Dismiss Notice
Join Physics Forums Today!
The friendliest, high quality science and math community on the planet! Everyone who loves science is here!

News A123 Systems files for bankruptcy

Tags:
  1. Oct 16, 2012 #1

    chemisttree

    User Avatar
    Science Advisor
    Homework Helper
    Gold Member

    After receving $249.1 million grant from the US Department of Energy and $125 million in tax credits and incentives from the Michigan Economic Development Corp., A123 Systems is filing for Chapter 11. What remains to be seen is how the debtors will run the company and if the jobs promised here in the US will be transferred overseas.
     
  2. jcsd
  3. Oct 16, 2012 #2
    My previous boss was a high-ranking official at A123. From what I heard, the place was a mess. Good mangers and engineers have been leaving the company for better opportunities in droves.

    On the other hand, you cannot really expect each government-sponsored company to thrive and become a multi-billion dollar business. Also, didn't China severely limit the export of rare-earth minerals essential for Lithium battery production?
     
  4. Oct 16, 2012 #3

    russ_watters

    User Avatar

    Staff: Mentor

    Why do you say that?
     
  5. Oct 16, 2012 #4

    OmCheeto

    User Avatar
    Gold Member
    2016 Award

    Argh.

    I once said; "I've never lost money in the market."

    That is no longer true.

    I just lost a poop-load on A123.

    I've also told people, way long ago, that if A123 goes down, it means Americans don't understand squat about science, sociology, nor economics.

    -----------------------------------------
    But now, I understand why Cantor has been shorting the American dollar.

    good night, and god bless PF
     
  6. Oct 16, 2012 #5
    I have been dealing with NYSERDA for quite some time, which is the Research and Development Authority of NYS. They have funded hundreds, if not thousands, proposals that could lead to a groundbreaking invention. Or they could not. Needless to say that most of the money is spent without ever attaining the original goal! The point is that until you do the research, you never know. The world out there is hardly deterministic.

    This example could be extended to the Federal Government. How can you possibly make sure that every single company you put money in will become successful and profitable? That's not possible. The government cannot choose winners and losers. What it can do, however, is to sponsor a company with the best proposal and the best chances of surviving its nascent age. And I believe this part is done quite well.
     
  7. Oct 16, 2012 #6
  8. Oct 16, 2012 #7

    russ_watters

    User Avatar

    Staff: Mentor

    I don't see how that's relevant here: we're not talking about pure R&D efforts, we're talking about companies who manufacture actual products. I'm OK with the government spreading R&D money broadly/thinly.
    I believe this thread is an example of the government not doing it well. And I believe that the Obama administration has made poor business decisions based on political goals, in a two-step process:

    1. Deciding what industry to support and what not to support.
    2. With a lot of money to spend in small industries, throwing money at companies without properly vetting their viability.

    Furthermore, if we're going to have a government who is going to support business with direct corporate stimulus, who better to do it than someone who made a good fraction of his living doing exactly that with private funding? Or, perhaps Romney would decide that that is better left to venture capital firms and get the government out of that business. From the article in the OP:
    Would you invest in such a company?!
     
  9. Oct 17, 2012 #8

    OmCheeto

    User Avatar
    Gold Member
    2016 Award

    :redface:

    At least I didn't lose as much as General Electric. They invested $73,000,000.
    And A123 had an IPO market cap of $2,000,000,000.
    So it looks as though quite a bit more private money than public money was lost.

    That reminds me, with such a significant capital gains loss, can I write the whole thing off on my taxes next year and have all of you foot the bill for my losses? Seems like the wall street thing to do.

    ---------------------------
    ps. I've decided that playing the market is like fishing. You throw your line in, spent inordinate effort reeling in what appears to be a potentially good catch, only to find you've reeled in an old spare tire. Oh well, time to re-cast.
     
  10. Oct 17, 2012 #9
    Russ,

    Why for Christ sake would you invest money in R&D and not subsequent manufacturing? If I extend your logic, that's pretty much equal to "we invented a car that runs on water but let's just stick to the prototype". And how about NASA and other science agencies? Army labs? That's hardly broad/thin spending.

    The other argument of yours is funny: the government can choose which industry to support and which not. The decision to support a company has to be aligned with the program of the elected President and his Government. Clearly, renewable energy-focused government will support solar and wind as opposed to coal. I do not see anything wrong with that.

    And how can you vet a viability of a startup company that has no other assets than the idea and a few excited folks?

    Actually I am quite curious how you would assess such a company.
     
