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Chinese Firm Wins Bid For US-Backed Battery Maker
theodp writes "On September 13, 2010, President Obama called A123 Systems from the Oval Office to congratulate them on opening the nation's first manufacturing facility to mass-produce electric vehicle batteries, which the White House noted was made possible by a $249 million Recovery Act grant the company received the prior August. 'When folks lift up their hoods on the cars of the future,' the President said, 'I want them to see engines and batteries that are stamped: Made in America. And that's what you guys are helping to make happen.' But on Saturday, the assets of A123 Systems were auctioned off to the Wanxiang Group, a large Chinese auto parts maker. Wanxiang agreed to pay $256 million for A123's automotive and commercial operations, including its three factories in the United States. Forbes reports that A123's stock, which closed at 7 cents a share on Friday, is now worthless."
Free market my ass. This is corporatism. Allow the corporation to do what they want at all costs. There is no reason that the government should NOT be allowed to designate that funds it spends benefits its citizens over other people. EVERY OTHER country in the world does this.
Let the nitpicking and the corporate hothead flaming begin below....
There isn't a free market on the global level. There pretty much isn't a legal free market in the US. You can keep cawing on about the free market but it doesn't make it true.
This is the free market in action. Would you rather the White House block the sale?
I'd rather the White House not give them $250M in taxpayer money in the first place. How exactly was that free market in action?
The Recovery and Investment Act was supposed to stimulate America's economy, not go to further prop up a regime with numerous humans rights violations. The last thing we need is more traffic because of these cheap batteries blowing up on the interstate.
all the IP will go to the Chinese.
At least this time we got them to pay for it.
If Slashdot were chemistry it would look like this:Cadaverine
I'd like to say this is speculative investment, and I'd also rather my governmenet not use tax dollars to engage in such speculative investment at all.
But it is, in fact, crony capitalism, or worse, pure fraud.
No, wait, it's just fraud. We are being robbed.
deleting the extra space after periods so i can stay relevant, yeah.
In a free market, a failing company would fail. In this case, the government took $249 million in tax dollars and gave it away. This is not the free market.
Love sees no species.
The united states of fail giving away their incomptetenly mismanaged and dearly needed money to their future masters. Why keep it partisan when it's your whole nation sinking?
A123 had actual contracts to put batteries in cars and had actual products. Does this mean that electric car batteries are not expensive enough? This is pitiful.
Sorry, but gray text on gray background is making my eyes bleed.
As of 2012 $129 million of the grant was used to build plants in Michigan (Romulus and Livonia); the remaining grant money has not been tapped (the grant was extended to 2014, but with the company in bankruptcy...) Originally Johnson Controls was going to buy (and use) the plants; it is still unknown if the plants will be used, but speculation is that at least one of the plants will be used. Note that the grants were backed by all of the Michigan members of Congress, despite the party. All of them wrote letters of endorsement to the DOE. The loan program that issued the grants was created in fall of 2008. The loan program predates Obama's presidency; the company applied in January and Obama because president January 2009. Please don't make this a partisan thread. This is what looked like a promising company that had a market in 2009 and needed to build manufacturing capacity - and the market disappeared (Chrysler closing its EV division was the major hit)
I have to admit that I'm irritated that as a US taxpayer my pocket was picked to redistribute $250 million to a company now owned by China.
Because that is not how they play this game.
Look at how they dumped solar cells as a great example.
If we add that A123 is the sole provider of batteries for the Fisker Karma, would you start to care? That A123 is a provider of MW-scale batteries to AES Corp, for use in windfarm smoothing and grid services?
I would have preferred that the government not gotten in the business of payouts to its campaign contributors, but elections have consequences. Usually corrupt consequences, but what can you do.
This is the free market in action. Would you rather the White House block the sale?
I'd rather the White House not give them $250M in taxpayer money in the first place. How exactly was that free market in action?
To go even further with that point, it's not the free market in action any more, as they already ruined that. Free market means if your management is all idiots and your manufacturing process sucks and your expenses are out of control and your downline is basically only 2 customers, you will fail. With $250 mil dropped in your lap, free market "survival of the fittest" goes away but all those problems don't go away. It just means you fail later, with more money because your company still sucks. Yes, that kind of grant accelerates what would take 10 years to build up but it has no way of knowing if the company would have succeeded, given enough time.
