on current activity levels and commercial requirements," said Fisker.
Fisker has more than enough issues on its plate right now. In April 2010,
Fisker received $529 million in
, which were part of a program to progress development of high-tech vehicles. The loans were also meant to revamp a closed General Motors plant in Wilmington, Delaware for Fisker EV production. However, Fisker fell a little behind on its production schedule, and in May 2011,
DOE froze the loans due to "unmet milestones."
Fisker had only drawn $193 million of it at that point.
Due to these money issues, Fisker is having a hard time securing funds to make its second car -- the Fisker Atlantic. Fisker is now looking for investors to help out with the financial situation so Atlantic production can begin.
Fisker's investor solution has drawn a lot of criticism though, because two potentials have been Chinese companies --
Zhejiang Geely Holding Group and Dongfeng Motor Group Co. This has rubbed the U.S. government the wrong way, since Fisker received U.S. taxpayer dollars to fund its Karma plug-in.
The Karma itself has had to be recalled in the past too, as battery supplier A123 Systems (which
last year) vowed to replace
nearly 600 Karma batteries for $55 million in 2012.
A123 Systems, which
filed for bankruptcy
in October 2012, was
acquired by Chinese firm
for about $260 million in December.
Earlier this month, Fisker's problems escalated to a new level when Henrik Fisker, who co-founded Fisker Automotive in 2007,
stepped down as executive chairman
citing "several major disagreements" with "Fisker Automotive executive management on the business strategy."
To make matters worse, Fisker Automotive is expected to make a loan payment to the DOE next month.
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RE: House of cards
3/29/2013 5:50:47 PM
I'd prefer to not be forced into the business of providing loans to businesses. I don't care how long it has been going on and how many ridiculous branches of beauracracy do it. If this risk rating and all that is so lucrative, then people would provide the loans from their own free will and desire to get a return on investment.
The whole system is bad if for no other reason than I and all other taxpayers are forced into covering these risks. Much of the loans end up going to buy votes or pay back favors to large donors.
"A lot of people pay zero for the cellphone ... That's what it's worth." -- Apple Chief Operating Officer Timothy Cook
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