By Kenric Ward | Watchdog.org Virginia Bureau
FREDERICKSBURG — Amidst his second run for governor of Virginia, Terry McAuliffe is spending time and other people’s money outside the state trying to kickstart his sputtering electric “cars.”
McAuliffe, who touts himself as a “businessman” first and former head of the Democratic National Committee second, is chairman of GreenTech Automotive, which is beginning to build “Neighborhood Electric Vehicles” in Mississippi.
GreenTech touts its “MyCar” — top speed of 45 mph and a price tag around $10,000 — as the future of urban transportation. Roadside skeptics say the NEV looks like Solyndra on wheels, a disparaging reference to the heavily subsidized solar company that went bankrupt two years ago.
In a 2010 interview, McAuliffe predicted that his company’s first-generation NEV would go on sale mid-2011. GreenTech initially pledged to hire thousands workers to assemble tens of thousands of vehicles a year at its new Tunica, Miss., plant by the end of 2012.
None of those projections has come close to fruition. The Tunica plant is still under construction, and the payroll barely tops 100 workers.
“They talk of a big assembly line. They had six cars,” said Michael Sheffield, who has covered the northern Mississippi project for the Memphis Business Journal.
Working out of a temporary facility in Horn Lake, Miss., 15 miles north of Tunica, GreenTech has been as quiet as its electric vehicles. Following a visit by Bill Clinton in July, the company didn’t post another announcement until this month, when it showcased a handful of NEVs to the U.N. Climate Change Conference in Doha, Qatar.
As McAuliffe vows that GreenTech “will help save American manufacturing, create thousands of middle-class jobs and reduce dependence on foreign oil,” the New York native has cultivated close connections to China.
Charles Wang, president and CEO of GreenTech, brought a background in car dealership networks and auto parts manufactures in China. He also served as secretariat general of China Financial Policy Research Center of Peking University.
In 2011, GreenTech reportedly began construction of a production site in Inner Mongolia and formed a joint venture in China with Shengyang Zhongrui Investment Co. BusinessWeek said core components for MyCar would be built by GreenTech in Mississippi, and GreenTech vehicles would be sold in China. That information has been scrubbed from the GreenTech website.
Sheffield told Watchdog.org that nearly all of the early assembly parts came from China.
Lyn Arnold, president of the Tunica Chamber of Commerce, agreed that was the case … until recently. “It’s changed in the past year. Now they are sourcing most of their parts from the U.S.”
But, Arnold added, no suppliers have located to Mississippi to feed GreenTech.
Investment for the electric-vehicle project is sketchy, and, like production, behind schedule.
GreenTech, which has no filings listed with the U.S. Securities and Exchange Commission, says vaguely that it relies on “private financing.”
At one point, the company used the controversial federal EB-5 program, which grants green cards to foreign nationals and their families in exchange for investments that create 10 or more jobs in the United States.
But with only about 100 employees currently in Mississippi, GreenTech’s EB-5s gambit has not been much of a fundraiser or job generator.
“There’s a lot of criticism of (EB-5s) being basically immigration scams,” said John O’Dell, a senior editor who has written about GreenTech for Edmunds automotive research.
O’Dell said NEVs, such as those already built by GEM-Polaris, “make a lot of sense in closed-campus environments like factories because they’re incredibly cheap to run” and have a range up to 70 miles.
“The question is, ‘How much money can GreenTech afford to lose until they get traction?’” O’Dell asked. “There’s an enormous amount of money involved in building vehicles and maintaining inventory. It’s not like building a computer.”
McAuliffe & Co. have not received federal “green energy” subsidies like the ones that fueled Solyndra, but GreenTech did get a multimillion-dollar assistance package from the state of Mississippi and Tunica, an economically depressed area desperate for new business.
Public loans and grants to the company total more than $8 million, with millions more in tax exemptions and rebates.
Sheffield said Tunica officials were particularly eager to do the deal.
“They’ll stay with this until the wheels fall off,” he predicted.
Though Tunica County is home to several riverboat casinos, the winnings haven’t trickled down to the hardscrabble community in northwest Mississippi.
“The city doesn’t even have a Wal-Mart — just a Waffle House and a Dollar General,” Sheffield said.
Mississippi’s Economic Development Authority says the taxpayer subsidies are contingent on GreenTech raising $60 million by Dec. 31, 2014. If GreenTech fails to meet the capital requirement and hire 350 full-time workers, local and state authorities can “claw back” their investments.
Skeptics wonder if those provisions will be worth the paper they’re written on if the GreenTech goes under.
McAuliffe, whose salary is unknown, has not disclosed his financial backers, saying only that they are “strategic investors active in the green technology area.” But by all accounts, the totals raised so far are dwarfed by the sums GreenTech needs to ramp up promised production.
