Kentucky officials are on the verge of pulling off one of the economic development deals of the young century with their aggressive leap into the void that is U.S. hybrid vehicle battery manufacturing. If they get good news in July when federal officials announce which prospective manufacturers will receive nine-figure grants, the commonwealth will cement an important role for the state in advanced battery making.
With a greening economy shifting toward renewable energy that requires storage capacity, vehicle battery success could develop into an industry supplying advanced batteries for almost all aspects of modern life.
In one two-week period in April, Kentucky officials learned they had landed two potential cornerstones of the fledgling energy-technology (ET) economy: a national advanced battery manufacturing research center and a national vehicle battery manufacturing facility. With a combination of forward thinking and aggressive action, state officials seized an opportunity that could make Kentucky the epicenter of the advanced battery industry in the United States.
That could launch a full-fledged ET boom here. When Austin, Texas, won a similar site competition in the 1980s for semiconductor manufacturing and research, a tech boom ignited that continues there today.
Beyond battery making, Gov. Steve Beshear and his economic development team foresee a powerful ET cluster that begins with additional auto making in Kentucky – which now ranks third behind only Michigan and California – and includes ET research as well as operations by the makers of any energy-consuming product: appliances, electronics, smart-grid components.
Battery-making is a $70 billion industry globally. There is no U.S. advanced battery industry now, but many, including President Obama, consider creating one vital to the nation’s economic future. As the world’s economy shifts from fossil fuels to better-managed renewable energy sources, those with ET resources will supplant today’s petroleum barons as global economic forces to be reckoned with. Because of this the American Recovery and Reinvestment Act of 2009 – the stimulus bill – set aside $2 billion to jumpstart advanced battery making.
“Right now almost all advanced battery manufacturing is in Asia,” Beshear said. “If we let this continue, we’ll find ourselves in the same situation in terms of future automobile manufacturing as we find ourselves today as it relates to fossil fuels and particularly oil – we will be captive to other countries for the supply of batteries necessary to fuel our cars. In terms of national security as well as future economic development of this country, it makes all the sense in the world to make sure we have a viable and vibrant advanced battery industry here in United States.”
Production could begin next year
If U.S. Department of Energy officials decide in July to allot serious money to a consortium that wants to build the nation’s first major advanced battery manufacturer on 1,551 acres south of Elizabethtown, Kentucky could begin churning out large, high-tech lithium ion cells by late 2010.
That consortium is the National Alliance for Advanced Transportation Battery Cell Manufacture, known as NAATBatt. It submitted its application May 19 for a slice of the special $2 billion advanced battery pie. That was only a month after the consortium selected Kentucky’s proposal over a half dozen others to become home to its manufacturing site.
A reported 165 groups are seeking the U.S. Department of Energy grant money, but Kentucky officials are confident NAATBatt will get the $300 million needed for the project to move forward in its current incarnation. Uniquely, NAATBatt is a non-profit with 55 members firms, its construction plans are ready and so is the Kentucky land.
Gov. Steve Beshear said the commonwealth is committed to invest $200 million toward the project, and lots of that is already funded.
Contributions include land the state assembled when it vied for a Hyundai vehicle manufacturing plant eight years ago; $44 million in Interstate-65 improvements that already are in Kentucky’s six-year road plan; $10 million in water, sewer, natural gas and other utility improvements; $10 million in worker training assistance for special-skills jobs; and up to $100 million in economic development bonds to assist with construction.
“We anticipate that there will some 1,500 construction jobs to build the facility, and as many as 2,000 permanent green jobs at the facility once it is completed and up and running,” Beshear said.
Pretty good, but that could be just the beginning. The governor and his economic development team believe more vehicle manufacturers definitely will be attracted to Kentucky when advanced batteries production begins.
“In addition, several members of the [NAATBatt] consortium have indicated a desire to co-locate around this facility, which would create more spinoff jobs,” Beshear said.
The founding members of NAATBatt include 3M, ActaCell, All Cell Technologies, Altair Nanotechnologies, Dontech Global, EaglePicher Corp., EnerSys, Envia Systems, FMC, Johnson Controls-Saft, MicroSun Technologies, Mobius Power, SiLyte, Superior Graphite and Townsend Advanced Energy.
Chicago attorney Jim Greenberger of the Reed Smith law firm played a key role in creating NAATBatt.
‘Not your grandfather’s worksite floor’
Plans call for the manufacturing facility along I-65 and a CSX rail line in Glendale to begin with four production lines, building to 16 production lines in three to four years, Greenberger said.
“Anybody who want to come in can have their technology manufactured at our facilities,” Greenberger said. NAATBatt will be a contract manufacturer for those with licensed battery technology, similar to what now takes places in China. Unlike operations in Asia, however, “We won’t have to make a profit.
Members (of NAATBatt) can have their cells manufactured at cost.”
According to an article posted on GreenCarCongress.com, the NAATBatt operation will consist of headquarters, a facility to refine products and production processes, and a larger operation designed for mass battery manufacturing. Total square footage of the campus is expected to reach 1 million s.f.
Production lines will house state-of-the-art equipment to pursue multiple production ideas and run trials to demonstrate technology. While lithium-ion offers the most promise immediately, formats such as lithium-air, zinc-hydride or zinc-air could come to the fore later.
“It’s not going to be your grandfather’s worksite floor,” said Greenberger, who, like state officials, looks down the road and envisions NAATBatt becoming “the anchor tenant” of a large ET development.
The economic impact would be huge. The NAATBatt consortium, in fact, is modeled after Sematech, a consortium formed in the 1980s to build a U.S. silicon chip industry at a time when Asia was about to gain a global stranglehold. Sematech chose to locate in Austin, Texas, in 1988, launching a tech boom there that continues to the present.
