Revolting Batteries

Funny what I have learned about the kind of projects my son, who is an investment officer with the U.S. Department of Energy, may be working on… unfortunately not from him since he never talks about his work, rather from the New York Times (May 9^th), for example. We all know that one of the weakest links in our energy generation programs – aside from exploding oil rigs in the Gulf of Mexico – is how to store electricity that may be generated in non-peak periods to be used later when demand is high. Anyone who has seen batteries that are typically used in solar homes or carried on electrical or hybrid vehicles can testify to these expensive and cumbersome batteries, even the more modern lithium-ion variety, which weigh entirely too much (hence wasting much of the power stored simply in carrying this excess weight around), are horribly expensive (replacing batteries in hybrid/electric cars after their rather short seven year average life can run $5-10,000) and toxically polluting as they wind up in landfills (instead of being properly recycled).

So when the DOE gave a grant to the Massachusetts Institute of Technology in 2001 to develop cheaper, lighter and more efficient batteries, and for techno-freaks, the substitution of nanoscale phosphate materials for the cobalt that's used in conventional lithium-ion batteries – whatever that means – turned out to be a home run. Effectively, the batteries that once filled a large compartment in a car now simply fit into a container the size of a carry-on bag. With a further $250,000,000 stimulus boost from the DOE – awarded to Massachusetts-based battery manufacturer A123 Systems – and some local Michigan incentives, this home-grown technology was about to become the source of an entire new American workforce, right?

Remember our “Wall Street” financial buddies – the ones who are doing, as Goldman CEO Lloyd Blankfein put it, “God’s work” – to create new jobs and fund new American products and services? It seems that the providers of capital were wondering why a sensible American-based company would ever want to manufacture anything here where labor is expensive and regulations on worker safety, etc. are so restrictive. Further, the relevant experience to implement such manufacturing was no longer an American strength; the better trained workers were already in China. Generally it takes nine months to get a Chinese plant in operation, about a third of the time that is typical in the U.S.

“That's why A123 had to give in and build its first plants in China, where the company could move into production quickly to show auto industry customers that it could deliver on future contracts… ‘Without question, we would rather have done it all in the U.S.,’ said [MIT professor Yet-Ming] Chiang, who left Taiwan as a 6-year-old with his family, earned degrees at MIT and has been a materials science professor there since the mid-1980s. ‘I'm an American citizen. We're an American company. It's an American-born technology.’” The Times.

As the Michigan incentives tied in with the DOE stimulus funds, the competitive gap between Asian manufacturing costs and what works in the good old U.S.A. narrowed sufficiently to provide a plant in the state that once was the heart and soul of car-making. An old factory, outside of Detroit and once used to make VHS tapes for Disney, will open next month to build these new efficient batteries for domestic consumption.

There is a price beyond lost jobs when we take high-tech to China: “But in ramping up production in China, A123 paid an immeasurable price: loss of its intellectual property, the ideas and engineering that made its products better… The company did what it could to slow the technology transfer by breaking down the manufacturing process into steps, [A123 co-founder and chief technology officer Bart] Riley said, but ‘we ended up having to teach these guys how to make our state-of-the-art, world-class batteries. … And some of them are now competing with us directly.’… By the end of next year, A123 expects to have two plants in Michigan employing 400 people, with plans to go up to 2,000 workers able to produce about 30,000 battery systems a year…. The company's sales reached $91 million last year, and it has about 1,700 employees, two-thirds in Asia.”

We still good at inventing “stuff,” but that’s only for the highest-end of our deteriorating educational system. We still have to figure out how to design a society that works for the rest of America… and stop tearing apart our schools.

I’m Peter Dekom, and we still got it… we just have to learn how to keep it.