Fisher CoachWorks was a Michigan hybrid vehicle “green” start-up company that the state hoped to claim as one of the “success stories” for the state’s premier economic development program. Former Gov. Jennifer Granholm championed the company in a September 2009 news release, saying it was part of Michigan’s “new energy” economy. Some estimates showed that it would create 530-plus jobs.
Instead, the Michigan Economic Development Corporation lost taxpayers $1.6 million on the deal, but not until after an organization-wide effort to save the company.
Michigan Capitol Confidential put in a Freedom of Information Act request to the state for documents related to Fisher CoachWorks, a “green” bus company that went out of business in 2010 after two years of spending money but not producing a single bus.
The hundreds of documents tell the story of the government advantages that can be bestowed upon a company after it has been picked as a “winner” by the state’s politicians and economic central planners — and even after the business model becomes clearly perilous. MEDC officials reached out to local, state and federal officials in hopes of securing money for Fisher CoachWorks, yet the documents show that this wasn’t enough to save the hybrid bus company. In the final months of its life, it was relying on government after private investors had backed out.
One top MEDC official reached out to a private venture capital firm in California on behalf of Fisher CoachWorks. Ned Staebler, then vice president at the MEDC, wrote in a March 2, 2010, email that he was setting up a meeting between Fisher CoachWorks and Khosla Ventures, a venture capital firm in California.
“Could you please send me one paragraph on Fisher I could use as an intro. i.e. Fisher is a great company making huge strides in the bus world with customers and traction, yada yada,” Staebler wrote in an email to MEDC staff.
However, documents show Fisher CoachWorks was struggling well before Staebler tried to connect it with Khosla Ventures.
Six months after the governor publicly praised Fisher, a Feb. 15, 2010, MEDC memo stated that Fisher CoachWorks had failed to meet two performance “milestones” as part of its $2.6 million total loan agreement with the state. The memo asserted that if the MEDC didn’t give Fisher CoachWorks the $1 million remaining from the initial loan deal and then allow it to change its benchmarks, then “the company will most probably be dissolved.”
A later email clarifies that the MEDC denied Fisher CoachWorks’ request to alter its failed milestones and also denied the request for the final $1 million loan.
Staebler, who now works for Wayne State University, said in an email that he was just doing what he did for “countless” other businesses.
“What I would say is that in the midst of the financial crisis, Fisher like many other Michigan businesses was struggling to find financing to operate its business. Like I did for countless other Michigan businesses during my tenure at MEDC, I offered to make an introduction to a potential investor. Ultimately, Fisher was unsuccessful in raising additional capital and went out of business,” Staebler wrote.
On March 15, 2010, Fisher sent an email to the MEDC notifying it of plans to shut down and lay off all of their employees. The announcement that the company was going down set off a flurry of MEDC activity to try to find the company some money.
Leslie Smith, then MEDC’s director of business acceleration, wrote in a March 29, 2010, email, “I’m pulling together all of the forces of MEDC” to help find a way to salvage Fisher CoachWorks.
According to one staff email dated April 9, 2010, the MEDC tried to convince the Flint Mass Transit Authority to give $2.2 million of its federal stimulus “development” money to Fisher CoachWorks. Flint MTA had an agreement with Fisher CoachWorks to buy two electric buses with the money. But the transit authority rejected the MEDC’s proposal. (After losing its source for two $1.1 million hybrid buses, Flint’s MTA is now in the market for a pair of $2.5 million hydrogen-powered “green” buses from another company).
The MEDC also contacted the U.S. Department of Energy, looking for federal money for Fisher. According to an April 14, 2010, email, that option was closed off when the DOE told the state that “they do not invest directly into companies.”
The MEDC was also trying to “slant” media stories about Fisher CoachWorks’ financial problems.
After the company had missed its performance milestones and had informed the MEDC that it would lay off staff, a Crain’s Detroit Business reporter contacted the MEDC asking questions about the imperiled operation.
Smith wrote in a March 26, 2010, internal email to another staffer: “I suspect your Crain’s guy will back-off for a while after the meeting I had today in which I specifically asked them to cool their jets on the media play while we try to work out an amicable solution to their problems.”
She followed that email with another one minute later that read: “You’ll see from my message to Bridget (Beckmann, MEDC spokeswoman) how I’m trying to slant this for media play.”
Smith now works as general manager for Wayne State University’s TechTown.
In the end, the MEDC didn’t prevail. On March 3, 2011, the MEDC received a check for $29,000 for all of Fisher CoachWorks’ remaining assets.
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.