State Paid Company To Create Michigan Jobs — Or Move Them Elsewhere

In December 2019, the Michigan agency in charge of granting selective subsidies to some corporations sent an annual report to legislators about electric car battery makers getting state benefits through a program called the Michigan Economic Growth Authority.

One of the firms was called A123 Systems Inc. The agency stated, “By agreement, the company was to create 300 jobs no later than December 31, 2016; as of September 30, 2012, 415 jobs were created and verified through the annual certificate application process.”

But that wasn’t the whole story, as A123 Systems explained in its own annual filing with the U.S. Securities and Exchange Commission for 2011.

Corporate subsidy agreements with the state often require payments from the company (“clawbacks”) if it takes money for creating jobs but doesn’t meet specific requirements, including keeping those jobs in Michigan. But this deal let A123 Systems keep the benefits even if it relocated almost half the jobs out of Michigan within three years of collecting its tax credit.

This meant that the MEDC agreed to give the company taxpayer dollars for jobs that could have been shipped out-of-state.

A123 Systems filed for bankruptcy in October 2012.

In the SEC report A123 Systems stated, “We experienced net losses of $85.8 million, $152.6 million and $257.7 million for the years ended December 31, 2009, 2010 and 2011, respectively.” The firm’s assets were eventually bought by the Chinese company Wanxiang Group.