Greening the Rustbelt

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Simplistically speaking, someone, somewhere might just call it “Corporate Welfare” (or worse), but a couple of smaller renewable energy players are planning something really big in the State of Michigan

Look up...Look waaaayyyyyy up!

Look up...Look waaaayyyyyy up!

The central hub to these plans would be a sprawling 320 acre facility in Wixom Michigan where the Ford Motor Company has held silent watch over its shuttered auto plant since the huge facility was shut down in 2007. Now in 2009, two renewable energy players have stepped up with a bold plan to change the state of affairs in Michigan.

Xtreme Power of Kyle, TX is a 5 year old company employing 90 people that provides solid-state power management and storage systems, which would dovetail very nicely with it’s larger partner in this grande venture. Clairvoyant Energy of Santa Barbara, CA is the American presence for a Spanish solar panel company that has already deployed a 12-Megawatt installation on top of a General Motors plant in Zaragoza, Spain, and expects to generate big change from the derelict infrastructure in Wixom

Xtreme expects to directly create some 2,500 jobs, with 1,500 of these being either right in Wixom, or within a 10 mile radius. An impressive topspin is added to this proposed venture with 10,000 additional supplier jobs supposedly being created – under their best projections of course. Anyone familiar with UAW negotiation tactics and PR strategy might be able to determine (and share with us) how such “spin-off” job figures are actually derived, because clear sources for such things just never seem to be credited, much less readily available in support of such claims. I presume this figure includes the extra morning drive-through attendants at the local McDonalds, or something equally distended.

From it’s own side of the venture, Clairvoyant expects to run one solar panel manufacturing line initially to employ 300 people, with projections to operate 3 more lines eventually. We are left to presume that they ultimately expect to employ 1200 people, but I’ve not found any sources at this early stage of the proceedings.

You see both companies have been fairly reserved in the dealings with the Press thus far, since they are both seeking State and Federal loan guarantees and tax incentives to move ahead with the project. When the timing is right however, there would be several prominent politicians involved who’d certainly like to (at least) share in the enormous PR value, if not the actual economic impact associated with the very first venture to transform a mothballed auto plant into a new Green manufacturer. Of course, brandishing the bragging rights to being the first political leader to get ex-autoworkers in the “rust belt” back to work in the new jobs of a budding Green economy, is made even more pointed by the piercing irony that the Wixom Ford plant had previously been rolling out the legendarily luxurious, gas-guzzling Lincoln Town Car.

How does this line get re-tooled now ?

How does this line get re-tooled now ?

Ford Motor Executive Chairman Bill Ford Jr., who has long pushed the Dearborn-based automaker to take a leading role in sustainable vehicle development, would surely maximise the value of this venture as well. As this news started to spread on the day that State hearings and deliberations were held (Aug25/09), The Detroit Free Press states that Bill Ford Jr. was unavailable for interviews, but Ford representatives sent e-mailed statements about the proposed project to their offices. Ford’s statement included the following.

“Ford has been working closely for months with key partners to transform the closed Wixom Assembly Plant into a renewable energy park that can have a major positive impact in the state of Michigan, its economy and its employment. While key steps remain to make this a reality, we are encouraged by the progress on a project that’s very much in line with Ford’s commitment to sustainability. We look forward to sharing more details of this exciting project soon,”

The Associated Press (AP) said that “An Xtreme spokeswoman confirms the company’s interest, but isn’t discussing details. A message was left with Clairvoyant.” AP also said in their article that “Officials” spoke on condition of anonymity because details aren’t being made public until legislative hearings Wednesday. So it seems that there are some pretty strict gag orders in effect while proceedings are underway, which should not be surprising since there is about 750 million dollars hanging in the balance to get this deal up off the ground for these 2 (relatively small) renewable energy players
In fact the two principal players in this gambit expect to use only half of the 320 acres (or 4.7 million sq.ft.) facility once the projected start date arrives in 2011, and hope to transform the entire site into Green Energy Industrial Park as a model for sustainable Green Industry, with however many other (undisclosed) Green Energy associations and prospective businesses coming in on the deal, and expected to lease the remaining 50% vacant space in this proposed “Energy Park”.

