LG Plant Employees Wasted Time Playing on Taxpayers' Dime

With President Obama in attendance, the 2010 groundbreaking for the LG Chem Michigan Inc. plant signified the first steps toward creating more efficient batteries for electric vehicles. With $150 million from the government invested in the project, funds designated in the Recovery Act, the Michigan factory was supposed to produce jobs, in addition to the lithium-ion batteries for electric cars.

"The objective of the project was to design, construct, start up and test a production facility for lithium-ion polymer batteries, create more than 440 jobs, and produce enough battery cells annually to equip 60,000 electric vehicles by the end of 2013, with assembly beginning in 2012," Department of Energy Inspector General Gregory H. Friedman wrote in a report on the plant.

Nearly three years after the groundbreaking event, not a single battery has emerged from the plant. What happened to the government investment footing more than half of the $304 million bill for the plant?

"We found that work performed under the grant to LG Chem Michigan had not been managed effectively," Friedman wrote. "Based on progress to date and despite the expenditures of $142 million in Recovery Act funds, LG Chem Michigan had not yet achieved the objectives outlined in its Department-approved project plan."

According to Friedman's investigation, employees at the plant spent most of their days watching movies, playing board games or video games, and an excessive amount of time volunteering at local animal shelters and community improvement groups.

LG Chem Michigan, a subsidiary of the South Korean company, completed only three of five planned production lines, according to the report. Thus, General Motors, an expected purchaser or the Michigan plant's batteries, is still buying EV batteries from an LG plant in South Korea. Additionally, the job target at the plant was never reached. While it could have sustained well over 400 jobs, at its peak there were only 215 employees there.

Since the investigation in October, prompted by employee complaints, the plant has returned $842,000 to DOE. However, it is estimated that unproductive work at the plant exceeded $1.6 million. "While the efforts of the Department and LG Chem Michigan's immediate reaction to the allegations resulted in recovery of the non-productive labor charges, the results of our review indicated that more fundamental issues existed, limiting the possibility that the objectives of the project will be met," Friedman wrote.

Plant managers are requesting an extension to May 31 to fulfill the final two objectives of the plan. "Unless and until production begins at the Michigan plant, in our opinion, the U.S. taxpayer will garner little benefit from its $143 million investment," the report predicts, going on to suggest that enhanced monitoring and stricter management may help to achieve goals.

"Department management agreed with the report's recommendations and stated that it had initiated actions to address the issues identified," it said.

For the full report, visit the DOE website.

Posted by Jessica Acklen on Feb 15, 2013