A U.S. Energy Department inspection of LG Chem’s still-under-construction battery plant in Holland, Mich. found trained, but idled workers were paid to play cards, board and video games – and LG Chem billed Uncle Sam $842,000 for tens of thousands of man hours for this.
Citing vagaries in the rules, and ultimately blaming the non productivity on the Volt – for which the plant is intended to produce battery cells – the Korean battery maker has however paid back the funds to the federal government.
According to a report by Wired, since the Volt’s battery cells are still made in Korea, and LG Chem has not shifted production stateside, it was felt these workers – whose numbers are estimated at “less than half” of 440 workers projected to eventually come on the payroll – had to do something to stay occupied while two of five planned production lines remain unfinished.
To date, not one battery cell has been produced in Holland for a production car offered for public sale, and they are all being made and shipped from Korea. In order to find something to do as they wait, other paid employees were found to be occupied with more civic-minded things like volunteering for Habitat for Humanity, outdoor nature centers, and animal shelters.
The story was portrayed as another (not-so) great example of your tax dollars (not) at work, and a government-mandated industry that has not exploded like the bureaucrats and industry executives working with them expected.
Building the new factory has taken $142 million out of a $151 million federal Recovery Act grant. LG Chem Michigan is partially staffed and ready to go, but producing very little except expenses for all the effort.
Officials for the Korean company, spending the U.S. taxpayer funds, justified the need to pay idle workers further with a rather weak excuse that they’d initially been “unfamiliar with the types of costs that were allowable” and were trying to keep an awkward situation under control.
“They wanted to do their best to maintain the workforce in hopes that production would start soon,” said Energy Department inspector General, Gregory Friedman, who explained to Wired the situation. “They also indicated that they resorted to furloughs and permitted employees to engage in non-productive activities to help ensure that their investment in training employees was not lost.”
LG Chem officials have argued they had no choice but to pay workers to play.
The rationale for paying trained workers to kill time while they waited for a plant start up was ultimately blamed on the Volt’s production not living up to its billing that had paved the way for this factory in the first place.
In calendar year 2012, noted Wired, GM sold around half of the 60,000 Volts and Amperas it had initially projected globally – back when plans for the LG Chem Michigan plant were also just getting underway.
Friedman told the publication that LG Chem had to make some tough decisions, but blamed lack of sufficient demand as lying “at the core of the problem.”
The government inspector also observed GM is nonetheless domestically producing on average 1,955 Volts each month, and these at least could use batteries produced in Holland.
But they are not.
So until “some alternative use for the plant is developed,” or LG Chem decides to move production from Korea to Michigan, Friedman told Wired, “U.S. taxpayers will receive little direct benefit from a plant for which they provided half the funding.”