Another one of the Energy Department’s taxpayer-financed “investments” just went belly-up. This one died very quietly, without making a formal announcement, but USA Today noticed:
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 threshold required by the government as a condition of the loan, says its former CEO, John Walsh. Though about 100 staff were laid off and its offices shuttered, it has not filed for bankruptcy reorganization.
For a change, this company didn’t make battery-powered cars or solar panels. VPG received Energy Department funding because “some of its vans were expected to be fitted with engines fueled by clean compressed natural gas.”
USA Today reports their vehicles were selling well enough to create “a healthy order backlog,” but the company “ran low on cash and didn’t have the dealer network that it needed.”
That seems odd, given that VPG boasted of pulling in $400 million in private venture capital on top of their $50 million DOE loan. They couldn’t convince private interests to invest a little more in a company that had a backlog of orders – at least 2300 vehicles on order when production stopped six months ago, according to USA Today – and only needed more dealers to fulfill it?
As is customary with these Energy Department loan debacles, there are questions about the approval process:
VPG’s DOE loan was controversial. In 2011, the Washington Post raised questions about a fundraiser for President Obama and and the loan. It reported VPG was part of the portfolio of companies under Washington, D.C., -based investment firm Perseus whose vice chairman, James Johnson, was an adviser and fundraiser to President Obama. 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 its merit after two years of review.
During two years of extensive review, no one at the Energy Department was able to anticipate the lack of sufficient qualified dealers to process the company’s orders?