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The News Journal Dutifully Defends Fisker

The News Journal has a story yesterday on Fisker Automotive's survivability.  In it they defend the start-up against every question and call any comment that questions the ideas of the company and the  government "politically motivated".  I'm sorry News Journal, but what's politically motivated, is your fish wrap paper.  This is the longest government propaganda piece I have ever read.  When the Caesar Rodney Institute looked at the Fisker business model, it questioned whether or not the company could meet rather lofty sales goals.  Since then, Fisker has twice drastically revised their sales goals as production delays, cash flow problems and problems with the vehicles battery system.  I wouldn't call that "politically motivated" questioning.  I'd call it looking at the facts and asking questions that make sense instead of blindly buying whatever line of bull that the government throws at you.  Let's tackle some of the problems with the News Journal's defenses of Fisker (why a NEWS organization can't just report the facts and call a spade a spade, I'll never understand).

Fisker's Funding

One of the knocks against Fisker is that it has drawn more support from the government than from private capital.  The News Journal claims in their piece that Fisker has raised $850 million in private capital compared with $528 million in Federal loans, $21.5 million in Delaware direct aid (grants that will not be paid back), a sweetheart no bid land deal on the old GM Boxwood Road plant (saving them tens of millions of dollars on property costs) and untold amounts in California state aid to the start-up company.  USA Today however, gathered different information from the Department of Energy who reviews the funding of companies to whom they give grant and loan money.  They say that Fisker has only brought in $650 million in private equity compared to at least $550 million in government promised aid.  That's a 54% private funding ratio which no other industry could survive under.  That means 46% of the company is subsidized by government funding.

Talking Points

As is typical from the News Journal, they sought out as many left wing sources as they could.  Not hard in Delaware where the far left has bought up every office they can find.  In fact, the only alternative voice they found was Delaware GOP Chairman John Sigler and they took his quotes out of context.  Let's cover some of the more ridiculous statements:
Josh Freed - The Third Way (Progressive Soros funded group)

“Frankly, it would be the equivalent of the Internet sector finding themselves under political attack in the early ’90s as they emerged or automobile companies coming under attack in the early 1900s as they were becoming competitive with horse-drawn carriages and trains as a mode of transportation,” said Josh Freed, vice president for clean energy at Third Way, a centrist Washington, D.C., think tank.

Now this sounds incredibly thought provoking but it's not the first time we've heard it...Obama's Delaware bred messaging czar David Plouffe said this:

“Well, let’s step back for a minute. We have to win this race, you know, we–if we don’t win the clean energy race in terms of technology, innovation, and jobs, and cede it to other countries, we’re not going to have the century–we need this. It’d be like us ceding the automotive industry race or the Internet and computer race.”

Similar points, same problems.  Here they are.

1. Auto companies - The automobile industry wasn't subsidized by the government in the 1900's.  Henry Ford didn't get government help to develop the assembly line and even the oil and gas industry didn't receive government tax breaks until 50 years after it launched.  So if we want to treat the green energy industry like the auto companies, we should remove all funding.
2. Internet - The internet's backbone was indeed created by the government but that was in the 50's and 60's when the government was using it as a defense network.  By the 1990's, the backbone existed and there was little to no government funding for private internet companies.  In fact, the 90's internet boom was such a boom because the government WASN'T pocketing profits.  The money was changing hands in the private sector.

Senator Anthony DeLuca

Senator DeLuca was quoted as saying that "tax incentives and government backed loans are not new" concepts.  Well Senator DeLuca is right but that doesn't mean that tax incentives and government backed loans are right and proper simply because we've been doing them for a while.  Holding individuals as slaves wasn't any more right in 1860 than it was in 1776 simply because it wasn't a new idea.  It was wrong all along the way because it's wrong.  The government picking winners and losers is simply a losing proposition and Delaware has proven that first with Blue Water Wind and now with Fisker.  Both are government supported programs and both have or are failing.

