More Obama stimulus wasted taxpayer money

Feds: Michigan battery firm misused $150M U.S. grant

A Michigan-based company slated to produce lithium-ion polymer batteries for electric vehicles has instead kept production overseas, has failed to meet job targets outlined in a $150 million grant from the federal government, and has been reimbursed by the government for $842,000 in wasted work time, according to a U.S. Department of Energy Special Report released Wednesday.

The DOE says Holland, Mich.-based LG Chem Michigan misused part of a $150 million in American Recovery and Reinvestment Act funds and has decided not to shift production from its plant in South Korea to Michigan. It painted a stark picture of wasted U.S. federal dollars.

"Until the shift in production takes place or some alternative use for the plant is developed, U.S. taxpayers will receive little direct benefit from a plant for which they provided up to half of the funding," the report said.

The DOE also said in its report that it reimbursed LG Chem for labor costs that did not support the purposes of the original grant. The agency said employees "spent time volunteering at local non-profit organizations, playing games and watching movies during regular working hours."

The DOE said it is likely the amount of charges for nonproductive work exceeded $1.6 million, about $842,000 of which was reimbursed.

The department said it could not calculate the exact loss to the government because LG Chem did not track labor activities "in detail."

Other goals for LG Chem's $304 million battery cell manufacturing plant in Holland have not yet been met, according to the agency.

"Based on progress to date and despite the expenditures of $142 million in Recovery Act funds, LG Chem Michigan had not yet achieved the objectives outlined in its Department-approved project plan," read the 28-page report.

Missed benchmarks include:

LG Chem has not manufactured any battery cells to be used in electric vehicles and only half of the expected number of jobs has been created. Assembly was slated to begin in 2012; the company is supposed to create more than 440 jobs and produce enough battery cells to equip 60,000 electric vehicles by the end of 2013.

LG Chem has constructed only about 60 percent of production capacity, despite the fact the DOE has administered 94 percent of the project's funds.

Production from LG Chem's South Korean facility was supposed to shift to Michigan last year under the assumption demand for electric vehicles would continue to grow. LG Chem officials told the DOE that production had not started because the demand for the Chevrolet Volt had not developed as originally anticipated. But the DOE questioned that analysis, saying that "demand for the Chevrolet Volt averaged 1,955 vehicles per month in 2012. That volume could have readily been produced by using the then built-out capacity of the Michigan plant."