Bright Automotive Closes After Inability To Secure Federal Loan
This week, would-be hybrid vehicle manufacturer, Bright Automotive, closed its doors citing inability to secure a $314 million federal loan.
“We have been forced to say ‘uncle.’ As a result, we are winding down our operations,” the company’s Chief Executive Officer Reuben Munger and Chief Operating Officer Mike Donoughe wrote U.S. Energy Secretary Steven Chu in a letter Tuesday.
Bright had been in talks with the U.S. Department of Energy since September 2010 and had gotten to the point of a fourth “near final” conditional commitment from the government.
The company had received $5 million from GM and the Detroit News reports that Bright Automotive has about 60 employees in Michigan and Indiana, many of which are former executives from the Detroit Three automakers.
It is now reportedly in process of shutting down, and in question is the purported “debacle” as the letter described the government’s Advanced Technology Vehicle Manufacturing loan program.
It’s being said that these and other signs indicate that political favor for government backed green energy is shifting, and now-shuttered solar panel maker Solyndra is often invoked as at least one highly visible tipping point.
Sensing that its own end was coming, last week, Bright’s executives sent Chu a letter saying “time is running out” and they commiserated with the energy department against political attacks on loan programs. “We understand the political assault and the often misguided and partisan criticism unfairly waged against you and your team,” the letter said, adding that Bright would be forced to close in one week without funding. “Irrationality and petty politics have paralyzed your agency at a time America needs you most. One cannot score if one does not shoot.”
In contrast, opponents to government backing cite federal budgetary woes, other concerns, and an often-repeated contention is that the government should not be “picking winners and losers.” The debate over taxpayer money for green energy is ongoing, but such funds have reportedly become harder to secure.
Bright’s executives said each new piece of correspondence from the federal government “arrived with more onerous terms than the last. The first three were workable for us, but the last was so outlandish that most rational and objective persons would likely conclude that your team was negotiating in bad faith,” the company wrote. “We continued to play by the rules, even as you and your team were changing those rules constantly — seemingly on a whim.”
Chrysler Group LLC has also reportedly abandoned its application for up to $3.5 billion in loans this month after the energy department proposed what were described as very restrictive terms, and reduced the amount of the proposed loan to under $2 billion. Similarly, the DOE reportedly canceled a planned $730 million loan to the Dearborn unit of Russian steelmaker Severstal OAO.
Bright said the loss to the U.S. economy was 675 direct jobs and at least 2,700 indirect jobs.
On the other had critics of government-backed support for nascent industrial efforts have declared it a win for common sense, and said a tougher approach is the fiscally responsible thing to do.
After comment was sought from the U.S. energy department, none was given by deadline.