  11. Oct 17, 2012 #10

    russ_watters

    User Avatar

    Staff: Mentor

    Sorry, had to rub that in a little. :devil:
    Probably, yeah.
     
    Last edited: Oct 17, 2012
  12. Oct 17, 2012 #11

    russ_watters

    User Avatar

    Staff: Mentor

    *I* would, but the government doesn't actually invest, it just hands out money in grants and loans/loan guarantees. So where *I* would invest with the hope of turning a profit, the government doesn't hope to -- it actually plans not to. They assume all the risk without the chance of a benefit. I guess the fact that they aren't hoping to profit makes the poor decisions hurt less, but it also eliminates most of the incentive to make good ones.
    What is wrong with it is that the best political decisions don't always make for the best business or environmental decisions. For example, funding that is sent toward solar instead of nuclear unintentionally buoys coal because solar is expensive and can't produce much energy. But it sounds good in a speech.
    :confused: :confused: That's the entire point of venture capitalism!? People meet with venture capitalists and present an idea that they can sell and a business plan to sell it. Venture capitalists then decide if the idea looks marketable and the plan looks viable. For example, the business plan would say how much you can sell your batteries for and how much it costs to manufacture them. With A123, the quote I posted above says that the plan was decidedly unprofitable: the cost to manufacture was higher than the selling price.
     
  13. Oct 18, 2012 #12
  14. Oct 19, 2012 #13

    OmCheeto

    User Avatar
    Gold Member
    2016 Award

    yeah? I would say; "Yippy Kay Yay, PmF!"

    Anyways, I'm clueless as to why the stock is still trading, and made a 135% gain in the last 3 days.

    108,000,000 of 170,000,000 shares traded today.

    Wall Street is funny, in my book.
     
  15. Oct 19, 2012 #14

    AlephZero

    User Avatar
    Science Advisor
    Homework Helper

    To quote from your link
    In fact, it's the same order of magnitude cost as accidentally wrecking one prototype of a jet engine. Which isn't something that jet engine manufacturers enjoy doing, but that doesn't stop it happening occasionally. (And for GE, they can easily get their money back by raising the price of light bulbs $0.01).
     
  16. Oct 20, 2012 #15
    I am sure that you realise that someone on Wall Street bet that you would lose money. And most likely that bet was made with borrowed money. It is the new and improved Casino Capitalism game.
     
  17. Oct 20, 2012 #16
    I heard it had quite a few patents so it wasn't a complete failure.
     
  18. Oct 20, 2012 #17

    OmCheeto

    User Avatar
    Gold Member
    2016 Award

    Don't even get me started on conspiracy stuff. So many companies/countries are after their intellectual property at the moment, it makes my head spin.

    Wang Chung, or whatever that Chinese companies name is(Wanxiang. I was close), is probably really pissed at the bankruptcy court's decision to let Johnson Controls get ahold of the company for a fifth of what they were offering.

    Interesting times. IMHO, this is why east coast Casino Capitalists spend millions trying to oust west cost congressmen, because said congressmen want to re-instate the wall street gambling tax.

    As usual, [Nixonian Expletives Deleted]

    ps. Solyndra has just recently filed a $1.5 billion dollar lawsuit.
    hmmm...
    I guess in the end, Shakespeare was right.
     
  19. Oct 20, 2012 #18
    It seems Bill Moyer's 2010 Essay on Plutocracy was right on the money. no pun intended

    http://vimeo.com/32805018
     
  20. Oct 20, 2012 #19

    OmCheeto

    User Avatar
    Gold Member
    2016 Award

    Edward! You're going to get us both in trouble.

    This thread is about bashing the government for trying to fix the country, not about bashing plutocrats for sucking the life/wealth out of it. God knows the Caymans can use a few more trillion in their banks.

    I think Aleph was right, people appear to have no comprehension of orders of magnitude, nor, what is at stake.
     
  21. Oct 24, 2012 #20
    Actually it shows you don't understand squat about economics. If a company can't sustain itself in the market without massive government assistance then what it's doing is not economical. This has quite a bit in common with other parts of the malthusian energy plans: Politically contrived, hugely subsidized, and turned into political issues because they can't compete on their technological and economic merits.
     
Know someone interested in this topic? Share this thread via Reddit, Google+, Twitter, or Facebook




Similar Discussions: A123 Systems files for bankruptcy
  1. File sharing (Replies: 14)

  2. Goodbye to Twinkies? (Replies: 65)

Loading...