Alan Levin

Alan Levin, DEDO Chief and resident Markell Administration "Republican" whose very presence on the staff deflects most criticism of the Markell Administration's failed economic policy from Republicans, said that the "shortest way to fail is to not try".  An awesome bumper sticker for sure but light on substance.  In this case, you don't have people saying do nothing.  You have people saying that what you're doing doesn't make sense and that you should look to solid, tried and true methods to lift us out of the depression we are in.  You have people who understand that when the chips are down, every dollar counts.  You don't spend your last dollar on a lottery ticket.  Mr. Levin is known locally for creating "Happy Harry's" a discount drug store that was eventually bought for millions of dollars by Walgreens.  Mr. Levin knows better than anyone, how businesses should work.  It's curious then, that someone so steeped in business acumen would not understand the simple fact that a start-up company with no name recognition, no long term reputation and little to no advertising who plans to immediately leap frog two well funded, long established rivals and capture 20% of  the market within 2 years is a little far-fetched.  Either Mr. Levin isn't as smart as we think he is (unlikely) or he's schilling for the Governor to score political points.

The above points are just a few examples of truth over the fiction of the News Journal puff piece.  Folks, we're dealing with a lack of responsibility here.  From the top of our government to the media who props them up we have a machine that just keeps wasting more and more money, time and prosperity on their friends and campaign donors.  We've got to wake up.  Here's an exercise for you, read the News Journal piece and see if you can find the inconsistencies with reality then post them here.

Fisker’s folly costs Delaware more than tax dollars

Brian Selander responded to harsh criticism from DelawareGOP chairman John Sigler about the Fisker layoffs.  He cited Congressman Castle and President Bush as Republicans who joined the Democrats in their scheme to pick winners and losers with taxpayer dollars.  Perhaps Mr. Selander wasn’t paying attention last year but Delaware replaced Congressman Castle BECAUSE of support for plans like this, Cap and Trade and universal healthcare (which Castle voted against after spending more than a year campaigning in FAVOR of it).  Perhaps Mr. Selander has been too busy holding on to Governor Markell’s coat tails to see that a majority of Delaware Republicans have rejected the big government/massive spending by the Bush Administration.    The bottom line is that there are always going to be the Olympia Snowe’s and the Mike Castle’s of the world who will side with bad ideas.  Picking a handful of people who don’t see the forest through the trees is laughably short cited and unfortunate to come from someone in the Governor’s office.

The reality is that Fisker, like Blue Water Wind before it and Bloom Energy in the future is another in a string of government green energy busts that will in the end cost taxpayers hundreds of billions of dollars.  Fisker was touted to be one of the biggest and best opportunities that will revive our state’s economy.  It was supposed to be a success story in the American Green Energy plan but it’s been plagued with a series of failures.  Now, 26 employees in Delaware (40 more in California) and a number of subcontractors are being let go.  This after Fisker fell behind its production schedule and poor sales results, after experiencing exploding battery problems similar to that of the Volt, after being “unable to find a suitable contract manufacturer in America” and moving operations to Finland “temporarily” and all this AFTER receiving a promise of $529 million from the Department of Elections ($193 million paid out thus far).  Even industry experts and alternative energy supporters are pointing to Fisker as an example of what NOT to sink money into.  WDELnews reports that Chelsea Sexton, an alternative fuel advocate, has beencritical of the Fisker “investment”:

"We have yet to see enough substance from Fisker at any point to justify the investments that have been made. So as frustrating as it is to see people lose their jobs, I also can't condone the DOE revising their loan, when they haven't met what they're supposed to do,"

The Blaze news service sums it up quite well:

So, let’s see if we got this straight:

1. Fisker Automotive is given $193 million of a $529 million DOE loan to produce two lines of plug-in hybrid cars and, presumably, create jobs
2. The company is unable to find a contract manufacturer in the United States, so it outsources manufacturing jobs to Finland (the company vehemently denies charges that it has used any part of the federal loan to fund manufacturing operations in Finland)
3. The automaker falls behind its production schedule and experiences“delays” in its sales (i.e. poor sales), depleting its capital
4. But to qualify for the rest of the $529 million loan guarantee, the company has to maintain a certain amount of capital
5. Therefore, in order to meet this DOE benchmark, Fisker Automotive decides it will save money by laying off an “undisclosed number” of employees

Considering that this is yet another government-sponsored clean energy investment that has experienced layoffs, and contrary to what Energy Secretary Steven Chu’s says, Fisker Automotive hardly seems like “proof positive” that the White House’s efforts to create new jobs are working.

In the end, who is hurt by this?  The Delaware (and American) taxpayers for one as hundreds of millions of dollars are once again squandered on yet another massive government failure.  Also beaten about the head and neck are the Delaware UAW members whose jobs were snatched from them by the failures of Chrysler and GM.  They were promised new opportunities with Fisker and that has been snatched from them.  Delawareans who are already facing a crisis of confidence have also been hurt.  Who are they to trust?  Our government has failed them time and again by simply overstretching their role and reaching into the private market.  It’s time we stopped that and focused government on what it should be focused on, which is creating a climate that promotes business expansion in the private market, encourages competition and ensure that the market customers have unfettered access to the products they want need and desire. 

Governor Markell and DEDO head Alan Levin have shown that good intentions alone will not fix our economic problems.  I have no doubt that they want to see jobs back in Delaware but there can be no doubt that they’ve failed to deliver them.  Why?  Because instead of allowing the customers and the citizens to decide what businesses come to Delaware and thrive and what businesses leave, they’ve taken to picking the winners and losers themselves.  The results?…Blue Water Wind and Fisker.  It’s about time we sent a message that what we need is a new direction.

Fisker is the Second Shoe to Drop

A story on Delaware Online today (sorry, I refuse to subscribe to the death of another tree in order to boost News Journal sales so I am not sure if it was actually printed in the paper version) displays the folly of American green energy policy.  Just a month after Blue Water Wind failed and cost us untold millions of dollars and just over a month after Fisker announced that their car faced similar battery problems as the Chevy Volt, the embattled car company, who has pushed back their production dates more than 2 years, has laid off 25 workers and cut contracts with a number of subcontractors.  Fisker has been touted as the next big thing to prove that the government's green energy strategy works.  Yet from it's inception it has needed massive government subsidies and government assistance in the form of sweetheart land deals to stay afloat.  After promising Delaware's largely union autoworkers big payouts if they could just hold on through the retooling of the former GM plant, the company has all but dashed those hopes.  Thousands of Delaware autoworkers who have been home after being laid off by GM and Chrysler and waiting for Fisker to start up now have little hope for a return to automobile manufacturing in Delaware.

On this blog back in September, we talked about Delaware's Solyndra lesson.  We pointed out the problems with Fisker's numbers and we referenced a number of other articles that had similar concerns.  The bottom line, many of us saw this coming but the government ignored us at best and made fun of us at worst.  They called us crazy and yet here you can see the results of government attempting to pick winners and losers.  In the end the taxpayers lose when their money is taken and wasted, the employees lose when they end up out of work and the communities lose when businesses close their doors and the ancillary jobs leave town. 

Mark this date.  In December of 2011, I gave a talk at a meeting of concerned citizens where we covered a range of topics including green energy, fracking and the cost of our government's green waste.  You can see the presentation from that meeting here.  The next green energy disaster to rock Delaware will be Bloom Energy who is relying on Delmarva Power to subsidize its Bloom Boxes by tacking on a $2-$4 charge to each bill.  Government cannot and should not pick winners and losers.  This is yet another reason why we simply MUST put people who understand our markets and the design of our government in the places currently occupied by corrupt officials more interested in cronyism than their constituents.