That statement is foolish, at best. This is not the "free market". US industry has been under attack for a couple of decades now, and this is just another footnote in the grand globalization scheme.
I would suspect, though I haven't looked for proof, that the Chinese government may have been involved. A small subsidy maybe, to enable the Chinese company to bid a bit higher than they might have been able to?
"Windows is like the faint smell of piss in a subway: it's there, and there's nothing you can do about it." - Charlie Br
The Republican politicians who voted for the energy policy act of 2007 were for sale. And like any good investment, they paid off, leaving somebody else to hold the bill.
Lets take a look at the Senate roll call on the bill that actually gave them this money, the American Recovery and Reinvestment Act of 2009:
Democrats - 55 yeas - 0 nays
Republicans - 3 yeas - 38 nays
Independents - 2 yeas - 0 nays (one is an "Independent Democrat")
Now lets take a look at the House roll call on this bill:
Democrats - 244 yeas - 11 nays
Republicans - 0 yeas - 177 nays
Yet again the Democrats blame the Republicans for what the Democrats did all by themselves.
"His name was James Damore."
The investment, made with it without an expectation of reimbursement, was nonetheless an investment. I assume it was made with the expectation of a successful venture, jobs and tax revenue, and development of a domestic battery manufacturer.
the failure began the question of whether there was a reasonable chance of success.
I expect my government to have such an expectation, but the market is a harsh place, and companies do fail.
I would prefer we do it differently.
deleting the extra space after periods so i can stay relevant, yeah.
You never know, this might be part of the trend in manufacturing returning to US soil; with ultra-cheap material from China sailed in through the great lakes, they can slap the stuff together with the help of minimum wage machine operators, keep the "Made in USA" label, and stick them in $100,000 cars with the profit sailing back to China (and probably some fresh water out of the lake while they are at it).
Free market advocates will be filling this thread with more vitriol about how it always backfires when the government picks winners or losers, but the Chinese will basically be the only source of battery technology in a future where everything relies on electricity... Are you OK with the free market picking the US as the loser?
Public money is best spent on things private companies can't/won't do.
The best long term thing Government can do to help the country is finance research and education that form the building blocks for new companies. By comparison there are boat loads of investment dollars floating around in the private sector, the Government has no special way of knowing who the winners will be over private investors and the dollars are less needed there anyway. Financing companies is much riskier always, I guess I can see floating a loan to an established company in a crisis, but that is about it.
Republicans and, worse yet, Democrats both have become overly hypnotized with the power of "Private Enterprise". But people who run private companies are still just people. Better for Government to refocus on what is does well and assure plentiful funding for that. So if you really want to help produce electric cars, put out money for research at Universities and have open contracts for US manufacturers to sell the Government electric cars.
Xerox Parc were famous for innovating like hell, but being completely unable to monetize that innovation. Other people took their inventions and ran with them.
The USA is doing this on a national level. America innovates -- China, buys or steals the IP, then destroys American business, and yet people whine about the lack of 'pure' free markets, as if the beggar-thy-neighbour, merchantilist Chinese are doing everything they can to destroy Western business.
Time for people, especially the free market idealists to pull their heads out of their arses, and realise that the crypto-fascist Chinese Communist Party is waging a long, generational war against the West, and are hell bent on world domination.
When competing with the Chinese, all options must be on the table. If that means we're not simon-sure free-marketers, so what? If the government puts up seed money to kick-start American national champions and the bet turns sour, so what?
Ideological purity will get us nowhere at the end of the day. Only winning matters. Time to grow some balls, and learn how to fight as dirty as the Red Chinese.
How can you be robbed of something you gave away?
Because in the constitution it said *nothing* about giving grants to US-based high tech battery manufacturers... therefore it is illegal for the federal government to do so (according to him). Pretty simple, really.
I'd like to say this is speculative investment,
No it wasn't. It was a grant , not a loan, not an investment. That means the government just gave them the money with no requirement or expectation that it would be paid back.
Yes, but I'd like to think the gov't doesn't just give away money for the hell of it.
'When folks lift up their hoods on the cars of the future,' the President said, 'I want them to see engines and batteries that are stamped: Made in America. And that's what you guys are helping to make happen.'
