A123 Opens Lithium Ion Battery Plant in Michigan, Wants to Create Global Hub for Electric Vehicles
Big companies put on dog-and-pony shows for government officials all the time, but this one actually means something. A123Systems (NASDAQ: AONE), based in the Boston area, is officially opening a 291,000-square-foot lithium ion battery manufacturing facility in Livonia, MI, today. The plant already employs more than 300 people, and is part of a Michigan expansion that the company says will create a few thousand jobs in the state over the coming years.
It’s a big deal—for Michigan’s ecosystem, for U.S. competitiveness in manufacturing, and for A123’s business. The new plant in Livonia is the largest lithium ion automotive battery plant in North America, according to the company. It will produce lithium ion battery cells and packs, to be used in electric and hybrid-electric vehicles. The Watertown, MA-based company hopes to help transform Michigan into a global hub for the expanding market of batteries and electric vehicles.
The Livonia plant has been in the works for years, but is now a reality thanks to a $249 million grant from the U.S. Department of Energy (DOE) last year, and $125 million in refundable tax credits from Michigan’s 21st Century Jobs Fund. A123 also has a DOE loan application pending for $233 million.
For the opening ceremony, U.S. Secretary of Energy Steven Chu will be on hand, as will Michigan Governor Jennifer Granholm, Senator Carl Levin, Senator Debbie Stabenow, and other politicians. A123’s CEO, David Vieau, will be joined by most of the company’s top brass, including co-founders Yet-Ming Chiang and Bart Riley, and chairman Desh Deshpande. Big customers like China’s SAIC Motor Corp., BAE Systems, Navistar, and GM will be present too. The emcee and host will be Jason Forcier, vice president of A123’s automotive group, who is based in Michigan and is overseeing the new facility. (Forcier is known within the company as the “wheels guy.”)
Attendees will see a working factory, and see how a lithium ion battery is made, Forcier says. Unlike some of A123’s competitors in the state (like LG Chem), he adds, “This is not a groundbreaking, this is a grand opening…We’ll show the world we’re making batteries right here in the state.”
That has special significance to Forcier. While many people around the country may have learned of the economic woes of Flint, MI, through Michael Moore’s 1989 documentary, “Roger & Me,” Forcier and his family—some of them GM employees—lived through it. Forcier himself has built his career in the automotive industry, working for Lear and Bosch before joining A123 just over a year ago. His automotive and transportation division makes up 60 percent of A123’s revenues, and is the company’s biggest focus area, followed by its power-grid and consumer products.
“The battery industry is really a rejuvenation for the whole area,” he says. “This is extremely important for Michigan from an economic standpoint. The engineers and the skilled plant labor is all here. We’ve been able to tap into it…The talent in Michigan is second to none when you want to be in the auto industry.”
What’s more, Forcier says, the plant and others like it are an important step for U.S. manufacturing. “Prior to the American Recovery and Reinvestment Act, there was no battery industry to speak of in the U.S.,” he says. “Most of it came out of Korea and Japan. It’s a huge deal for the United States.”
Although some observers are opposed to government handouts, Forcier says, the plan is to do whatever it takes to make the cost of electric vehicles competitive with gas vehicles—something he thinks will happen within five years. “We’re not here to take handouts forever. It’s just to get competitive. We’re passionate about independence from foreign oil.”
A123 already has a research and development site in Ann Arbor, MI, with more than 75 employees. That facility, which chief technology officer Bart Riley oversees, came from the company’s acquisition of T/J Technologies in 2006. A123 also has a manufacturing plant in Romulus, MI, slated to open officially in the first half of 2011. That plant, which already has some employees, will produce the special coatings for A123’s batteries. (The coatings are currently made in China, where A123 built its first plant.)
So, how crucial are the new Michigan factories to A123’s business? “It’s extremely important,” Forcier says. He notes that the company was able to get the Livonia plant up and running quickly, partly because it took an existing, vacant building (which had been owned by Technicolor) and renovated it to make batteries. The accelerated timeline—A123 took possession last October and started building battery cells in July—allowed the company to take business from Navistar and Fisker Automotive. “We wouldn’t be able to take it if we had to build a new factory,” Forcier says.
In the bigger picture, automotive lithium ion batteries are projected to become a $50-100 billion market by 2020—and A123 intends to remain one of the big three players in that business. “The likelihood is that kids being born today won’t know a world where cars aren’t plugged into the wall,” Forcier says. “My three year old will think plugging a car in is completely normal.”