A123 business plan changes

America needs to wake up. We live in an age when it's not aircraft carriers that defend us, it's economic power and intellectual property. Ok, it's always been that way. We just don't seem to understand the game very well.

 

JCI would have kept the doors open also.

For the Chinese the people and IP are more valuable than to JCI, the american factories are also more valuable. JCI already has IP for lithium batteries. Its much harder for a chinese company to hire the key employees.

 

This is pretty bad. Prior to filing bankruptcy, Wanxiang wanted 80% for $450 million. Now, they got 100% (minus military contract) and free of debt for $256.6 million.

Wanxiang Takes Control Of A123. Again. As It Wins Bankruptcy Auction

 

A123's Executives Get Their Richly Undeserved Bonuses | National Legal and Policy Center

In February, only a couple months after the company laid off 125 workers at its Michigan plants, company directors awarded top executives big salary increases. Chief Financial Officer David Prystash, VP of Energy Solutions Robert Johnson, and VP of Automotive Systems Jason Forcier saw their salaries increase between 27 percent and 51 percent. Prystash had just been hired in May 2011 at a base salary of $300,000 plus a $50,000 signing bonus.

In addition, CEO Vieau saw his compensation boosted by 400,000 additional restricted stock units. Four other top A123 executives, including Johnson and Prystash, collectively received 810,000 stock units. An SEC filing said the stock would fully vest “in the event the company consummates a ‘change of control’ transaction.” Also A123’s compensation committee of its Board of Directors hiked the remuneration terms of its top officers should control of the company change hands, which included accelerated vesting of unvested stock options and restricted stock awards; payment of base salary for 18 months in case of termination; payout of target bonuses for the year if terminated; and continuation of benefits for 18 months if terminated.

 

Ohh, I want a job like theirs.

 

The way I see it, this was their plan all along. They didn't care about the future of the technology, they didn't care about anything but lining their pockets with our (taxpayer) money.

Let's face it, all of these people are set for life if they manage their money right. If they don't, they could probably write a book or something. I have no sympathy for these people and these are the reasons I don't want one more penny of my tax dollars given to any company like this. They just don't care about anyone but themselves and the gov't doesn't hold them accountable. If I fail at my job, I don't get a raise. If the ship runs aground, the captain is fired (no matter whose fault it is, even if the captain is sleeping when the ship runs aground, he is fired). A123 ran aground, now lets fire the captain.

Additionally, I'll bet the sale to the Chinese company is approved. If so, the result will be, my (and your) tax dollars, given to rich people who do not know how to manage, to make them richer, to ultimately give China the manufacturing edge on battery technology.

What a terrible investment that was . Can we please stop this madness at my expense?

 

The startup — which has lost $900 million since 2007 and has 1,000 employees and contractors in Michigan — received $50 million in debtor-in-possession financing from Wanxiang.

A123 vowed to create 3,000 jobs by the end of 2012, but employs only 1,300. The company won $249.1 million in grants from the Obama administration in 2009 to build battery plants in Romulus and Livonia, but has spent only $132 million. It also received more than $125 million in tax credits from the state of Michigan.

Energy Department officials said Monday they will not award the remaining $117 in grant funding to A123's new owners.


From The Detroit News: Bankruptcy court approves sale of A123 to Chinese corporation | The Detroit News | detroitnews.com

 

This is why we should reward based on the results (gallons saved and greenhouse gas reduction) and everything will go upstream.

When the incentive is based on the battery size only, we get plugins like Fisker Karma qualifying maximum $7,500 -- 54 MPGe on electricity and 20MPG on gas. Of course there won't be demand.

The incentive should be giving maximum credit to midsize 5 seater plugins with big results like C-MAX Energi and PiP -- 95 to 100 MPGe on electricity/boosted and 43 to 50 MPG on gas.

 

What we need to do is simply stay out of it and quit looking to the gov't to "fix the problems". Its obvious, by what usb pointed out above, that the gov't is not a good driver of the free market. The gov't is too influenced by lobbyist to make a "good" decision.

The following scenario is all too familiar
1) Gov't decides it must do something good
2) Politicians give my tax dollars to "implement" this "good" thing
3) Recipient of tax dollars give themself and cronies a huge salary to do this "good" thing
4) Tax dollars and company is poorly managed and constrained by gov't restrictions to produce this "good" thing
5) Executives see the end coming and give themselves huge monetary awards b4 filing for bankruptcy
6) Company is closed or sold for pennies on the dollar and all taxpayer investment is lost (never to be seen again)

Someone, please stop the madness.

 

You start by saying, "... they didn't care about anything but lining their pockets ..." and "... tax dollars given to rich people who do not know how to manage, to make them richer ..." and so I had to do a double take. I thought you were talking about the house of rep's & congress. Welcome to the new world order.

That said, one could talk about the horrible waste of NASA ... and/or militarty tech. Collaterally, at least new high tech stuff does come out of their waste, despite the horribleness of the waste.
.

