Michigan is taking a lot of hits lately. Not only is its traditional automotive industry winding down, but new electric car companies are being lured elsewhere too, despite state efforts. Its one ray of hope has been the advanced battery business, with $300 million in tax cuts successfully attracting major companies to the region. Today, that ray just got a bit brighter, with Korea's LG Chem announcing plans to open a $303 million battery cell factory in Holland, Mich.
The location is pretty advantageous for the corporation, which has a deal to supply battery cells to Detroit-based General Motors for its much-hyped plug-in Chevy Volt. The new plant is expected to churn out enough cells for 200,000 electric and hybrid vehicle battery packs, LG Chem says. It's expected to come online by 2012 and create 400 much-needed, permanent jobs.
Half of the money for the 650,000 square-foot factory is coming from the U.S. Department of Energy, which granted LG Chem $151.4 million in stimulus funds last summer for the project. It will only be responsible for producing lithium-ion battery cells -- which GM and eventually its other clients will assemble into bigger battery packs. Each pack contains about 300 cells and weighs 400 pounds. It is without a doubt the most expensive component of plug-in vehicles.
The plant will be operated on a day-to-day basis by LG Chem subsidiary Compact Power, based in Troy, Mich., which is providing the other $151.5 million.
This is a rare positive sign for Michigan and Governor Jennifer Granholm. LG Chem's decision to locate the factory in Holland can be attributed to the $100 million in tax credits it received from the state, as well as the $25.2 million 15-year job-creation credit. It also had an easier time navigating zoning and permitting laws. It looks like the bold strategy to make batteries Michigan's new core business is on its way.
Other big battery names like A123Systems and Johnson Controls-Saft (supplying Ford) have located in Michigan for the same reasons. Now if only it can score a big commitment from Panasonic, which is looking to compete aggressively in the electric vehicle battery industry, the state could have a real chance to turn its economy and high unemployment rates around.