Thursday, February 14, 2013

More Government Knows Best Wasteful "Investments" ... This One's a Doozy

U.S. government officials care enough about saving the middle class and our nation's prosperity to wisely "invest" billions of taxpayer dollars each year as part of their "public service" duties on behalf of We the People.

Usually it's money ill spent, of course, and not even noteworthy. But sometimes the error is so egregious that it's worth noting.

Such is the case with one recent government "investment" in batteries for electric cars intended to be manufactured in Michigan by a South Korean company. While the total "investment" lost only $142 million, what's noteworthy is that the grant recipient didn't even try to make batteries at the Michigan facility.

U.S. Grant Funds Workers' Play at LG Chem Factory has this strange story to tell about the latest example of the lack of fiscal responsibility of our government aristocrats in Washington:

"The Obama administration's electric car efforts took another hit on Wednesday after a federal inspection found a South Korean advanced battery maker never scaled up U.S. production despite receiving $142 million in federal grants.
A Holland, Mich., factory owned by LG Chem Ltd., part of LG Corp., was half-funded by a government grant and estimated to add some 440 jobs building battery cells for General Motors Co.'s Chevrolet Volt and other vehicles.
LG Chem never scaled up a Michigan plant's output. Above, the groundbreaking ceremony in 2010.

When demand for the plant's batteries didn't meet expectations, the company filled orders with cells made at a factory in South Korea, leaving the Michigan plant largely idle . . . .

The inspector general said that to avoid layoffs at the factory LG Chem paid idle workers $1.6 million in the third quarter of last year, about half of which was covered by its U.S. grant, even though there was nothing for them to do. The workers played board games, watched movies, and volunteered at local animal shelters during regular work hours . . . . LG Chem has since paid back the government's share of those charges. . . .

In 2010, Mr. Obama attended the plant's groundbreaking and said such grants would "unleash private sector growth" and called the factory "a symbol of where America is going." The facility today has about 150 workers, some of whom are hourly employees and are furloughed one week a month.

LG Chem is the latest of several recipients of federal funds, including solar panel maker Solyndra LLC, that haven't panned out. Solyndra filed for bankruptcy in 2011. . . .

"Four years ago, other countries dominated the clean energy market and the jobs that came with it. And we've begun to change that," Mr. Obama said in Tuesday's State of the Union address.

The DOE initiative that funded LG Chem's factory in total provided about $2 billion in grants to more than two dozen companies building advanced batters and other components for hybrid and electric cars.

Another recipient, A123 Systems Inc., got about $250 million in federal funds for plants in Michigan. It filed for bankruptcy in October and its automotive assets have been sold to a Chinese auto-parts firm. The new owner is expected to continue operating in the U.S.
The Department of Energy's deputy assistant secretary in charge of the grant program, Kathleen Hogan, said in a written response to Wednesday's report that the funding for LG Chem was part of an effort to "continue to grow the manufacturing sector in the United States." She said the electric vehicle industry "hasn't grown quite as quickly as expected," but will become "an enormously valuable and growing market."

. . . while LG Chem had said it planned to move battery production to Michigan from South Korea, there was no explicit requirement for it to do so in order to receive federal funds. The company built three of five planned production lines, but underestimated labor costs—apparently unaware of a requirement that it pay prevailing wages—and no longer has enough grant money to complete production.

The facility has produced test battery cells, but none have equipped Chevrolet Volts. LG Chem officials (said) that shifting production to Michigan now would "result in financial losses on battery cells produced in the U.S.,". . . .

Demand for the Volt and other electric vehicles has been below expectations. The Michigan plant was to have the capacity to produce enough battery cells to equip 60,000 vehicles a year. GM sold 23,641 Volts in the U.S. 2012. . . .

Rep. Lamar Smith, a Texas Republican who is chairman of the House Science Committee, called the LG Chem case an "outrage." "The president wants more money to fund more pet projects, but it is clear that his administration hasn't been responsible with what they've already been given," Mr. Smith said in a statement."

Summing Up

Just another case of our government officials "investing" the taxpayers' money better than We the People could ever hope to do for ourselves. It's the OPM way prevailing over the MOM way once again in Washington.

Aren't we lucky to have such a caring and responsible group of "progressive" politicians in place and saving us from making our own mistakes?

And making every effort to save the planet with electric cars --- and also to save us from developing and using all that oil and natural gas that we have in abundance?

Now investing "green" is definitely an idea whose time has come, or is it?

Stay tuned. It's your money they're spending -- er -- investing.

Thanks. Bob.

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