Biden-backed Fisker Delaware auto plant, 2500 jobs, in doubt
Not content with over $200 million in state and federal money, Fisker may build overseas
Biden-backed Fisker Delaware auto plant, 2500 jobs, in doubt
Joseph N. DiStefano
Amid hardball negotiatons, upstart California carmaker Fisker is testing the Democrats' policy of subsidizing manufacturing jobs:
"Fisker Automotive Inc. said it is delaying production of its next-generation family sedan and may not build the vehicle in Wilmington, Del.," Detroit News reports here. "CEO Tom LaSorda," ex boss of Chrysler, said "Fisker may move production outside the United States" if it doesn't raise enough additional government or private money to build here.
In late 2009, Vice President Joe Biden joined a crowd of 1,000 - Delaware politicians and United Auto Workers members, mostly - announcing more than $500 million in low-cost US Department of Energy loans plus $12.5 mllion in state economic development loans and $9 million in utility loans from Delaware Gov. Jack Markell to retool the shuttered General Motors Plant in Stanton, west of Wilmington, and hire up to 2,000 construction, manufacturing and support workers to make Fisker electric-hybrid cars. From Delaware Gov. Jack Markell: "When Fisker and the Department of Energy reached an impasse over the distribution of the remaining loan, Fisker made clear they did not have the capital necessary to build out the Boxwood Road plant" (since a big US loan was to finance the Delaware plant).
He added: "Fisker said again during the unveiling that their first choice remains to build their next car in Delaware. That remains our first choice as well. If it becomes clear that Fisker’s need for additional capital leads them to build elsewhere, we will vigorously enforce our rights to recovery under the state’s loan agreement."
The state loans become grants (permanent) if the plant ends up creating the promised 2,495 jobs, says Markell spokesman Brian Selander.
The News says Fisker has already spent $193 million of federal money for its European-built Karma model and other projects. "But the Energy Department froze the rest of the loan last year amid talks about the company's business plan," the News reports. Fisker's small car, "the Fisker Atlantic, was to start production this summer in Wilmington. Now, LaSorda said, he won't decide where to build the vehicle until the end of summer, and said it might not come out late this year or next."
Wilmington "is still our primary choice, but we're looking at other options," he told the News, noting Fisker "is getting a lot of interest in building the Atlantic elsewhere... There's a lot of interested parties outside the U.S. willing to invest in the company."
Fisker laid off 26 workers in an initial Wilmington restart crew back in February. LaSorda said the Wilmington plant is "gutted and is ready to go" but no tools have been installed.
If Fisker opens the plant, it's a victory for Democratic-run Delaware, which has offered incentives to revive aging auto and oil plants and to new energy, health and distribution businesses. These efforts are popular with Delaware financial and labor leaders. But if LaSorda takes taxpayer money and runs, the result are an embarrassment for government-backed industrial policy and a boost to conservative Republicans who say government does a poor job picking winners.
Comments (31)
Please let Fisker shop around for additional funding. They've already wasted enough taxpayer money. What happened to the other $300 million they raised through private funding, and if they decide to build a car overseas, they should refund the taxpayer money already spent.— unclejed- If they build offshore, then tariff their cars to the max.Anti-Americans company should be treated accordingly.— moretoit
At least the DRPA is out of money to waste!— HappyBob- Uh, which "oil industry" is Biden trying revive? Must be a different Biden they are referring to, not our VP.— TRexx
- Once again another waste of taxpayer dollars to prop unions jobs for a product nobody wants.— Wildman Bill
- Hahahaha....hey, Joe Biden, you gonna' come in for an orchestrated PR event at this place now??? Sheer stupidity!!!!!! Get the government out of the auto business....no more loans, grants subsidies- nothing. If they fail, then they fail. No big loss. It is how the business cycle goes....products which have no demand go by the wayside and new products which have natuiral demand fill the void.
Once again and as usual the government IS the problem and NEVER the answer....