Sanford Kane, NAATBatt’s chief financial officer and chair of its site selection committee, was chairman of Sematech’s site selection committee
‘We could organize an industry’
This opportunity for the first major U.S. advanced battery manufacturing operation to take root in the serene green beauty of the Bluegrass arose because of an unusual set of circumstances combined with timely hard work. Greenberger himself wonders at it all.
“I joke with people that this is really just a law firm marketing exercise that got carried away,” he said.
In 2002 Greenberger got involved in work at Reed Smith to seek business in “green” and clean growth technology. He spent five years educating himself about a broad topic, examining trends, trying to sort the wheat from the chaff.
“I thought to myself, you know, in this whole area of clean tech I’ve got to pick the one thing that I think is really going to take off. What is the paradigm-changing technology that’s really going to happen in our lifetime?” Greenberger said.
He zeroed in on hybrid car batteries. And that led him across town to Argonne National Laboratory, which is the center of U.S. battery technology research. Argonne held a conference last June at Greenberger’s urging at which he met Ralph Beard, who spoke about the lack of a U.S. manufacturing industry. Beard is now NAATBatt’s chief technical officer. Kane also was a speaker at that conference.
Meanwhile, Greenberger had a position on an advisory committee for the campaign of a Chicago politician running for president, Barack Obama.
At that June 2008 event, he said, “I remember turning to one of the fellows from Obama’s office and saying we could organize another conference or we could organize an industry. And that was sort of the beginning of this whole undertaking.”
NAATBatt was born. Seeking funding, Greenberger connected with the office of his local congressman, Rahm Emmanuel. Looming large now is a conversation Greenberger had with Emanuel’s brother, an acquaintaince from high school, who asked now much money they were talking about.
“I said in talking to the folks in the industry, and sort of mapping this all out on the back of an envelope, I would say $2 billion should probably do it in terms of the appropriation that really needs to be made to jumpstart this industry,” Greenberger recalls.
That is the amount appropriated this year to stimulate U.S. advanced battery manufacturing – after several unexpected events played out. Obama beat Democratic frontrunner Hillary Clinton and Republican nominee John McCain for the presidency. Emanuel became Obama’s chief of staff. The world economy went into a meltdown, the massive U.S. economic stimulus spending bill sprang onto the political scene, and it passed.
“When I see the things that have come together, I never could have possibly predicted last June that they would have actually happened,” Greenberger said. “It is just as though the finger of fate is pointing toward this and saying we’re going to make happen whatever needs to happen to let this thing get done.”
Right place, right time
In Kentucky, a key event was Beshear’s appointment of Len Peters secretary of the Energy and Environment Cabinet. A chemical engineering professor who taught nearly two decades at the University of Kentucky and went on to head of the U.S. Department of Energy’s Pacific Northwest National Laboratory in Richland, Wash., Peters came to state government with academic expertise, research community knowledge, national contacts and credibility.
Peters and Secretary of the Cabinet Larry Hayes, who also serves as secretary of Economic Development, were key players when Beshear early in his administration set a goal of positioning Kentucky to be a U.S. economic leader and initiated strategic thinking to accomplish that. Wanting to leverage the state’s vehicle manufacturing base, the administration also zeroed in on advanced batteries as a key step.
Peters learned Argonne National Lab’s board wanted to expand beyond Chicago for the first time in its 60-plus-year history, and he got in touch with its director, Robert Rosner, a fellow member of the close-knit national lab director fraternity. Knowing also that Argonne was the top advanced battery research center in the nation, an idea took shape to partner on battery manufacturing research and do it in Kentucky.
Last Nov. 5 – the day after Obama was elected president – Beshear, Peters, Hayes, state Commissioner of Commercialization and Innovation Debra Clayton, University of Kentucky President Lee Todd, University of Louisville President James Ramsey and several top faculty members all made a trip to Argonne to pitch the idea. They reached a handshake agreement during that trip, Peters said.
Next, Argonne officials connected Kentucky on a timely basis with Greenberger and NAATBatt, which was under tight time constraints to pursue federal stimulus dollars. Kentucky took a running start at becoming the site of NAATBatt’s planned manufacturing facility, too. Greenberger said Peters and Hayes immediately impressed him with their knowledge, understanding and aggressiveness.
“I have a lot of experience in site selection,” NAATBatt’s Kane told Site Selection magazine, “and I haven’t ever seen a team that put together a more committed or professional effort than Kentucky. Instead of sending a bunch of charts and e-mails, which others did, they created a private Web site and gave us a private password. On that site was everything you could possibly want in terms of details of the site. The governor did a video for us, and it was incredibly professionally done. It showed the level of dedication that went into the effort.”
Greenberger, too, said the state’s pitch wowed him. “They put a lot of other states to shame.”
“This world is a very competitive place these days, and those that succeed are those that work at it,” Beshear said.
Argonne officials announced in April their partnership with the state, UK and UofL to launch a national advanced battery manufacturing research facility on Ironworks Pike just north of Lexington. Less than two weeks later, NAATBatt revealed Kentucky is where it will manufacture advanced batteries.
Now state and NAATBatt officials await the Department of Energy’s decision in July on which manufacturers will receive grant dollars. By the way, the U.S. Secretary of Energy is Steven Chu, a Nobel Prize winner who was director of the Lawrence Livermore National Laboratory at Berkeley and as a result knows Peters and the Argonne people well.
It’s all “an amazing alignment of stars,” Greenberger admits. Contemplating the “finger of fate” that seems to be at work as next month’s grant decision nears, Greenberger said, “Let’s point just a little bit farther.”