South Korean battery supplier LG Chem has confirmed that its new battery plant in Holland, Michigan remains idled. The company started construction on the facility back in 2010, following the receipt of US$150m in government stimulus aid. The plant was intended to supply batteries for GM’s Chevrolet Volt extended range hybrid, but has not yet produced any. Sales of GM’s Volt have fallen well below expectations, and the OEM has scaled back production forecasts as a result.
Local media, citing a company statement, report that LG Chem is “extending and expanding” furloughs for its 200 workers. The rolling furloughs started 30 April and were expanded in late August. LG Chem still intends to use the plant, but only “when the market demand justifies production.” It does not provide an estimate of when this may be.
“LG Chem has the strongest motivation to operate the plant, because it has invested more than 50%, over $150m, of the cost to construct the facility, so it will utilize the plant when the time is right,” the company statement reads.
In light of the government aid and the failure to begin operations, the company has been criticized for wasting taxpayer money. In response to such criticisms, LG Chem says that it is not using federal money to pay for idle workers and will review any misspent money for potential refunds to the government.
LG Chem has emphasised in its statement: “The company will not use (Department of Energy) grant money to pay for any idle time. It will review prior billings, and if any has been used, then that money will be refunded to the DOE.”
LG Chem isn’t the only battery maker under pressure just now. Massachusetts-based A123 Systems recently filed for bankruptcy, listing assets of US$459.8m and debt of US$376m as of 31 August.
