After Obama's endorsement, yet another energy company goes bust
27 Jan, 2012 19:53
A note to American energy companies: if you want any future whatsoever, avoid Barack Obama like the plague.
President Obama spoke highly of the Ener1 battery company during Tuesday’s State of the Union address, noting that federal investments in the private company have made it one of the leading manufacturers of its kind. Indeed, a bipartisan-approved grant from the US Energy Department did guarantee the company with $118 million in funding and they have since helped, as Obama put it, make America “the world leading manufacturer of high-tech batteries.” Now only two days after he had those glowing words for the company, the battery builders have run out of power and filed for bankruptcy. According to papers made available on Friday, Ener1 has $73.9 million in assets but a debt of $90.5 million as of December 31. They filed Chapter 11 papers in a New York City branch of the US Bankruptcy Court on Thursday.In the filing, interim Chief Executive Officer Alex Sorokinsays that competition in east Asia, “which generally have a lower cost manufacturing base,” had caused Ener1 to bite the bullet.The company’s EnerDel division has received around $55 million of the federal grant so far but wasn't able to make ends meet even with the support from Washington.If this all sounds strangely familiar, don’t worry — you’re not crazy.Last year another private energy company, California-based solar-panel makers Solyndra, filed for bankruptcy. That move, which has since become one of many scars on the Obama administration, came despite the president touting the company during 2010’s State of the Union. "You can see the results of last year's investments in clean energy,” Obama said in his 2010 address. He then referenced Solyndra, calling it a business “that will put a thousand people to work making solar panels.”Solyndra would later receive a massive government loan, but even after taking in millions of US funds, was forced to call it quits. By late 2011, the company stood to lose all 1,100 employees.Obama has been largely critiqued for supporting Solyndra only for them to go under months later. After they filed for Chapter 11, an investigation was launched to see what role the White House had with Solyndra executives that could have caused the administration to approve the dubious loan, which was valued at $535 million. In that case, the company also blamed international competition, saying in a statement from September, “Solyndra could not achieve full-scale operations rapidly enough to compete in the near term with the resources of larger foreign manufacturers.”Then there was Beacon Power. The Department of Energy approved a $43 million loan so that they could build a flywheel power plant in New York State during 2009, but three months they filed Chapter 11 as well. Beacon was extended the grant so that they could build a plant in Stephentown, NY, but agreed in November that they would sell the facility in order to pay back the Energy Department.Solyndra, who used all but $8 million of its federal funding, also owed private investors around $70 million.While Republicans have largely been the ones to attack Obama over his role with Solyndra, the Department of Energy offering to Ener1 was one that was agreed on by both sides of the aisle. Regardless, it isn’t positive news for America, its president, the manufacturing sector or the economy. Stocks in the company fell by 73 percent on Thursday.“Unfortunately, you can now add Ener1 to the growing list of failed companies that went belly up after hundreds of millions of dollars in administration backing,” Florida Republican Representative Cliff Stearns says of this week’s news. Congressman Stearns had previously called the Solyndra contract a “casualty of the Obama administration’s failed stimulus.”