The AP also said that “Xtreme Power, and Clairvoyant Energy, are looking to buy the plant if state tax incentives and federal loans are approved” by the mid-September deadline for matching Federal grants. So they are obviously pressing for passage at the State level, based on looming Federal program deadlines. Not an unusual pressure tactic in business and political circles, especially where large scale changes are required.

In fact, there seem to be some huge political shifts in motion to enable this project in a State with a notoriously high unemployment rate, and a legacy of (seemingly outdated) taxation policies designed to extract maximum value from the once prosperous Auto Giants. Sen. Jason Allen (R-MI), the committee’s chairman, said he expects a vote on the tax credits by the Michigan Business Tax Senate Finance Committee which is expected on August 26, in order to extend different tax credits for the companies under the Michigan Economic Growth Authority(which were exhausted under the current plan), and also raising a cap on state tax credits for job creation that Gov. Jennifer Granholm has said would be needed for the project. Notably, the Governor got a big win when Michigan projects snagged more than half of the $2.4 billion in federal grants awarded Aug. 5 for battery research and electric vehicle development!

The state Senate Commerce Committee also heard testimony that the proposed site would would also be declared a “renaissance zone”, allowing for abatement of some property taxes, so there is no denying how eager Michigan is to revamp it’s tax structure to accommodate such new growth.
Liz Boyd, Governor Granholm’s spokeswoman, wrote the Detroit Free Press stating:

“The Wixom project has the potential to make Michigan a national destination for renewable energy products, and that falls right in line with Gov. Granholm’s effort to create jobs by transforming Michigan into the center of the nation’s green economy.”

So. The simplified upshot of this is that the project involves a $725-million initial investment that would produce 4,300 direct jobs. Michigan “officials” say Xtreme could hire up to 2,500 workers between late 2011 and 2014 and generate another 10,000 supplier-related jobs in the area. It’s also worth noting that Xtreme is no stranger to securing Public funding as it received a $2 million Emerging Technology Fund grant from the State of Texas in 2007 to develop its technology.

Pike Powers, an Austin TX based lawyer who had worked with the company, was quoted in TheStatesman.com saying that Texas officials wanted the company to expand in the state, but said Texas could not compete with the size of the Michigan incentives offer. Powers estimated that Michigan’s incentives to the company are worth well over $200 million. In addition, the state will help the company to seek another $500 million in loan guarantees.
” The incentives Michigan offered them are staggering,” said Powers, who has worked on high-tech recruiting projects in Austin for the past three decades. “The bottom line is that Texas competed hard, but how can you compete against that much money being poured in to save Michigan.” Powers also assured that the Kyle company (Xtreme) had fulfilled the commitments it made to the State of Texas when it received its Emerging Technology Fund grant. That stamp of credibility alone should be enough to lead the way into a new Green economy shouldn’t it?

So here we have two relatively small operations looking to take on ownership a full-scale automotive industrial site to build a better tomorrow for Michigan and Consumers everywhere, using solar and energy management technology from today. As yet, there’s little official news or even anecdotal info available on where they see their respective industries going as a result of scaled up production, or what types of synergies they expect to find with other Green partners in this proposed Energy Park. We can however be assured that they are certainly bold enough to venture into the Governmental process in order to shift the tides in their favour on this very current, complex, and possibly contentious subject. As of August 27th, the day after deliberations, none of the principal players have posted any news releases, or alluded to any results or even forward looking statements on this very intriguing subject within the news services, or on their respective sites. However the Detroit Free Press reports that the tax credits for the Wixom deal have been extended and approved, and include quotes from representatives from both companies involved.

Putting aside the prospects of corporate opportunism for a moment, perhaps this is also a bold PR move by an incumbent Governor, who’s simply gotten hooked up with another rather run-of-the-mill solar panel manufacturer (with ties to GM), and their prospective energy storage partner in order to build another battery supply plant in Michigan, alongside a popular solar energy player? For as good as the “optics” look on a plan like this, I’m sure that alot of people (tax-payers, and otherwise) are hoping for much more actual and progressive substance to materialize than what little appears to be actually present thus far.



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