Republicans Seize on Bankrupcy of Battery Maker That Received $249M in Federal Loan Guarantees

Andrew Harrer/Bloomberg/Getty Images

The bankruptcy filing Tuesday of an electric car battery maker that received $249 million in federal loan guarantees and that President Obama had touted as a poster child for green-energy jobs has given fresh fodder to Republicans and presidential nominee Mitt Romney, who have attacked Obama's green-energy initiatives as a waste of taxpayer funds, yielding few new jobs.

A123 Systems of Waltham, Mass., announced the Chapter 11 filing on Tuesday. The company had already spent roughly $130 million of its award money from the Recovery Act (a.k.a. the stimulus), according to the Energy Department.

Some Republicans have begun calling the case another "Solyndra," referring to the failed solar-panel start-up that received more than $500 million in government loans from the Obama administration before going belly up.

"A123's bankruptcy is yet another failure for the President's disastrous strategy of gambling away billions of taxpayer dollars on a strategy of government-led growth that simply does not work," said Romney spokeswoman Andrea Saul. "While the President has said he would 'double down' in a second term, Governor Romney will return the federal government's focus to its proper role supporting research and creating an environment where private sector innovation can thrive."

Obama had publicly praised the company and CEO David Vieau for contributing to what he described in a 2010 phone call to Vieau as "the birth of an entire new industry in America." During an April 2010 speech in the White House Rose Garden, Obama and Vieau compared together, with the president hailing the company's plan to create 3,000 jobs by 2012.

As recently as July 2011 Obama touted the company as evidence his plan for a green-energy economy was taking hold. "Here's A123, a clean-energy manufacturer in Michigan that just hired its 1,000th worker as demand has soared for its vehicle components," Obama said in a speech in Washington. "Companies like these are taking root and putting people to work in every corner of the country. "

Energy Department spokesman Dan Leistikow explained in a blog post Tuesday on the A123 bankruptcy that "in an emerging industry, it's very common to see some firms consolidate with others as the industry grows and matures." He emphasized that Milwaukee based Johnson Controls had agreed to purchase $125 million in A123's assets, including two Michigan manufacturing plants that it planned to keep open.

A123 said in a statement that "all of its automotive technology, products and customer contracts; its facilities in Livonia and Romulus, Michigan; its cathode powder manufacturing facilities in China, and A123's equity interest in Shanghai Advanced Traction Battery Systems Co., A123's joint venture with Shanghai Automotive" would be absorbed by Johnson - preserving many of those jobs and investments.

Democrats noted that A123 had received bipartisan backing over the years, including award grants from the President George W. Bush administration. Vieau also visited with Bush at the White House, appearing publicly with the 43rd president in 2007.