Why not Virginia?
GreenTech, headquartered in McLean, Va., landed in Mississippi because Gov. Haley Barbour offered the company a better deal than the Old Dominion.
Virginia officials said the GreenTech project was brought to Virginia Economic Development Partnership in 2009, during then-Democratic Gov. Tim Kaine’s administration. But VEDP was never able to get a concrete business plan with financing from the company.
No formal proposal was brought to either Kaine or his Republican successor, Gov. Bob McDonnell.
The failure to pursue a Virginia venue mystifies officials in the Southside region, where unemployment is in double digits, vacant manufacturing facilities abound, and land remains dirt cheap.
“My knowledge is that (GreenTech officials) visited once in Virginia,” said Jeremy Stratton, head of the Danville Office of Economic Development.
“Southern Virginia would be very competitive with Mississippi in terms of manufacturing infrastructure and operating costs,” he said.
State Delegate. Don Merricks, R-Pittsylvania, agreed.
Merricks said the economically depressed Danville and Martinsville regions are “well positioned” for new businesses.
“Manufacturing is down, but it’s coming back. We have fiber optics in and a low cost of doing business,” the delegate told Watchdog.org last week.
Though he was elected in 2007, two years before GreenTech locked onto Mississippi, Merricks said he “never heard” of GreenTech.
Early on, McAuliffe’s company narrowed its search to right-to-work states, south of the Mason-Dixon Line. That strategy flew in the face of the pro-union positions McAuliffe held while heading the DNC and chairing Hillary Clinton’s 2008 presidential campaign.
Jeannemarie Davis, a former Northern Virginia legislator currently running for the GOP nomination for lieutenant governor, assessed McAuliffe’s game plan bluntly.
“That he would go to the best deal, speaks volumes about where his heart is at,” she said.
Blending business and politics
When viewers of the GreenTech website click on Chairman Terry McAuliffe’s name, they’re taken to the “McAuliffe for Governor” campaign page that seeks donors and volunteers.
The presumptive Democratic nominee’s cyber linkage doesn’t necessarily connect with Virginia voters, however.
McAuliffe’s corporate profile on social media is all but invisible. GreenTech’s year-old Facebook page has a grand total of 12 “likes” and its Twitter account (@MyCarWMGTA) has just 26 followers on Twitter, including President Obama’s Organizing for America, and McAuliffe himself.
“The biggest criticism people had when (McAuliffe) ran (for the Democrat’s gubernatorial nomination) in the (2009) primary was that a lot of political people didn’t even know he lived here because he didn’t get involved locally,” Mame Reiley told Bloomberg News.
Reiley managed Brian Moran’s Democratic gubernatorial bid four years ago, a primary won by state Sen. Creigh Deeds, D-Charlottesville.
Though McAuliffe, a prodigious fundraiser, spent $8 million on his campaign — more than twice as much as his opponents — he garnered just 26 percent of the vote in his party’s primary.
After the 2009 election, but before Mississippi Gov. Barbour left office, McAuliffe and Wang worked with officials in Jackson and Tunica to cobble together the multimillion-dollar incentive package that landed GreenTech in the Magnolia State.
While Barbour hailed his “Mississippi Blueprint” for economic development, some analysts question its effectiveness.
Matt Mitchell, senior research fellow at the free market-oriented Mercatus Center at George Mason University, saud, “There are two ways states compete for business — either straight up with good public policy, or with an acknowledgement that ‘We’re terrible, but are willing to suspend the usual rules to attract companies.’”
Mercatus’ “Economic Freedom” index of states ranks Mississippi a lowly No. 30 and places Virginia fifth overall.
On “Regulatory Policy,” Mercatus again lists Mississippi in 30th place while Virginia is No. 4.
A New York Times survey found that Mississippi gave “at least” $416 million in incentives, grants and tax breaks to companies, not counting GreenTech. Virginia, a far larger and wealthier state, allocated $1.3 billion, but that represented a slightly smaller share of the state budget, the report found.
Not surprisingly, McAuliffe, whose office did not respond to Watchdog.org’s repeated requests for an interview, applauded Barbour’s efforts.
“Thanks are due to Governor Barbour for being so receptive to our strategy to create manufacturing jobs in the United States,” McAuliffe said last July on GreenTech’s website.
Taking a global perspective, the gubernatorial hopeful declared this month, “We have a responsibility to our customers and to our planet to conserve our precious natural resources and to leave this world a better place for future generations. Green jobs are jobs of the 21st century. We’ve gotta be in the future.”
Contact Kenric Ward at [email protected] or at (571) 319-9824.
— Edited by Kelly Carson, [email protected]
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