A Twisted Clean-Tech Tale: How A123 Wound Up In Bankruptcy

curtwoodward writes "Advanced battery maker A123 Systems was supposed to be one of the marquee names of the U.S. cleantech manufacturing scene — it won hundreds of millions in federal grants, had operations around the globe, and supplied the luxury Fisker electric car. In 2009, as the economy sputtered, A123 registered the country's biggest IPO. Today, it's in bankruptcy court, with possible buyers submitting bids for its parts and pieces. How'd A123 fall so far, so fast? As losses mounted, its reliance on just two big customers came back to haunt the company — and a series of screwups at a Michigan plant delivered the final blow."

Comments

Just another cautionary tale

[Revotron]

Nothing good has ever come from the commander-in-chief tossing government money back to his buddies (and campaign donors) in industry. My statement applies to this president just as much as it does to those before him.

Re:Just another cautionary tale

[mspohr]

The government has been tossing taxpayer money to the oil industry, big agriculture, banks and everyone else who could buy themselves a politician or two since the beginning of time.
This particular failure sounds like a combination of bad management plus the fact that developing and scaling new technology is hard.

Re:Just another cautionary tale

[mspohr]

Just a few clarifications to your post.
Loan guarantees are not grants.
A123 received a $250 million loan guarantee, not $90 billion.
Government has a vital role to play in keeping the economy moving. This is done through tax incentives, loans, stimulus programs and grants.
The problem is that the wrong corporations capture these incentives. Obsolete industries and industries which are doing fine without incentives tend to capture most of them... (i.e. General Electric receives enough government incentives that they pay no taxes but they are a perfectly viable business to stand on their own.)

Re:Just another cautionary tale

[bill_mcgonigle]

Government has a vital role to play in keeping the economy moving. This is done through tax incentives, loans, stimulus programs and grants.

That's their claim, but it's hogwash. Every dollar 'given' as stimulus has been taken from other people, either directly through taxes, or by devaluation of capital through inflation.

That capital is thus no longer available to its original (proper) owners, and so cannot be invested by them. The only remaining question is whether the government is more careful with how it invests other people's money than they are themselves.

To illustrate the point, may I present: A123 Systems.

EXCUSE ME?

[Anonymous Coward]

Government has a vital role to play in keeping the economy moving. This is done through tax incentives, loans, stimulus programs and grants.

Yeah, by ripping off people by creating an A123 Systems, Solyndra, you NAME it, they keep the economy going! You know, the guys who just chew up money, give it to their buddies, and run off having raped everyone with a corporate scam. And by keeping the economy going, I mean inflating and taxing the US economy into asphyxiation to where PEOPLE HAVE NO MONEY TO BUY because they are paying for this corporate welfare garbage. Except that they aren't because the debt is GROWING AT ABOUT FOUR BILLION DOLLARS PER DAY.

FREE markets which are markets free from government meddling (this includes corporate welfare and tax breaks for the big businesses) allow the economy to work AS IT SHOULD. Consumer demand drives supply chains. Consumer demand is WHAT PEOPLE WANT. When people get what they want, you have a healthy economy.

You can put financial regulations and environmental protections in place against businesses all day long, but as soon as you try to force the market to do something, it will adapt. For instance, there is an anti-tobacco subsidy where the government pays you to not plant tobacco. You plant one acre to prove that you can plant tobacco, and the government gives you FREE MONEY to not plant tobacco on the rest of the land. It doesn't take but five seconds of thought to understand how not only does this increase the growth of tobacco but drains the coffers at the same time. This is one of the simplest examples. You end up with your controls both fostering corruption (great way to pay yourself or your buddies) and creating inefficiencies in the economy which will be bypassed as there is still demand for whatever the government was trying to kill and which will be abused because there is an artificial free supply of government-issued "incentive."