Southeast Michigan is one of 20 regions from around the country picked for federal grant money that targets industries considered to have growth potential, Gov. Rick Snyder and an Obama official said Monday.
The federal Jobs and Innovation Accelerator Challenge program selected Metro Detroit for $2.1 million in funding from among 146 applications for its potential in alternative energy manufacturing. The program is part of President Barack Obama’s initiative to create clusters of technological growth nationwide.
The Michigan Economic Development Corp. said it will match up to $500,000 of the federal funding with money of its own for the proposed Southeast Michigan Advanced Energy Storage Systems Initiative.
“This isn’t about a fuzzy, wishy-washy initiative,” Gov. Rick Snyder said at a press conference Monday at Next Energy Center, a nonprofit energy consultancy that is part of TechTown at Wayne State University.
Though electric and hybrid vehicles aren’t yet widely popular, the cluster will capitalize on projections for greater demand, Snyder said.
“A lot of it is making a commitment to weather the hard times,” he told The Detroit News.
Next Energy, the Macomb/St. Clair Workforce Development Board and the Michigan Minority Supplier Development Council are heading the initiative, which includes training courses and contractor workshops.
But similar projects around the country have yielded mixed results, said Olav Sorenson, a professor at Yale University’s School of Management. Companies located near competitors usually grow slower and fail at higher rates, he said.
“Concentration can have real costs as well, since it can create a fragile economy with little ability to adapt to the changing world,” Sorenson said.
“For Detroit, these lessons seem particularly poignant.”
Michigan has a competitive advanced battery sector, with more than 35 companies and suppliers for battery systems and electric vehicles, according to the MEDC.
But the alternative energy business has been rocky for at least one company that has received Michigan tax credits. A123 Systems, a Waltham, Mass.-based firm with lithium-ion battery-making plants in Romulus and Livonia, saw its year-to-date loss through September widen 61 percent.
“We have never been profitable,” read the firm’s Nov. 9 quarterly filing with the Securities and Exchange Commission that also said future expenses “will make it harder for us to achieve and maintain future profitability.”
Energy Conversion Devices Inc., the Auburn Hills solar panel maker, also has seen its losses increase. It is trying to sell its battery manufacturing operation.
But the Obama administration sees clean technology and other economic clusters having economic potential. The 20 awards in its program total $37 million in federal grants and are projected to create 4,800 jobs, retain 2,400 jobs, train 4,000 workers and lead to 339 new businesses.
“This is not about the federal government riding into towns and writing plans for communities,” said John Fernandez, U.S. assistant secretary of commerce. “We’re only going to be competitive as a country if our regions are competitive.”
By Jaclyn Tropp, The Detroit News