An A123 Systems Postscript

| November 1, 2012 | 13 Comments

It looks like A123 Systems, which recently went belly-up after burning through $129 million in Federal loan guarantees, wasn’t totally useless after all.  Apparently they did create a few jobs while the money lasted.

By the most generous count possible (combining all reports over the life of the company), they created at most 408 new jobs with that Federal money.  That averages out to over $316k in taxpayer money spent per job created.

Even the Federal government itself does better than that.

Category: Economy

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  1. UpNorth says:

    But, but, but, clean energy is the wave of the future. President Present said so. I guess we’re not supposed to care how much it costs to create those jobs, it’s only our money, right?
    $316K for a job? Paying people to show up and play board games, or do community service? Hey, it’s “a good idea”, who cares how much they spend.

  2. Hondo says:

    UpNorth: to be fair, the folks playing board games and community service wasn’t A123 Systems. That was LG Chem. They actually managed to produce something useful, and haven’t closed their doors or gone belly-up. Yet.

    Hey, I’m all for clean, renewable energy. But any source of energy that isn’t economically viable in the free market w/o huge public subsidies isn’t really an energy source – it’s a research project.

  3. Veritas Omnia Vincit says:

    Sadly, this points out a key discrepancy in government versus private sector…if our company took in 316k per employee we would have so much capital after a year we would be debt free. Of course when you print the money the amount is irrelevant to the politicians, if not the taxpayers who suffer through the devaluation and inflation.

  4. Hondo says:

    VOV: The general rule of thumb that Federal organizations used to use in determining annual employee cost for their employees was roughly 133% of salary. That includes the full cost of employing the individual: OASDI, Medicare, employee benefits, retirement account contributions, etc . . . .

    Here’s a few representative examples. Since Federal civilian pay other than for executives now varies by region, they’re based on quick and dirty “eyeball averages” of the national pay scales. Raw data can be found here:

    http://www.opm.gov/oca/12tables/txt/gstbls.txt
    http://www.opm.gov/oca/12tables/html/ex.asp

    A Senior Executive in the Federal service makes no more than a bit under $200,000 per year (that’s for level I of the Executive Schedule – Cabinet Officers; other Federal executives are capped at either Level II or III). Than means these rather high-level folks have an annual payroll cost of less than $267,000.

    A mid-seniority GS15 (highest GS grade) makes around $135,000, and hence has a payroll cost somewhere around $180,000. These are senior experts/senior managers.

    A mid-seniority GS13 makes around $100,000, hence costs around $133,000 annually. These are typically highly qualified and/or relatively senior professionals or junior/mid managers.

    A mid-seniority GS11 makes around $70,000, hence costs around $88,000 annually. These are typically junior/journeyman professionals.

    A mid-seniority GS9 makes about $60,000, hence costs around $80,000 annually. These are equivalent to entry-level professionals.

    A mid-seniority GS5 makes around $40,000, hence costs around $53,300 annually. These are generally clerical or administrative jobs which often top out for promotion potential at GS7 (maybe $50k per year average salary).

    Bottom line: A123 systems was spending more per year in public money to create each of their jobs than the Federal government spends on a Cabinet Secretary’s salary and benefits.

  5. NHSparky says:

    Gee, thanks Hondo. If I wasn’t banging my head into the desk before over the waste, fraud, and abuse, I sure as hell am now.

    Oh, and as far as “green” technologies, anyone ever ask these folks what kind of fun stuff is used in those batteries, solar cells, etc? How many birds are killed by those wind turbines? All for sources of power with availability of somewhere around 25 percent (compare with nuclear average availability of around 95 percent)?

  6. Hack Stone says:

    Okay, time for a rhetorical question, but figuring how many companies this administration has provided taxpayer funded backing, is there at least one green company that is making a product that consumers are actually buying/utilizng?

    As an aside, I love when the left complains about Republican corporate welfare, yet they don’t see the irony what Obama is doing with his green energy program.

  7. OWB says:

    Hack, would some of those fancy schmancy lightbulbs count? Who cares if you go blind using them – they last a looooong time!

    Meanwhile, if you want to put up a small windmill in your own yard instead of using some other form of energy to pump water from your well – good luck with that in many places.

  8. NHSparky says:

    Hack–as I mentioned in another thread, it gets much, much worse than the Solyndras and A123s of the world.

    Consider the amount of tax breaks both from the feds and individual states utilities currently receive for building these high-cost, not-so-reliable “green” technologies. I don’t have total figures in front of me, but the larger utilities such as Southern California Edison, PG&E, NextEra Energy, etc., are pulling in BILLIONS in tax breaks by building these wind/solar farms. Some of them are nice, but these sources are NEVER going to become what are known as “baseline generation” like coal and nuclear.

    They simply don’t generate enough and aren’t reliable enough. But we’re paying for them. A LOT.

  9. Hack Stone says:

    They are erecting a new building down at Quantico, and the company put up the building is mandated to have a solar panel farm to power their trailers that they are using as offcies. The site manager told me that it would probably take twenty years for them to break even on energy costs for what it cost to install the. All this for two trailers that will only be there for three months. Our tax dolars at work.

  10. UpNorth says:

    The “alternate energy” idiots are trying to push a mandated 25% use of alternate energy on us this election in Michigan. As in, locked in to the state constitution. Because Michigan is basically grey skies and a little wind starting about now until April, and that’s so conducive to wind and solar. Hell, my solar-powered driveway lights shut off about an hour ago, because they don’t get enough sun to fully charge the batteries this time of year.
    Not to mention the 4x higher cost to generate energy by solar vs coal, oil or natural gas.

  11. UpNorth says:

    Hondo, LG has only produced test batteries so far, apparently there aren’t enough Volts to get them to produce one production battery.
    I know, I was just tossing LG Chem into the mix, as it’s just another “green energy” boondoggle.

  12. Hondo says:

    UpNorth: understood that LG Chem has only produced a test run of batteries. However, that did prove (1) the design and production process is sound (unlike Solyndra) and (2) the resulting process actually produces a working product (unlike A123 systems).

    In short, they built a working factory that actually produced a useful product. Unfortunately, their projected market disappeared about the same time their factory was coming on-line. They at least had the good sense to not produce a stockpile of stuff for which their market disappeared.

  13. UpNorth says:

    True, Hondo. They probably picked up a copy of Motor Trend, and said, uh, oh. Maybe today isn’t a good day to finally open the production line.
    Hey, maybe O can get the government to buy up the Volts and increase production? Nah, that’s been tried, still no demand for the Volt, so, no batteries.

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