Add VPG to the list of government-funded failures:
A Michigan maker of vans for the disabled that received a $50 million Energy Department loan has quietly ceased operation and laid off its staff.
Vehicle Production Group, or VPG, stopped operations after finances dipped below the minimum required as a condition of the government loan, says former CEO John Walsh. Though about 100 staff were laid off and its offices shuttered, the company has not filed for bankruptcy reorganization.
VPG, of Allen Park, Mich., received its Energy Department loan under the same clean-energy program — now under fire by House Republicans — that originally committed $527 million to troubled plug-in hybrid carmaker Fisker Automotive and $535 million to solar start-up Solyndra, which has filed for bankruptcy reorganization. VPG was deemed eligible for the clean energy loan because some of its vans were to be fitted to run on compressed natural gas.
Bonus: It’s also a failure of the Pickens Plan to change the nation’s automobile fleet to compressed natural gas:
“. . .the company had raised $400 million in private capital from investors, including financier T. Boone Pickens, and built 2,500 MV-1 vans.”
And can we go for the hat-trick? Ties to an Obama fundraiser:
VPG’s DOE loan was controversial. In 2011, The Washington Post raised questions about a fundraiser for President Obama and the loan. It reported that VPG was part of the portfolio of companies under Washington, D.C.-based investment firm Perseus, whose vice chairman, James Johnson, was an Obama adviser and fundraiser. Perseus said at the time that Johnson played no role in procuring the loan for VPG. The Energy Department said at the time that the loan was based entirely on merit after two years of review.
So, what did the DOE think this company could do at the time?
Oh, well. Just a little bit off judging the “merit after two years of review.”
The DOE approved loans of only $8.4 billion out of the $25 billion authorized, so overall losses will be minimized. And of the $8.4 billion loaned, $5.9 billion went to Ford while $1.4 billion went to Nissan — companies that can pay the loans back regardless of the success of their underlying venture. This is not, as Veronique de Rugy pointed out in her must-read analsysis of the ATVM program, as good news as it seems:
The worst part of this story, once again, is that most of the money guaranteed by the Department of Energy went to companies that should have borrowed money on their own. Instead, the government played venture capitalist with our money, causing systemic and unintended distortions to the market.