It isn't often I get a bloggable news item out of the Midland Daily News front page, but our status as Dow Chemical's HQ came to play today--
The Dow Chemical Co. has backed out of its ownership of Dow Kokam LLC, selling its interest in the advanced battery manufacturing company formed in 2009 to MBP Investors LLC.
MBP is an affiliate of Townsend Ventures, which is one of the founders of the Dow Kokam. The deal, announced Friday, makes MBP the majority owner of the company, which operates the Midland Battery Park on Saginaw Road in Midland and the Lee’s Summit facility in Missouri.
2009. Back at the beginning of the Obama regime, when hope and change sprung eternal and stimulus money for alternative energy projects flowed freely.
Fast forward an Olympiad and times have changed. The dreaded Tea Partiers have closed the lid on the punchbowl and the economics of electric cars and other green things have come home to roost. This related story came across the wire yesterday; I saw the headline on Drudge if I recall, but I found Silicon Valley's birdcage liner via a quick "Fisker loan" Google-
The Obama administration said Friday it will lose $139 million on a loan to struggling electric car maker Fisker Automotive after selling part of the loan to a private investor that immediately took the company into bankruptcy.
The Obama team wanted battery-powered cars to take off, but even with huge subsidies to both buyers and makers, it 'twern't working. Tesla seems to be fairing OK, but the Fisker deal seemed shaky even four years ago, with a small-fry luxury car make with fishy Russian backing looking like a poor bet to turn into a mass-market electric car maker; that take proved correct with 20-20 hindsight.
Meanwhile, back to the MDN Dow story-
Dow Chemical said its decision to sell its share of Dow Kokam fits with the ongoing overhaul of the corporation’s mix of businesses. In recent quarters the company has emphasized return on capital and building value for shareholders, which has led to a review of every business and targeted some for sale or joint ventures if they aren’t capable of performing to Dow Chemical’s new expectations.
Translation into everyday language- the money wasn't there like they had hoped, and Dow was looking to wash its hands of it. They'll still be happy to sell materials to Kokam, but they've bailed on an equity stake. Unlike government, who wants to keep its voters and donors happy with recovering investment dollars a back-burner issue, the financial bottom line is a business' bottom line.
"Maximizing shareholder value" is the CFO's mantra, as the first chapter of just about every finance textbook will tell you. Dow's stake in the battery market wasn't doing that. Not good news for the denizens of 1600 Pennsylvania.