Now, how many billions of dollars can we expect to be repaid this month by Chrysler & GM??? They still owe us tens of billions of dollars which are artifically propping up their organizations. When do the taxpayers get repaid???— kelprod2 - These loans were created in a bill passed in 2007, with regulations and funding passed in 2008. As such, it seems disingenuous to state that it is "Democrats' policy". Despite current GOP claims to the contrary, the program was passed with bipartisan support (86-8 in the Senate, 314-100 in the House).— Politburo
- and it is not a surprise,.....O's gift to his union buddies blows up in his face...think about it...the gov't bales them out and they still can't make....Messaget to unions...You still don't get it...Message to sheep and democratic koolade drinkers.....Your tax dollars are wasted by your union and government officials......— nuggett
- Biden+Casey= HUGE TAXPAYER EXPENSE and very little reward. Rather than throwing public money at a plant that will not be able to compete on the internation stage, maybe the Politicians should try to make Philly competative again by reeling in the anti-competitive unions.— Citizenc92
- The other party getting ignored is the Delaware union employees who were misled by Fisker and the PR politicians like Biden and Casey. Many have held off in getting other jobs. Maybe they should change the name to Frisker since that is what they have done to the taxpayers and the union workers.— Tired of Journos
- This is neither a Dem, nor a Rep thing. It's about a company gaming the system by creatively using the rules, lobbying, etc. I'm more interested in how the current admin moves towards closing the loopholes to make sure that companies can't pull an 11'th hour change like this, and to force them to return the money (not just what's left, but all of it) subsidized by the government. I agree with the concept of providing a means to help companies get off the ground, but there's just too much waste and abuse at this point for it not to be addressed and the rules enforced.— Yoda117
- How does Casey have anything yo do with this? You do know Delaware is not part of PA right?— Tiller
- Yoda...if a concept is viable, it will find plenty of private financing. This is yet another example of totally failed "stimulus" type of government waste.
And you are 100% correct, they should be forced to repay every dime. Ditto for GM & Chrysler...what are their repayment terms? When can taxpayers expect to be paid in full? Tens of billions of taxpayer dollars artificially propping up failed companies is simply terrible public policy.
Hope & change, hope & change....— kelprod2 - it's the corporate race to the bottom. They get one state to give them handouts and tax breaks and concessions, then go to the next state and say they have to do better than the last. Along the way they destroy the economy because all the "savings" just mean less money going into the economy as salaries and taxes.— Pelti
- Proof again it is time to get the "JV" off the field. In DC, DE, Pennsy too, throwing tons of borrowed $$$ at failed, or unproven concepts, when is enough "enough". Really, this ... has to stop— pymntboy
- Fisker moving offshore would actually be a good thing because nobody is going to buy their electric vehicles anyway and far more government $ will be lost if they got additional funding to produce. Solandra, Fisker, its all the same Obamaconomics when hundreds of millions are flushed away.— STS_PA
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... There's a lot of interested parties outside the U.S. willing to invest in the company." Good then go rip them off.If the Repubs have half a brain they would start to calculate all the money this regime has wasted on these fly by night auto companies and so called "green jobs". Even the average boobus American voter would be shocked by the number.
— MilesLong1 - kelprod2 says "if a concept is viable, it will find private financing"... and he's able to say this because of a worldwide network that was born via public financing and then later supported by mostly private financing after it was shown to be a viable solution. This is exactly what the DOE loan program is attempting to recreate.— Politburo
- Politboro...I am part of an investment group and there are endless amounts of investors looking for places to park their cash. There is ZERO need for public financing of business...none.
If a product is viable (say Fiskar electric cars), investors will quickly follow. If they lose their money, so be it. Government on the other hand just hands out taxpayer cash, nilly willy, and if the company fails...oh well. Hope & change...
The government should NEVER be in the business of loaning money to companies, whether they are packaged as loans, grants or subsidies.— kelprod2 
Comment removed.- I told you so. Fisker is trying to game the state of Delaware. They need to be sent packing. They do not have a viable product. Venture Capitalist have plenty of extra cash for good ideas. I do not see them linig up for this one? Get your money back. GM and Chrysler should be making another payment by September. Car sales are up.— A. Martinez
- Joe Biden is a proven MORON!— beef
- So Kelp, you would have allowed the banking industry to go down in flames too. And you would have allowed not only GM and Chrysler, but the hundreds of parts and other suppliers to those companies die as well. Of course, we know that you thought that the raging deficits created by the prior administration mostly during boom times should be paid back during Obama's Presidency, and no stimulus nor jobs bills should have been even thought about until the deficit was eliminated. You take Hooverism to an entire new level---you completely reject Keynsian economics...at least as long as there is a Democrat in the White House. Had we followed your advice, the economy would have collapsed in a manner that would have made people look fondly at the Depression. In fact, we should have spent more, had a real jobs program and then (as we did under Clinton), when the economy was back on its feet, tax as we should and pay down the deficit. It is amazing that Obama has done as well as he has in obtaining economic recovery when all the Republican are as ignorant of basic economic principles as you.— Palestra Jon
- Comment removed.
