Column

Starkman: Electric Vehicles and the Exploitation of Michigan Taxpayers

February 23, 2023, 4:08 PM

The writer, a Los Angeles freelancer and former Detroit News business reporter, blogs at Starkman Approved. This column first appeared on his blog. 

By Eric Starkman

In 1987, then Michigan Attorney General Frank Kelley held a news conference to disclose his office had charged two individuals who pulled off what he said was the biggest mortgage scam in the state’s history. The pair were accused of defrauding 1,600 investors of about $47 million by selling them high risk mortgages with way above market interest rates. There was more demand than supply, so the scamsters assigned multiple holders to the same mortgage.

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Former Attorney General Frank Kelley

The Ponzi scheme collapsed.

I was new to Michigan, and I expected that Kelley would express sympathy for the mortgage victims and assure them justice would be promptly served. Much to my surprise, Kelley chastised the mortgage victims for their gullibility.

“If something sounds too good to be true, it probably is,” Kelley said.

Michiganders would be wise to consider Kelley’s counsel in wake of Gov. Gretchen Whitmer’s announcement last week that $1 billion in incentives will be given to Ford Motor Co. to build an electric battery plant on which it will rely on a communist China-based company to provide the technology to operate.

“It’s thrilling, it’s thrilling,” Whitmer told reporters following a Ford event. “I can’t imagine if this announcement was happening in another state how we’d all be feeling right now.”

I’m confident in saying no other state would make such an announcement.

Ford said it will invest $3.5 billion to construct the battery plant, called “Blue Oval Park Michigan.” Ford pledged the plant will employ 2,500 people with pay ranging from $20 to $50 an hour. That means Michigan is giving Ford $400,000 in incentives for every job Ford promised to create.

Ford’s newfound love for Michigan made me suspicious, given that in the fall of 2021 the company announced with great fanfare that it would invest $11.4 billion to build a mega EV campus in Tennessee and two battery plants in Kentucky. Ford builds its electric Mustang in Mexico, and the company last year opened a $260 million state-of-the-art office facility in that country, where increasingly the design and engineering of its vehicles are handled. At least half of Ford’s workforce is located outside the U.S.

Ford in 2021 said it would invest more than $5 billion to build “Blue Oval City” in Tennessee and promised to create 6,000 jobs. Despite the massive investment, Tennessee only coughed up $884 million in incentives, meaning it only gave Ford $147,333 for every job the company promised to create.

If Ford doesn’t make good on its job promises, Tennessee can claw some of the incentive money back. Perhaps Whitmer had the good sense to make the same provision, but she made no mention of it.

Notably, the Tennessee’s legislature spent three days debating Ford’s incentives, while it’s unclear whether Michigan’s legislature gave much review to Ford’s battery plant incentive package. Michigan’s legislature has been known to pass critical legislation at midnight without much debate and scrutiny. (See Michigan Democracy Dies at Midnight at the bottom of this story.)


Gov. Glenn Youngkin

It’s known Ford’s preference was to build its battery plant in Virginia, but Gov. Glenn Youngkin told the company to take its business elsewhere, ostensibly because he was concerned about Ford relying on a China-based vendor for critical battery technology. The entrenched media said Youngkin was merely posturing to appeal to Republicans in preparation for an expected run for the presidency, a distraction that provided great cover for Whitmer.

Referring to the $1 billion in incentives Whitmer gave Ford, Virginia House Majority Leader  Terry Kilgore told the Virginia legislature the Commonwealth would never have agreed to such sweetheart terms.

“We would not have been successful in that bidding war had it come to that,” Kilgore said.

One might expect Michiganders to be jaded about grandiose electric battery and other EV projects they’ve repeatedly been promised but have yet to experience, particularly those who remember all the pie-in-the-sky green initiatives former governor Jennifer Granholm pursued during her two terms as governor.

Michigan Capital Confidential

Mackinac Center for Public Policy compiled a list of Granholm’s green energy boondoggles and some of them were doozies. Among them was the $141 million in tax credits and subsidies Michigan gave A123 Systems, which opened a lithium-ion battery manufacturing plant outside Detroit in 2010 but ran into trouble two years later after it was revealed the batteries it manufactured were defective and it would cost $55 million to replace them.

