LG Chem, a division of South Korean industrial giant LG, is constructing a new plant in Holland, Michigan to manufacture lithium ion batteries for the electric vehicle (EV) market.
Obama was on hand to take credit for the $151.4 million Federal grant used to help construct the facility. An excerpt of his remarks:
Because we did, shovels will soon be moving earth and trucks will soon be pouring concrete where we are standing. Because of a grant to this company, a grant that’s leveraging more than 150 million private dollars, as many as 300 people will be put to work doing construction and another 300 will eventually be hired to operate this plant when it’s fully up and running. And this is going to lead to growth at local businesses like parts suppliers and restaurants. It will be a boost to the economy of the entire region.
If electric vehicles are going to be such a money maker, and Michigan is such a great place to do business, why does LG Chem need a $151.4 million grant to construct a EV battery plant? It’s not like LG Chem is a small start-up and is short on cash. Per LG Chem (just the division’s) 2009 sales brochure:
At LG Chem, we have been partnering to meet the needs of customers for more than 60 years now. Since our founding as Lucky Chemical Industrial Corporation back in 1947, we have grown to become a global player in the chemical industry with annual revenues of over KRW 13.7 trillion and more than 13,000 employees worldwide.
13.7 trillion South Korean won = 11.3984 billion USD.
The LG Chem division has annual sales of over $11 billion and for a well run company of that size a $300 million investment is not a huge deal. Furthermore, if the EV market is going to live up to its hype, you would think companies such as LG Chem would be paying Michigan for the rights to construct lithium ion battery plants.
Lastly, it doesn’t seem very efficient to spend $151,000,000 to create an expected 300 jobs:
another 300 will eventually be hired to operate this plant when it’s fully up and running.
That works out to $503, 333 of tax payer money to create 1 job. Not a good return on investment.
I would wager a guess that the main reason they received the money is because Obama is such a big fan of electric vehicles. They will help save the planet and all of that.
Sure with all the new coal plants need to power the EV’s
There’s some more make work that will go away in the short term.
This is absolutely ridiculous. If the market is clamoring for EV’s, LG would build three li-ion battery plants.