From President Obama's July 2010 visit toHolland for groundbreaking of LG Chem battery plant.
HOLLAND, Mich. (WZZM) - It was a promise of hundreds of new jobs with competitive wages, but now almost all the workers at LG Chem in Holland are on furlough. Two years after President Obama visited the city, touting the potential of the company, it still has yet to begin production.
LG Chem was expected to produce 15,000 batteries for electric and hybrid cars every year, as well as hundreds of new jobs. President Obama embodied the excitement during the ground breaking in Holland.
"You're leading the way on showing how manufacturing jobs are coming back to the United States of America," says President Obama.
Two years later, LG Chem has not produced a single battery and almost all of the 200 employees are on rolling furloughs, missing a week of work every month. Holland Mayor Kurt Dykstra says its a gamble the city had to take.
"The deal as presented to us was, this is the package we've put together, if you're interested sign here. If not, they'll go somewhere else, so sure there were tax breaks put into place," says Mayor Dykstra.
Because of tax breaks, LG Chem will save nearly $50 million in city property taxes over 15 years. The company's also exempt from paying at least $2.5 million for the Michigan Business Tax every year. LG Chem received more than $150 million from a U.S. Department of Energy Grant. When the deal was made for the plant, former Congressman Pete Hoekstra was critical of President Obama and the government incentives.
"This is not his money to hand out, people in those communities paid those taxes," says Hoekstra.
When asked if the lack of progress was disappointing, Mayor Dykstra said, "All one needs to do is look at what's happened with General Motors, their (LG Chem) principle customer, and the sales of the volt."
LG Chem released a statement saying, "At this time LG Chem is not able to make a definitive projection of how long the rolling furloughs may last. That will ultimately depend on market conditions and consumer demand."
LG Chem's tax breaks are part of a 15-year contract with the city, which requires the company to create 300 jobs by 2015. If that agreement is broken, city officials say the company's tax breaks could be dropped. However, Mayor Dykstra says he's optimistic the jobs will come.