That sounds like an expectation to me.
We are being robbed.
How can you be robbed of something you gave away?
Because I didn't give it away. Some group of assholes did. Most of whom I did not vote for.
all the IP will go to the Chinese.
At least this time we got them to pay for it.
But who receives payment of the auction proceeds? I'm guessing it won't be the people who put up the $249 recovery funds.
The problem is that free trade is a LIE because it allows those countries that have no evvironmental or worker regulations a distinct market advantage over those that do. It would be like playing a football game where you tell one side only "There are no rules and no penalties for you, do what you want" while the other team plays by the rules. Can anybody guess which team will win every time?
What we should do is slap high tariffs on any country that doesn't have similar working conditions to ours. if you let the factories dump their waste into the rivers, or allow them to belch toxins right out the stacks? Then it wouldn't do you a bit of good as you'll only be able to trade with countries that are in a similar situation.
But until we do this you can give up ever having things built in this country again as we'll simply never be competitive. By dumping their toxins the corps get to remove the costs associated with running a clean factory and pass it on to the peasants who'll have poisoned water and land, but since there are many dictatorships and regimes that simply don't give a fuck WHAT you do to the peasants that will always be an open, same as there are plenty of places that won't care if you expose those peasants to cancer causing substances in the course of their daily grind, so again this gives a great advantage as those costs now disappear.
All we will do long term if we allow this to continue is allow a handful of megacorps to concentrate ever more wealth while making sure more and more of the third world hates our guts and wishes us dead, and for good reason. And for those that say "They're just going through an industrial revolution like we did, it'll get better"? Might want to look what is stamped on those trash cans and other cheap low skill stuff as its NOT China anymore, its places like Malaysia and Vietnam. As the workers in China demand not to be treated like factory fodder and live in toxic waste the megacorps are simply moving to new places to export their cancer factories, still dozens of third world countries left to exploit and at this rate you're looking at a good 200+ years before they have ran through them all, leaving superfund sites in their wake.
Never forget the words of Thomas Jefferson, for they are just as true today as we he uttered them over 2 centuries ago: "Merchants have no country. The mere spot they stand on does not constitute so strong an attachment as that from which they draw their gains."
ACs don't waste your time replying, your posts are never seen by me.
Lets take a look at the Senate roll call on the bill that actually gave them this money, the American Recovery and Reinvestment Act of 2009:
Wrong funding. http://en.wikipedia.org/wiki/Advanced_Technology_Vehicles_Manufacturing_Loan_Program (passed in fall of 2008) which was part of http://en.wikipedia.org/wiki/Energy_Independence_and_Security_Act_of_2007 Have a wonderful day. (If you had read my post, you would have caught the "program from 2008" and realized you had the wrong funding. )
Free markets are largely fictitious. They can only be maintained through heavy government intervention *cough* anti trust laws *cough* and require strong public infrastructure and an educated population. In short, there is not and never has been a "free market" except that which has been fostered and tended by a government relatively free of corruption. Without this government oversight, a "free market" quickly gets taken over by privately held monopolies that are then leveraged against other markets. The market then degrades into a highly capitalized form of fascism, as is happening now in the USA.
For example, even the USA at its height had much of its "private enterprise" industrial strength funded by public entities. here is an excellent example, makes for a fascinating read.
I have no problem with your religion until you decide it's reason to deprive others of the truth.
This is not the free market.
First and foremost, what do you think a free market is?
Second, we haven't had *free markets for over 100 years and we don't want free markets.
Competitive markets are where the real growth is found and the only way to get competition is to restrain the worst impulses of the free market.
Third, this is what we have: https://en.wikipedia.org/wiki/Mixed_economy
It's better than a completely free market.
*For all definitions of "free"
[Fuck Beta]
o0t!
Such competition is backed by the Chinese Government. If we want our companies to be able to compete, we need to have our own government actually support young industries, not just old embedded ones.
So using tax dollars to lower the price of your products to drive competitors out of business is competition?
So what is your bar for cheating?
