News Story

Electric Vehicle Battery Subsidy Failures Evident Early On

Former Gov. Granholm defends her policies in Detroit Free Press article

Last week, the Detroit Free Press concluded that the massive giveaway of state tax dollars to electric vehicle battery makers failed to generate the thousands of jobs that were promised.

In particular, a March 16 article noted that, "today, Michigan has only a few hundred battery workers in four plants — despite $861 million in Obama administration stimulus grants and $543 million in Michigan tax credits awarded by former Gov. Jennifer Granholm’s administration in 2009."

Readers of Michigan Capitol Confidential are not surprised by this news given that the failures of the electric vehicle battery industry in Michigan have been chronicled by this news service for years. Yet, it is good news for taxpayers that other media outlets now are paying attention.

Former Gov. Granholm described the battery industry as a "new Michigan economy" where the state would become the center for advanced battery production. 

It didn't happen.

The state and federal government awarded more than $1.4 billion in tax credits and direct subsidies to four companies — A123 Systems, Dow Kokam, Johnson Controls and L.G. Chem. Nearly $600 million in federal money alone was spent. Three of the companies went bankrupt and all have missed their job projections by a long shot. 

About 6,826 jobs were predicted, according to information in the Free Press article. The four companies have about 575 total employees today, less than a tenth of what was projected.

James Hohman, assistant director of fiscal policy at the Mackinac Center for Public Policy, was talking about the problems with the state's plan early on. In April 2009 he was quoted in a MIRS story after the Michigan Economic Development Corp. made estimates that the battery industry would create 62,000 jobs.

"Considering that there are only 26,200 battery manufacturing jobs in the entire nation, the MEDC appears to be living in electric powered fantasy world," Hohman said nearly five years ago.

The Bureau of Labor statistic revised its 2009 number to 24,000 battery manufacturing jobs in the U.S. There still were just 26,200 battery manufacturing jobs in the U.S. as of January 2014, the latest month for which data is available.

The Free Press reported that former Gov. Granholm still defended her policies.

"Granholm still doesn't regard Michigan's incentives for battery makers as wasted money. 'Just because the jobs haven't happened 'yet,' it doesn't mean that cracking the code to vehicle batteries was the wrong strategy,' said Granholm, who is teaching at the University of California, Berkeley," according to the Free Press story.

Jack McHugh, senior legislative analyst for the Mackinac Center, said former Gov. Granholm's stance illustrates the combination of "hubris, folly and political deceit" he says is at the core of all government attempts to pick winners and losers in what is supposed to be a free market economy. Nearly every legislative Republican also voted for the subsidies.

"This is why what Hayek called the 'fatal conceit' of government central planners is so fatal," McHugh said. "When private investors and entrepreneurs stake their own money and reputations on a speculative venture, their motive is to make money. If it fails, they have no choice but to say 'oops' and hopefully learn from the experience. In contrast, when politicians use taxpayer dollars to make such bets, they are primarily pursuing political benefits, not economic ones. That motivation greatly increases the likelihood of failure. When it occurs, it explains why the politicians (and the bureaucrats who manage these programs) are never willing to acknowledge that the adventure was a mistake."

Michigan Capitol Confidential has chronicled the failures of green energy companies. 

In November 2012, CapCon reported that Michigan was home to half of the country's largest bankrupt green energy companies

Articles also were done on the failed promises of LG Chem; the GOP reviving the subsidy program after vowing to end it; and the MEDC (the state's corporate welfare arm) removing videos of politicians promising success. 

Michigan Capitol Confidential also did dozens of stories chronicaling the collapse of A123 Systems.

In a September 2010 story, two industry experts called A123 Systems "a risky venture."

Additionally, Michigan Capitol Confidential showed how A123 Systems increased the pay of its top executives by as much as $70,000 while it was laying off employees and suffering net losses of $170 million-plus through the first three quarters of 2011.

A123 Systems filed for bankruptcy in October 2012.

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.

News Story

Non-Christians Given 'Special Consideration' In Union Teacher Contract

Ferndale Public Schools provision could violate state and federal laws

The teachers union contract in Ferndale Public Schools in Oakland County gives "special consideration" to applicants who are of "the non-Christian faith."

Michigan's Elliott-Larsen Civil Rights Act prohibits discrimination in employment and public services on the basis of religion. The state constitution says it, "shall not discriminate against, or grant preferential treatment to, any individual or group on the basis of race, sex, color, ethnicity, or national origin in the operation of public employment, public education, or public contracting." And the Federal Civil Rights Act prohibits employment discrimination based on religion.

The contract ran from 2011 to 2012 but was extended to 2017. The teachers belong to the Ferndale Education Association, a division of the Michigan Education Association.

Regarding promotion to a vacant position, it states on page 22:

Should there be two (2) or more of these applicants with equal qualifications for the position and one (1) or more of these applicants with equal qualifications is a current employee, the current employee with the greatest seniority shall be assigned. Special consideration shall be given to women and/or minority defined as: Native American, Asian American, Latino, African American and those of the non-Christian faith. However, in all appointments to vacant positions, the Board's decision shall be final.

Earlier in the contract is a "no discrimination clause" that states no employee can be discriminated against based on their religion.

Ferndale Superintendent Gary Meier, Board President Jim O'Donnell, and MEA UniServ director Troy Scott did not return several requests for comment.

"This just strikes me as so un-American that they can put in open language for people to see that they are going to be discriminating against Christians," said Richard Thompson, president of the Thomas More Law Center in Ann Arbor. "Why would they be discriminating against Christians? They are not supposed to be discriminating against people for their religious beliefs. It's outrageous. And I believe it's unconstitutional."

Thompson also wondered why a public school district was tracking the religious beliefs of employees.

"Now, they are going to ask people, 'Are you a Christian?' " Thompson said. "Are people going to hide their faith so they can get a promotion? There is a subtle persecution [here] of Christians."

Rana Elmir, deputy director of the American Civil Liberties Union of Michigan, said she couldn't speak to the specifics highlighted in the contract "because it comes down to how it is implemented."

"There's nothing wrong with encouraging people from diverse faiths to apply for a position. In fact, doing so recognizes that our classrooms and communities are diverse," Elmir said. "However, public schools themselves should not be in the business of promoting particular religious beliefs or religious activities over others and they should protect children from being coerced to accept religious or anti-religious beliefs."

A spokeswoman from Ferndale Public Schools, who responded after the story's original posting, said the district does not discriminate when hiring.

"The district appreciates your bringing this antiquated language to our attention. The timing is perfect since Ferndale Public Schools just completed bargaining and, with the advice of our legal counsel and approval from the district EA (union) representative, this language will be deleted from new contracts," said Shelley Yorke Rose, a spokeswoman for the district. "Unfortunately, there are no employees in the district who have been here long enough to explain the origins of the language, which we estimate to have been inserted between 1976-79.

"Please note that the district does not discriminate in hiring on the basis of religion or other related issues," she said.

A recent study from the Mackinac Center for Public Policy showed that about 60 percent of public school union contracts in Michigan had illegal provisions. Michigan Capitol Confidential has reported on some of the most egregious. For example, in 2012, Capitol Confidential reported on a teachers union contract in Bay City that had provisions allowing teachers to be drunk and on drugs several times before being fired.

(Editor's note: This story has been updated since its original posting. Ferndale Public Schools replied with a comment this afternoon.)

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.