Charged up

October 30, 2009
| By Pete Daly |
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HOLLAND — More financial assistance from the state and local governments was confirmed for Johnson Controls-Saft Advanced Power Solutions LLC last week as it begins hiring employees and renovating the Holland factory where battery packs for hybrid electric vehicles will be in production next summer.

In return for receiving the largest ARRA federal stimulus grant for electric vehicle production, Johnson Controls-Saft will invest a matching amount of $299 million in the plant and has "committed to (creating) 550 jobs for this first plant" within the next three years, according to Mary Ann Wright. A Johnson Controls vice president, she is managing director of the company's hybrid electric car business and leader of its joint venture with Saft, a French battery manufacturer.

"We have started hiring," Wright said last week. She said the new JCS plant manager, Elizabeth Rolinski, "has her launch staff in place and we'll be ramping those people up over the next 18 months." Rolinski, who has been with Johnson Controls since 1988, has previously headed three Johnson Controls automotive plants in Holland over a five-year period.

Wright had just come from a meeting with state officials in Lansing at which the Michigan Economic Growth Authority announced it had granted JCS a "plug-in and all-electric traction battery pack credit," valued at up to $20 million over three years, to support the manufacture of battery packs using lithium-ion technology. In addition, MEGA also approved JCS for an Anchor Jobs tax credit that will be based on payroll taxes generated by new jobs at companies that supply the 129,000-square-foot JCS plant.

Yet another incentive was approved later in the week by the Michigan Strategic Fund, which designated the JCS plant a Renaissance Zone at the request of the city of Holland. The plant will be exempt from most state and local taxes for the next 15 years, according to Greg Robinson, assistant city manager of Holland.

The city of Holland is also requesting a Community Development Block Grant of $2 million, which would be used for renovation of infrastructure inside the building that will be the new battery plant.

Robinson said JCS has been "talking about two phases" of its entry into hybrid electric batteries in the U.S.

"Both could happen here in Holland, but we're not sure," he said, noting that if JCS opens another plant in Holland, the projection is that JCS will create a total of almost 1,100 new direct jobs within five years.

In April, MEGA awarded JCS a state tax credit valued at $48.5 million over 15 years and a battery cell state tax credit valued at $100 million over four years to help persuade it to locate its planned hybrid electric battery plant in Michigan. The same day, JCS announced it would be setting up its first U.S. cell manufacturing facility for lithium-ion hybrid batteries in the vacant Johnson Controls plant at the Wisconsin corporation's Meadowbrook site on 48th Street in Holland.

The company also announced in April it would apply for a matching stimulus grant under the American Recovery and Reinvestment Act in response to a U.S. government request for proposals from any U.S. manufacturer interested in going into production of hybrid electric vehicles.

In August, the Department of Energy announced that JCS was awarded a grant of $299.2 million — part of the $2.4 billion in ARRA grants made to 48 companies and organizations to accelerate the manufacturing of electric vehicles, batteries and components in America. General Motors, Ford, Chrysler and many auto suppliers also received grants, but the JCS grant was the largest.

Wright said the ARRA grant reflects "a lot of confidence in Johnson Controls," which she said is the largest lead acid battery supplier to the auto industry in the world.

"The administration is looking to build our domestic manufacturing capability and our technology capability as we transition from fossil fuels to electrified vehicles, and what we don't want to do is trade the OPEC oil cartel for an Asian battery cartel," said Wright.

The $20 million hybrid battery pack assembly credit approved by MEGA also has JCS "really excited," according to Wright. She noted that the only other company to receive that credit was General Motors. The credit will be "very helpful" as JCS begins production, because it represents a refundable tax credit for every battery pack assembled at the Holland plant, said Wright.

"We're really honored that the state of Michigan has such confidence in Johnson Controls, in terms of our ability to set the foundation for this (hybrid electric vehicle) business," she said.

In addition to the 550 direct jobs in Holland, "you can count on another couple of thousand indirect jobs that will be created" among suppliers and other businesses supporting the plant, said Wright.

Azure Dynamics, a Detroit company that develops electric and hybrid electric drive systems for commercial vehicles, will receive the first battery packs from the JCS plant. JCS also has a signed contract with Ford Motor Co. Wright said the Ford business will entail between 5,000 and 10,000 units a year — "and hopefully more as the market takes off."

According to its corporate Web site, Johnson Controls has been working for 15 years on development of high-voltage nickel metal hydride batteries, and hybrid electric buses in Europe are already equipped with its batteries.

In 2008, Johnson Controls partnered with Saft to open the world's first lithium-ion hybrid vehicle battery manufacturing plant in Nersac, France, supplying batteries for the Mercedes S-Class hybrid. JCS will also supply batteries to BMW.

The first Ford plug-in hybrid electric vehicle, using battery packs made in Holland, will be available to the public in 2012, according to Wright.

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