It's a relatively free market here in the US. There is no such thing in China. There is no way a foreign company could buy a bankrupt company in China. They don't even let you do business there without a lot of concession which may involve allowing a Chinese competitor to make your product for their local market while you're allowed to export your shit out of the country. There's also the recent clamp down on export of some raw materials (rare earths) in order to bring their own manufacturers up to speed (Look at the price of NdFeB magnets over the last couple years). Also, the government over there is funding a lot of companies - this one may be partially state owned - I don't recall. Then there's the (lack of) regulatory environment over there which further tilts the playing field. So while it's a free market over here, it's anything but free over there. They view our openness with large grins.
If you view money as wealth you're an idiot. Warren Buffet views ones wealth as how much of the physical and economic world one "owns" - in that light the Chinese are gradually buying America with it's own money, while we have a bunch of dip-shits walking around saying "free market". Nothing good can come of this.
Free market in technology means no money coming in for a year, 2 years or more while you develop it.
It means you invest $250 mill of somebody else's money, get even more money if it looks like it's working, and finally get a working salable product years down the road. With the understanding that most investments fail.
That's how Genentech did it. They got substantial government investments. Their original basic research was done under National Science Foundation and National Institutes of Health grants. And now their biggest customer is Medicare.
Thousands of other biotechnology companies (also founded with basic research paid by the government) failed.
The government invests lots of money to keep this free market working. Take the airplane. The Wright brothers succeeded because they got the government to invest in them. The aircraft industry was built on government money (and regulation).
Intel succeeded because they had government (military) contracts. The whole fucking silicon valley was built on military contracts. The military still drives technology. And spends the most money. How many $250 million failed projects did Halliburton and the other government contractors build in Afghanistan and Iraq?
This free market model disappears pretty quickly when you look at the actual history of technology. Most major developments were built on public-private cooperation. Oh, that's right, we're not allowed to major in history any more because history majors can't pay back their student loans.
Why couldn't they waste it on more drug prosecutions and prisons like the Republicans?
There was an engineering professor in California named Terman who taught his students that they shouldn't just study the technology, they should also look at how to start a business, and keep their eyes out for opportunities.
Two of his students were Hewlett and Packard.
China is not playing chess, they are playing GO (wei chi in Chinese). They have the entire playing field in view and it's huge - both the real world and the board game in the analogy. In chess you have straight forward tactics and what amounts to simple strategies to achieve relatively short term goals - like isolate a pawn or pin down a piece (the king for a win). With GO the game is literally about controlling territory - vast regions or lots of small ones, it doesn't matter - quantity is the only thing that matters. It's a game of world domination.
Is that their goal? I don't know, it's just a better way to play the game.
Well according to the government websites that are linked to in the summary (energy.gov and whitehouse.gov) he got the correct act. Can you provide a link that shows that the government is lying about the law that authorized the funding in question?
The truth is that all men having power ought to be mistrusted. James Madison
What goes around... comes around. Let the Chinese and the Chinese government do all the R&D to stay competitive in the market and after they've suck billions into it, then let's reverse engineer it and make it here on the cheap.
Works both ways.
I am really horribly surprised that this isn't mentioned more.
Just 4 months ago Wanxiang offered $450M for 80% of A123. Now Wanxiang got it for $260M. A123 lost it's creditors quite a large chunk of money and now Wanxiang gets control of A123 debt free.
http://insideevs.com/wanxiang-takes-control-of-a123-again-as-it-wins-bankruptcy-auction/
A123 has been horribly mismanaged from the start. People have been clamoring for their cells for years - but they wouldn't sell to anyone but OEMs - so many people took to disassembling packs from drills or more recently buying them off the grey market (eBay).
Their batteries are very good, but they have been plagued by bad business decisions and some bad luck (like the big batch of defective cells they sold to Fiskar costing $55M to replace).
I would have rather seen A123 tech been bought by JCI rather than Wanxiang - I can only hope that they are able to sort out A123s problems and finally get their product to market successfully.
You should really read further. Less than half the money was spent, and their sustainable product's sole client pulled out after demanding highly-specialized retooling, rendering their product line worthless without another infusion of cash. The owners have decided to cut their losses and have been in bankruptcy for some time now -- the sale is pending bankruptcy court approval. Outstanding creditors will be repaid out of the $256M sale price, but the US taxpayers (who provided a grant), and the stockholders (who have no recourse), will be left empty-handed. The owners are very likely personally out a very large sum of money, as outstanding creditors will soak up all of the liquid assets, including US grant money, once the sale is complete.
