Michigan electric vehicle maker to close two locations after pocketing $900,000 subsidy

Receiving $900,000 of taxpayer money won’t stop a Michigan electric vehicle maker from shuttering two locations and taking 188 jobs out of state.

Auburn Hills-based automotive supplier BorgWarner will close two plants of its subsidiary Akasol Inc., in Hazel Park and Warren. Layoffs will run from April 14 through July, according to a notice issued to the state under the federal WARN Act.

The factories test products for electric vehicles, including battery modules and packs, direct current fast charging equipment, and microgrid control and operations, according to a 2023 news release.

In 2019, the Michigan Strategic Fund awarded the company $2.24 million in taxpayer money for its Hazel Park plant, with the expectation it would create 224 jobs. The money would be paid out over five years as the company met milestones for creating jobs.

But the state and the company amended the deal in 2022. Instead of being promised $2.4 million over five years, the company received $900,000, according to a Michigan Strategic Fund annual report. The company created 66 jobs, according to the MSF report.

BorgWarner will close the plants as it pursues growth, the company told Michigan Capitol Confidential.

“Consistent with those efforts, we have decided to shift all battery production from our Hazel Park and Warren, Michigan, locations to our existing plant in Seneca, South Carolina,” the company said in an email. “We believe in our battery product portfolio and the opportunity for continued growth as customers increasingly require innovative eMobility solutions."

Michigan officials have given various companies billions in taxpayer money in return for jobs, but over a two-decade period, only one of every 11 jobs promised actually got created, according to a new study by the Mackinac Center for Public Policy. The study reviewed front-page news stories about government grants to private businesses from 2000 to 2020, revealing that these deals rarely meet job-creation goals.

When job deals made by the Michigan Economic Development Corporation fail, the agency redefines success and declares victory, John Mozena, president of the Center for Economic Accountability, told CapCon in an email.

“The MEDC is supposed to be guarding the interests of Michigan’s taxpayers and holding companies accountable, but they act like their real allegiance is to the companies that are getting the free money,” Mozena wrote. “That’s not surprising, given that the MEDC’s board is made up of people who benefit from these deals rather than anyone who might be a skeptic or whistleblower.”

Michigan can’t subsidize the auto industry to prosperity, according to Mozena.

“Whether it’s traditional cars and trucks, electric vehicles, so-called ‘mobility’ or whatever’s next, Michigan needs to tell the industry to stand on its own feet, pay for its own factories and stop expecting Michigan’s taxpayers to artificially inflate their balance sheets,” he wrote.

In 2023, Michigan lawmakers gave select private companies $4.6 billion in subsidies.

“This deal is another reason lawmakers, taxpayers and voters should exercise skepticism about corporate handouts,” Michael LaFaive, the Mackinac Center’s senior director of fiscal policy, told CapCon in an email.

“State government confiscates taxpayer money to subsidize a company it thinks is a real winner,” LaFaive wrote. “Then it issues a celebratory and self-aggrandizing press release announcing alleged jobs that will be created. The announcement is dutifully reported if not cheered in the press, only to see that big corporate winner become a big loser in the marketplace.”

The Michigan Economic Development Corporation did not respond to a request for comment.