* A123 cuts 350 temporary, staff workers in Michigan
* Battery maker heralded by White House for job record
* Job cuts prompted by reduced orders from Fisker
* A123 shares up 8.6 percent
By Kevin Krolicki
Nov 29 A123 Systems has cut 35 percent
of the workers at two Michigan plants that supply lithium-ion
batteries for electric vehicles in response to a reduction in
orders from major customer Fisker Automotive.
A123 cut about 225 full-time workers on temporary contracts
in early November and laid off another 125 staff workers last
week, company officials said on Tuesday.
A123 had employed about 1,000 workers in Michigan, a hiring
record over just two years that the Obama administration has
heralded as evidence of its success in creating green jobs with
The company, which developed as a startup at the
Massachusetts Institute of Technology, received a $249 million
grant from the Department of Energy to fund battery production
The state of Michigan gave the company another $125 million
to offset the cost of setting up a battery plant in suburban
That plant in Livonia, Michigan, had been running three
shifts of battery production, but it cut output to a single
shift after Fisker reduced its orders, said Jason Forcier, who
heads A123's automotive business.
"This is an unfortunate blip in what has been a strong
record in hiring people," Forcier said.
The workers are not represented by a union.
A123 spokesman Dan Borgasano said the company expected
Fisker's orders to pick up again starting in the second quarter
"We expect that this will be a temporary reduction in
workforce that will last six months or less," Borgasano
Fisker, which builds the $96,000 plug-in Karma, has
received $529 million in loans from the Department of Energy.
Delays in rolling out Fisker's plug-in hybrid have
increased scrutiny over the fortunes of the fledgling
automaker, which delivered its first Karma to actor Leonardo
DiCaprio over the summer.
Fisker had long said it planned to sell 15,000 Karmas in
2012, but a spokesman said earlier this month that the company
had lowered the target to between 10,000 and 12,000.
A123 is using a lower estimate of production of about 5,000
to 7,000 Karmas in 2012 in planning its own business, based on
more conservative estimates by outside forecasting firms,
A123 has a stake in Fisker after investing $23 million in
the startup. Fisker has raised funding from investors that
include venture capital firm Kleiner Perkins, the Qatar
Investment Authority and Advanced Equities.
A123 has also taken steps to cut orders for battery
materials from suppliers after the reduced orders from Fisker,
spokesman Borgasano said.
The company operates a second supply facility in Romulus,
Michigan, also near Detroit.
The Livonia plant was described as the largest lithium-ion
factory in North America when it opened in September 2010 with
a ribbon-cutting ceremony attended by U.S. Energy Secretary
Steven Chu as well as U.S. Senators Debbie Stabenow and Carl
Levin from Michigan. President Obama called in for the event.
At the time, the White House said A123 planned to employ
3,000 workers at its Livonia and Romulus plants.
In a return visit to the plant in July, Chu called it a "a
great example of how we are working with industries to create
jobs, strengthen our manufacturing industry and help our auto
companies compete in the global market."
The remaining shift at A123's Livonia plant is building
batteries for three truck companies, Navistar , Smith
Electric Vehicles and Daimler AG .
A123 has also won the contract to supply General Motors Co with batteries for an all-electric version of the
Chevrolet Spark minicar set for introduction in 2013.
The company has also been working with Fisker on a battery
for the Nina, a second, lower-cost model that the automaker
plans to sell.
"We fully anticipate to be awarded that program," Forcier
Shares of A123 were up 8.6 percent at $2.28 in afternoon
trading. The stock has fallen by 76 percent since the start of