On the upside, as stated, at least taxpayers are not out the entire tab.
You should be more irritated that a handful of US citizens in the form of soon-to-be-paid creditors will absorb every penny of that as part of the bankruptcy proceedings, following the $256M sale. And those creditors are not stockholders, who will be left empty-handed.
China didn't get a $250M check from the US government -- a group of nameless American creditors did.
And rightly so! Why should the owners of a failed company get to keep cash if there are still debts left unpaid?
No one has a right to their *own* opinion. They have a right to the TRUTH.
I think you forgot that the Democrats have controlled the Senate from Jan 2007-Present, and the House from Jan 2007-2010. They were in control of the committees and budgets during the financial collapse of 2008, and steered all of the "bailout" money. Technically everything leading up, causing, and continuing the recession was approved by the Democrats.
But, the public is apparently ok with all of the spending. They voted for it, and re-elected the same people, so what can you do.
Because I didn't give it away. Some group of assholes did. Most of whom I did not vote for.
If it's any consolation, more than half of your fellow countrymen (based on voter participation) are OK with that "group of assholes".
If you look around and everyone else is an asshole, what does that suggest......
No, not really. Considering that somewhere around half of the population pays no taxes at all. I'm pretty much in the middle of middle class and do pay taxes. My wife has MS and cannot work, but I make enough that we don't feel it's right for her to apply for disability, even though she qualifies. If I look around and everyone else is looking for a handout and I'm not, does this make me an asshole? And no, I don't feel any animosity toward those that do either. However I do direct my ire toward the politicians that have been spending MY money (for the past 12 years especially). They are the true assholes IMO.
Wanxiang has submitted the highest bid, but it has not been approved by the bankruptcy courts. There are a number of senators who are trying to have the buyout blocked because of A123's relationship with the Dept. of Defense. So while it's looking like our tech is heading East, it's not a forgone conclusion.
http://www.detroitnews.com/article/20121209/AUTO01/212090327/1148/rss25
I say that because they "dumped" product on the market at what should have been a loss to remove competition.
Post as something other that "Anonymous Coward" or shut up.
Americans should not have any bars when it comes to face a COMMUNIST country.
Hmmm... remind me what would you call the "bailout" that saved some American banks? Or the GM one?
Questions raise, answers kill. Raise questions to stay alive.
remind me what would you call the "bailout" that saved some American banks
Graft and corruption
Aah, change is good. -- Rafiki
Yeah, but it ain't easy. -- Simba
No, not really. Considering that somewhere around half of the population pays no taxes at all.
The above statement is simply false. The article that you quote says as much, pointing out that not paying income tax is not the same as not paying any taxes. People with low income pay SS and Medicare taxes, state and local taxes, personal property tax, and sales tax. The total tax burden on low income people is substantial.
The reason that low income people do not pay federal income tax is that they are making so little money, and when you add in exemptions, credits, deductions, etc, they are not supposed to pay anything. Retired people, veterans, handicapped people with MS, students, unemployed people don't make enough to justify any taxes as they are written. We can argue about whether those exemptions, deductions, and credits are justifiable. A better idea would be to make sure that they make enough that taxes are justified.
The more people I meet, the better I like my dog.
If you look around and everyone else is an asshole, what does that suggest......
That suggests I'm standing on a battlefield. There is half on one side and half on the other. We'll see how this century ends up.
I object to power without constructive purpose. --Spock
(Reliable) citation, or you just made these numbers up. And that doesn't mean a link to some blog that made the numbers up themselves, either. It means a link to an irrefutable source.
When the official source of this information is the government itself, on the official websites which tracks this stuff, which never leaves out any of its voting.. it makes you look like an idiot for not automatically going there where you should have known to go.
Senate Vote
House Vote
Now here is an idea.. instead of pretending to be smart by asking for a citation.. prove that you are smart by actually watching what the government is actually doing through the most authoritative channel possible.. the public one that has never once editorialize.. never once given an opinion.. the one you apparently didnt fucking know about proving that you are just a sheep.
"His name was James Damore."