Another Green Energy Company Stumbles: Fisker Announces Layoffs

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By Ronnie Greene and Matthew Mosk
iWatch News | News Report
From The Center for Public Integrity

Fisker Automotive, maker of exotic electric sports cars being built with help from a $529 million federal loan, has announced layoffs at its Delaware plant as it tries to persuade the Department of Energy to continue backing it with public money.

The company says 26 Fisker employees have been let go from the Delaware factory where renowned automotive engineer Henrik Fisker promised to one day begin producing affordable electric sedans. A Delaware newspaper also reported that subcontractors working on the car venture have been let go.

“It’s temporary,” said Roger Ormisher, a company spokesman. “We’re being prudent and sensible as a company.”

Fisker was one of a handful of auto companies to receive sizeable federal loans to help support the birth of an electric car industry in the United States. As the Center for Public Integrity and ABC News reported in October, Fisker’s efforts have been beset by delays — even after the company was touted by Vice President Joe Biden and others.

“Folks, we’re making a bet,” Biden said on Oct. 27, 2009 in Delaware. “We’re making a bet in the future, we’re making a bet in the American people, we’re making a bet in the market, we’re making a bet in innovation.”

While benefitting from U.S. taxpayer support, Fisker signed a contract with a firm in Finland to assemble its first generation electric vehicle, a flashy $97,000 sports coupe called the Karma.

As the layoffs were announced, Fisker approached the Department of Energy about the targets it must meet to continue drawing federal money. It is not yet clear whether the Energy Department will alter the loan’s terms, or invest more taxpayer dollars in the Fisker venture.

Department of Energy officials said they understand that Fisker has experienced production delays, but said they are not uncommon for a new company. And the department remains hopeful about the company’s future, in part because it has successfully raised more than $650 million in private sector investment to support its ongoing operations.

“Our loan guarantees have strict conditions in place to protect taxpayers,” said DOE spokesman Damien LaVera. “The Department only allows the loan to be disbursed as the company meets certain milestones and demonstrates results.

As has been widely reported, Fisker has experienced some delays in its sales and production schedule — which is common for start-ups.  As Fisker works through those issues and incorporates lessons learned from the production of the Karma, the Department is working with Fisker to review a revised business plan and determine the best path forward so the company can meet its benchmarks, produce cars and employ workers here in America.”

Critics of the Obama administration say they fear Fisker was at risk of becoming the nextSolyndra — a reference to the now-bankrupt solar panel firm that received support from a government loan program only to shutter its doors.

When asked directly by ABC News in October if taxpayers should worry about the half-billion dollar federal investment, Henrik Fisker was emphatic: “No, I don’t think they need to worry about it.” Could Fisker be the next Solyndra? “Absolutely not,” he said.

Fisker’s loan commitment, of $528.7 million, was announced in September 2009. The loan was broken in two parts.

In the first, Fisker would use $169.3 million for engineering integration costs to complete its first vehicle, the Karma. Engineering work would take place in Pontiac, Mich., with support from the company headquarters in Irvine, Calif. — and final assembly completed overseas.

The bigger chunk of the loan, for $359 million, would bankroll Fisker’s Project Nina, a lower cost plug-in hybrid sedan. “Fisker estimates that up to 75,000-100,000 of these highly efficient vehicles will roll off assembly lines in the U.S. every year beginning in late 2012,” the Energy Department announced.

To date, Fisker has received $193 million in government funds, according to a company statement.

In October, the company acknowledged outsourcing Karma assembly to Finland, but said the bulk of its government funds would be used to launch the second-generation electric vehicle, still under wraps, that would be assembled in a shuttered General Motors plant in Delaware. Some of those hired to prepare the Delaware plant for that effort were among those let go.

That project, the Nina sedan, has been put off until sometime in 2013.

“We have temporarily delayed work at the plant based on ongoing discussions with the DOE regarding funding for the Project Nina program,” the company said. “As a result, we have laid off 26 people.”

Ormisher said Fisker has delivered between 250 and 300 Fisker Karmas in the United States, and the company is nearing approval to sell the cars in Europe.

Reprinted by permission from iWatch News

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