Updated at 1:35: The Boston Globe reports Wanxiang America Corp. has won approval from CFIUS to acquire nearly all the assets of A123 Systems Inc., according to the company today.
In a statement Rep. Blackburn responded: "Just eight days ago, President Obama stated in his Inaugural address that 'we cannot cede to other nations the technology that will power new jobs and new industries.' I could not agree more, which is why it disturbs me that the administration would approve the sale of A123 to Wanxiang.”
The U.S. company A123 Systems (AONEQ) went bankrupt making batteries for the electric car industry, despite receiving close to $250 million in federal stimulus funds in 2009 to help jumpstart the business.
Now, the North American offshoot of a China's largest automotive components manufacturer, Wanxiang America, is set to acquire A123 after winning the bid for the beleaguered firm at a bankruptcy auction in December. Wanxiang beat out America's Johnson Controls (JCI) at the auction.
The deal awaits final approval from the Treasury’s Committee for Foreign Investment in the United States, or CFIUS.
Meanwhile, U.S. Congresswoman Marsha Blackburn (R-TN) wants the sale blocked, and she sat down with The Daily Ticker to explain why.
“There’s a good reason we should all oppose this,” Rep. Blackburn, also vice chair of the House Committee on Energy and Commerce, tells The Daily Ticker. She explains that while A123 has a commercial-end of the business, it also has a defense division. Blackburn contends they work off the same platform and backbone.
“We’re very concerned that [Wanxiang] would have access to this technology that is used for our electrical systems for drones, for our computer systems, and we do not want them to have that information," she says.
To dampen such concerns, Wanxiang will acquire only the commercial assets of A123; the defense portion of the business was sold separately to Navitas Systems, an Illinois-based firm.
Blackburn, however, argues A123 was divided for bookkeeping purposes, but the technology is the same.
She joins a list of more than two dozen lawmakers, according to the Wall Street Journal, who have expressed concerns over A123’s tax-payer funded technology ending up in the hands of a foreign purchaser, or questioned whether the battery technology can be separated from military projects.
President Obama said as much during his second inaugural address. “We cannot cede to other nations the technology that will power new jobs and new industries," he told the nation.
This controversy comes at a time when unemployment in the U.S. remains elevated at 7.8%, and when job creation is essential to an economic recovery.
According to Crain’s, Wanxiang America has been acquiring dozens of American companies for two decades saving 3,000 American jobs in the process. The president of the company insists the firm has never sent a single job or single penny back to China.
The question arises, is this really the time to be saying no to investment in US jobs and industry?
Blackburn sees the issue differently. “It’s the perfect time to be saying ‘let’s be very good stewards of U.S.-based [intellectual property],’” she says. “And A123 has 91 different patents that are important to the US military…you do not want to have that IP and that tech turned around and used against your US troops.”
Blackburn is introducing legislation in the House, H.R. 221, the SMART SALE Act, which addresses future deals like this. The bill would require the Committee on Foreign Investment in the United States to notify Congress of these potentially sensitive business transactions more quickly so lawmakers can weigh in.
As for A123, it joins Beacon Power and Solyndra on a list of alternative energy firms that received government backing and then went bankrupt. These bankruptcies have fueled criticism of the government’s investments in clean energy initiatives with taxpayer money.
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