When A123 Systems opened its battery plant, Granholm declared it made Michigan the “advanced battery capital of North America.” A123 Systems also received $249 million in a federal stimulus grant, with President Obama declaring the company’s Michigan facility the “first American factory to start high-volume production of advanced vehicle batteries.”

According to Mackinac Center, A123 Systems wound up in bankruptcy and pulled out of Michigan.

Another Granholm embarrassment was LG Chem, an electric battery plant in Holland, MI, that received $125 million in Michigan funding on top of considerably more federal funding. Granholm proudly declared the plant would help make Michigan “the world capital for advanced batteries.”

LG Chem was forced to return some of its government funds after a federal investigation revealed that paid workers were watching movies and playing games because delays in the production and demand for electric vehicles, namely GM’s Chevrolet Volt, did not meet initial expectations. The Holland battery plant is still in operation, and Michigan last year announced millions more in incentives to expand the operation.

MLive

Yet another Granholm brainchild was United Solar Ovonics, a manufacturer of solar panels, which received $40 million worth of tax credits in exchange for a promise to create 5,700 jobs. The company and an affiliate went bankrupt.

I could go on, but I’d urge you to review the Mackinac Center’s compilation of failed Granholm EV projects, which can be found here. Despite her nearly unblemished record of green energy failures, President Biden named Granholm his Secretary of Energy.

Michigan residents have provided billions in subsidies for Ford’s and GM’s Michigan manufacturing plants but promised job creation hasn’t always materialized.  According to Mackinac Center, a 2013 analysis by the state’s Auditor General found only 19% of the jobs projected by Michigan’s economic development corporation materialized.

Understandably, residents of Marshall Township where Ford plans to build its electric battery factory expressed concerns about the environmental impact on the region.

“Before we rush to embrace what some refer to as progress, first pause to consider what will be lost when land that has produced literally tons of corn and beans to feed a hungry nation is covered in concrete. It cannot be reclaimed,” the Detroit News quoted Fredonia Township resident Linda Smoot saying at a recent town hall meeting. “With the entrance of the Ford company, more farm land will inevitably be lost to housing and strip malls.”

Stephanie Fries, Ford’s regional manager of government relations, assured the meeting the environmental concerns were unfounded.

“Ford takes our responsibility to be a good neighbor seriously,” she said. “We look forward to learning more about what’s important to the community and becoming part of the fabric of the region.”

The folks in Marshall might want to review a lawsuit New Jersey’s attorney general filed last June against Ford for allegedly dumping waste on the homelands of the Ramapough Lenape Nation, a Native American tribe recognized by the state. The lawsuit accused the company of disposing thousands of tons of toxic paint sludge and other pollutants on the site of a former iron mine in northern New Jersey in the 1960s and 70s, then donating or selling the land without disclosing the contamination. As a result, tribal members say they have experienced cancer, birth defects, and other negative health effects. 

Ford last year agreed to pay $7.8 million to settle EPA allegations that it violated the Clean Air Act by illegally installing a device that defeated the emission control system in 60,000 1997 Ford Econoline vans. The defeat device was a sophisticated electronic control strategy designed to enhance fuel economy. According to EPA, the system led to an increase of smog-causing nitrogen oxide emissions well beyond the limits of the CAA emission standards when the vans were driven at highway speeds. EPA estimated the settlement prevented thousands of tons of nitrogen oxide from being released into the atmosphere.

Owners of 2020-23 Ford Escapes and 2021 Bronco Sports with 1.5-liter engines last week filed a class-action lawsuit against Ford for allegedly violating consumer protection laws by selling cars equipped with faulty fuel injectors that can cause spontaneous fires and subsequently neglecting to implement an appropriate fix. The lawsuit said the fires pose “serious environmental and safety hazards.”

I wouldn’t want any Ford manufacturing facility in my backyard. Moreover, if this Detroit News story about a reporter’s electric battery range and charging experiences gets widespread readership in Michigan, I wouldn’t bet on widespread adoption of EVs in Whitmer’s empire, despite all the money that she and her predecessors have given Ford and GM to make the conversion.

Reach the writer at eric@starkmanapproved.com. Confidentiality is assured.


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