As President Obama began his final day of prep for last night's debate, a company that makes batteries for "green" cars declared bankruptcy in Michigan after receiving $249 million in funding from the 2009 stimulus.
"This action is expected to allow the company to provide for an orderly sale of the automotive business assets and all other assets and business units," A123 Systems said in announcing the bankruptcy. Although it secured financing to continue operating in the short term, the company said there is "no assurance" that it will last.
Coming as it did on the morning of the second presidential debate, the bankruptcy filing corroborates Mitt Romney's crack at President Obama's expense during the first: "[Y]ou don't just pick the winners and losers; you pick the losers," Romney said, referring to Obama's subsidies for green companies. "This is not the kind of policy you want to have if you want to get America energy-secure."
The bad news for A123 has been building up gradually. Like Solyndra, another Obama-backed green company that declared bankruptcy, A123 sold its products at a loss -- "it loses as much as 57 cents per dollar of revenue from its sales to one customer," according to Technology Review.
Small wonder, then, that the company lost $258 million in 2011 and laid off 125 employees in Michigan, even after receiving all that taxpayer money. It also faced a $55 million lawsuit over defective car batteries. The losses got so bad that a Chinese company bought an 80 percent stake in A123 in exchange for $450 million in financing. Even that wasn't enough.
This isn't the future that Obama predicted for A123 when he and Michigan's Democratic governor, Jennifer Granholm, combined to give the company $390 million in government subsidies in 2010. "This is about the birth of an entire new industry in America -- an industry that's going to be central to the next generation of cars," Obama said when he telephoned in to a press conference at the opening of a company plant in Michigan.
Granholm gushed that "this is the start of something huge." Sen. Carl Levin, D-Mich., declared it "a huge, dramatic step that is great evidence that manufacturing is coming back in America ..." Huge indeed -- a huge waste of taxpayers' money, and a huge disaster for President Obama, coming three weeks before he stands for re-election.
Obama has only himself to blame, because he chose the policy. The lofty promise he made in his 2008 town hall debate against John McCain -- to create 5 million new green jobs -- has fallen completely flat, with only a few thousand such jobs created since. Four years into his administration, Obama has effectively proven that government cannot create new and sustainable industries by throwing billions in taxpayers' money to start-up companies.
It would serve voters well to remember this the next time politicians promise to use the government to create millions of jobs in industries that the market cannot support.