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Plant that got $150M in taxpayer money to make Volt batteries furloughs workers

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    July 15, 2010: President Obama gets into an electric Ford Focus as he attends the groundbreaking of a factory for Compact Power Inc. in Holland, Mich. (Reuters)

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    Batteries for the Chevy Volt are being built in LG's South Korean plant for now (GM)

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  • lgchem.jpg

    The Holland, Mich., plant, shown here in a rendering, was built with a $150 million grant from the Department of Energy.

President Obama touted it in 2010 as evidence "manufacturing jobs are coming back to the United States,” but two years later, a Michigan hybrid battery plant built with $150 million in taxpayer funds is putting workers on furlough before a single battery has been produced.

“Had it been private investors rather than government bureaucrats making the decision, there either would have been a reality check about the industry."

- Paul Chesser, National Legal and Policy Center

Workers at the Compact Power manufacturing facilities in Holland, Mich., run by LG Chem, have been placed on rotating furloughs, working only three weeks per month based on lack of demand for lithium-ion cells.

The facility, which was opened in July 2010 with a groundbreaking attended by Obama, has yet to produce a single battery for the Chevrolet Volt, the troubled electric car from General Motors. The plant's batteries also were intended to be used in Ford's electric Focus.

Production of the taxpayer-subsidized Volt has been plagued by work stoppages, and the effect has trickled down to companies and plants that build parts for it -- including the batteries.

“Considering the lack of demand for electric vehicles, despite billions of dollars from the Obama administration that were supposed to stimulate it, it’s not surprising what has happened with LG Chem. Just because a ton of money is poured into a product does not mean that people will buy it,” Paul Chesser, an associate fellow with the National Legal and Policy Center, told FoxNews.com.

The 650,000-square-foot, $300 million facility was slated to produce 15,000 batteries per year, while creating hundreds of new jobs. But to date, only 200 workers are employed at the plant by by the South Korean company. Batteries for the Chevy Volts that have been produced have been made by an LG plant in South Korea.

The factory was partly funded by a $150 million grant from the U.S. Department of Energy. LG also received sizeable tax breaks from the local government, saving nearly $50 million in property taxes over 15 years and another $2.5 million annually in business taxes. Landing the factory was hailed as a coup when shovels first hit the ground. 

“You are leading the way in showing how manufacturing jobs are coming right back here to the United States of America,” Obama told workers at the ground-breaking ceremony. “Our goal has never been to create a government program, but rather to unleash private-sector growth. And we're seeing results.”

Randy Boileau, a spokesperson for LG Chem in Holland, told FoxNews.com that battery production is expected to pick up once Volt assembly lines in Detroit resume production on Oct. 15. He said the facility has spent the past two years building infrastructure and conducting pre-production “test runs.”

“The market conditions haven’t been as favorable, but this hasn’t slowed down plans one bit,” Boileau said. “LG Chem has repeatedly said that this facility is a critical component for them globally.”

Boileau pointed out the workers who are on furloughs one week a month are eligible to collect unemployment for that week, and he said the company covers the contributions to their individual benefits during the period.

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The Volt has been plagued by low sales since it first rolled off the line three years ago. Orders have picked up for 2012 but are still well below projections.

Chesser said no amount of government subsidies can counter the practical problems posed by plug-in cars.

“Electric car batteries do not perform much better than they did 100 years ago," he said. "Research has not conquered the battery storage issue, and therefore the electric transportation ‘stimulus’ did not boost the ‘technology of the future,’ but instead a century-old technology as far as performance and capability goes.”

He added that the LG Chem plant's problems show that the unpopularity of electric cars despite heavy taxpayer subsidies has had more widespread negative effects than most realize.

“Billions of dollars were put into Volt research, and Ford received $5.9 billion in stimulus loans to retrofit plants to produce [electric vehicles]," Chesser said. "The battery companies like LG Chem that were supposed to service them have no customers to speak of. Their existence was solely based on access to taxpayer money.

“Had it been private investors rather than government bureaucrats making the decision, there either would have been a reality check about the industry, or only those who made individual decisions to invest would have lost their money, not taxpayers.”

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