 

I agree about NASA but the constitution mandates providing for the common defense. It doesnt' mandate wasting my tax dollars on fly by night firms.

 

The purpose of the plugin tax credit was to make them successfully. The way it was structured, is resulting in failures.

"EREV" manufacturers just threw in off-the-shelf inefficient gas engine to make a quick buck and buyers can claim the maximum $7,500 tax credit (hence maintain high MSRP). This is what happens when you don't tie the greenhouse gas emission with the amount qualified.

Of the two "EREV" on the market (Volt and Karma), both use GM's gas engine. It is easy to see who is the big winner from the current tax incentive.

Yet LG Chem (Volt supplier) battery plant is idling. A123 and Enerdel declared bankruptcy. Coda is cutting jobs. Nissan Leaf battery plant is a question mark.

The plugins with good future are Model S, PiP and Ford Energis. They all use Panasonic battery. However, it is not about the battery but the superior design of those cars. They offer big interiors and high efficiency in both electricity and gasoline.

 

Write your congress critter then.

As mentioned elsewhere, the law that gave the battery incentives for plug ins also gave them for renewable wind and solar installations for the home. Along with increased taxes on coal.

The credit for batteries was the help grow an industry. Plug in cars can be leveraged to conserve fuel and reduce emissions, but they have to be acceptable to the public first. How successful would the ICE be if the first cars had to meet minimum emission and efficiency standards back then.

There would be winners and losers without the credit, and there would be winners and losers if it were structured the way you wanted it. The market is picking the winners and losers, not the tax credit. It was to broaden the market to give these cars a chance to be chosen.

The Karma price tag starts at 90-something-thousand dollars. Holding it up as a failure of the EV incentive is like pointing to a Porsche or Lambo. as failures of the CAFE system. Very few are going to sell. So few that even if it were the most efficient car available, it would have little to zero impact on the country's emissions and gas use. The few numbers also mean little actual government funds are spent on the credit.

Fisker probably went with a GM engine for the same reasons the Ariel Atom has one, the right blend of performance for price. No need to insinuate a conspiracy that isn't there. It need to include BMW because that's who Fisker is switching to.

 

Lets pretend you are a congresscritter.

You have two alternatives.

1. Watch country X invest in what seems to be an emerging and promising industry and technology and gain a lead that means that next generation jobs and technology are beyond your citizens to benefit. Several years from now you will have no choice but to import what they make because you can't duplicate their patents or knowledge or the supply chain built up near their factories. You do nothing because you are focused on the near term or the balance sheet.

2. Or invest knowing that sometimes the technology will fail or be overtaken by a different technology. Take the financial hit now hoping for the benefits later ... perhaps long past your term or administration.

In the first case, your country is guaranteed to ship jobs abroad, in the other case you at least have a chance. You'll be tarred and feathered in the opposition press for doing nothing and letting another company and its state sponsored companies gain the benefits.

In the second case, you'll be tared and feathered in the press by the opposition even though their benefactors' hedge funds have similar success/failure ratios.

And, during the depths of the great recession, jobs were preserved or even perhaps created and skills gained. Those jobs bought things and kept other people employed.

I once was in charge of a product that I could see was destined for about 2 more years before a new technology would make it no longer attractive. I made the decision to invest, to abandon development on my dead-end product and replace it with completely new technology myself. The new product was better, faster, cheaper (and wouldn't be sold before I retired). I made the bet. Some in more senior management weren't pleased because it impacted their this month's bonus. I slept well knowing it was costing me personally too but it felt like the right thing. But a new technology or political direction could have made the bet a complete failure. Yes, it happens.

As I say while playing golf after I hit a really bad shot, just hit the next one. Because if you don't you never get the ball in the hole. Or in this case the new technology created (or preserved) jobs and the outside industry jobs they support. You can't be completely stupid about it but you gotta take some risk...hit the ball over the water because in that direction lies the hole.

As for A123, the stockholders lost a lot in their bet on the technology too. As will the workers. And senior management...well they always do OK.

 

The scenario isn't valid b/c congresscritters aren't swayed by logic. They are swayed by lobbyists. If they could be swayed by logic, the scenario would be valid and option 2 would be the clear choice but, here's how option 2 really turns out.

After the decision is made to invest in option 2, the money is given to people who can't manage a dime (usually cronies), then unrealistic expectations are placed on them by the fed, then they realize bankruptcy is imminent so they give themselves awards and bonuses just prior to filing, then the technology ends up in the hands of county X anyway and America is millions of $$$$ poorer.

 

Curious about the Consumer angle on this, since I use A123 packs for my RC receivers in my planes.
NoBS Batteries A123 Rx Turbine and Ignition Packs

Same? or not?

 

China has a lot of failed companies that are government funded too, many more than we have here. We just don't hear much about them.

 

Well, probably so but, I don't care about them because I'm not a "forced" investor in those companies.