- They obviously don't have (or don't want to use) their own money to make this a viable business that will survive. Let them take their "2000 jobs" (which is probably a "feel-good" number) to whoever will give them the money, and then more money, and more money, etc., to keep it going. The tax-payers are tired of these recurring scenarios.— dee99999
- Palestra Jon, Keynesism has never worked, and the snide tone of how you say to kleprod2 that it is 'settled economics' is amusing to me - it certainly is not. Keynesism turns classical economics on its head and led to some awful mistakes, such as the New Deal paying farmers to burn crops and slaughter livestock to keep food prices high - the premise was that in order to encourage food production, destroy it. Unlike classical economics, which focus on the supply side, Keynesists focus on the demand side, trying to put money in people's hands no matter what the product is, a la keeping failing auto companies open etc. Keynesians believe that the economic problem is abundance: too much production and goods on the shelf and too few consumers. Consumers lined up for blocks to buy things in empty stores in the USSR, but that never sparked production. Keynes' fatal flaw was that he completely disregarded the entrepreneur, the risk-taker, the one who innovates and creates the things we want to buy. This is exactly what is happening here with this crony capitalist sham that Fisker is trying to pull and that the government is trying to facilitate.— RittSq
- Ritt Sq. To the contrary, supply side economics is a fable that merely is an excuse for terrible financial practices such as the Reagan tax cuts on the wealthy, which have bankrupted us 30 years later. If you understand economics, the idea that the wealthy will put more money into play if you reduce their taxes and that tax revenues will increase as a result thereof, was described properly and succinctly by that well known socialist George H.W. Bush as "Voodoo Economics." The worst thing that ever happened to the Republicans (at least prior to their takeover by former Confederates) was abandoning their fiscal moderation and insistence that tax revenues meet expenditures by ensuring that tax rates were at a proper level. After 2 generations of agreement that the highest income earners should pay a graduated income tax, the Milkens, Boeskys and Gekkos of the world took over under Reagan, giving us the utter rape of the middle class and the biggest expansion of what is now known as the "1%" in American history. So you may be doing well and so may I, but the country is not. What we need to do is end the Bush tax cuts---and that is the most important issue in the upcoming election. As long as those foolish tax cuts on the most wealthy are allowed to expire, and we adjust Social Security for longer lifespans, we may actually have fiscal sanity for the first time since Clinton briefly put us on track. The attack on Keynesianism is not surprising, since so-called "entrepreneurs" have been agitating for unrealistically low taxes and high unemployment so they can pay low wages for years. However, it is bad policy and wrong as a matter of economics.— Palestra Jon
- Palestra Joe....yes, that is correct, I TOTALLY reject Keynsian economic policy as it has never worked, does not work and will never work.
Yes, you are correct, the banks should not have been bailed. If they made lousy bets with their business, so be it. Let the losses flow. We would have felt some pain, but the bounce back would have been quick. It is not the role of government to artifically prop a failed company....those failed companies implode and new companies arise to fill the void. That is a normal business cycle.
Yes...GM and Chrysler should have NEVER been bailed. They are not "successful" now, as they still owe TENS of BILLIONS of dollars to taxpayers and are being artificially propped up. You do understand that had they collapsed, investors would have bought up the viable portions of both Chysler & GM....and car sales would not have decreased, they would simply go to other companies (most of which produce in the US)...which would have resulted in those companies increasing hiring and also increasing purchases from suppliers. You pretend that had they gone away, so too would have their sales volume....which is ridiculous. Taxpayer cash was used to merely pick winners & losers...and facilitate the largest special interst payback in the history of the world- Obama handing both companies to his union special interest.
The economy would not have collapsed. That is pure bunk. Quite frankly, it was government intervention and their desire to artifically manipulate a free market which caused the downturn...and had government simply gotten out of the way, this economy would be MUCH further along in reparing the damage.— kelprod2 
No wonder banks won't lend money to the yo yos running manufacturing businesses. They don't know if they will be around to pay back the loans. So many people will jump at the chance to buy an electric car, but not from business as usual capitalists who take and take and then expect the world to buy and buy. I want an American made electric car with American made components. Since this is a new industry with little global competition, what is the hold up with these people. They get every advantage in Federal and State subsidies and a car plant handed over to them. When will they start building the electric vehicles?- Just stop trying to steer the economy. It is an organic living changing organism. Not a boat or a car that can be steered by government policy. Businesses are again holding funds because of anxiety over government policies. Hands off and the economy will right itself, yes there will be painful happenings. How does a child learn not to touch a hot stove????? We are truly ruining our country thru feel good economic policies promulgated by various special interest groups that benefit from the regulations. Stop please— Occupy reality
- How many "dirty" COAL plants could have been retro-fit with the TENS OF BILLIONS Obama wasted on "alternative to reality" energy? The only campaign promise Obama has kept is "your energy prices will necessarily skyrocket".— Fiftycal
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Joseph N. DiStefano blogs about the latest news in the Philadelphia business community and elsewhere. Contact him at 215-854-5194.
Reach Joseph N. at JoeD@phillynews.com.
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