UltraCell = UltraRipOff

The Dayton Business Journal reports today that UltraCell, which has had its hand out since it landed in Vandalia- is closing operations in Ohio.

Politicians make lousy venture capitalists- since the money they are playing with is our tax dollars. And don’t just consider the money that we put into this venture as a waste- the whole bureaucracy in the Ohio Department of Development, the “Economic Development Directors” of the region- and the Dayton Development Coalition- are all a colossal waste of our money and energy.

From the DBJ:

UltraCell Corp., which has received millions of dollars in Ohio funding, has shut down its Dayton-area operations.

The Livermore, Calif.-based company, which makes fuel cell systems, broke the news to suppliers in a letter last week saying operations here would end on Aug. 13.

Local and state officials expected a meteoric rise from UltraCell, but that never translated into local jobs.

In 2006, the company announced plans to open a production facility in the Dayton area and create 360 jobs by 2010. In December of 2009, the company only reported having 13 employees at its Vandalia plant.

Officials from UltraCell could not be reached for comment.

Ohio officials are reviewing state grants and loans to UltraCell to determine what the company will be required to pay back, according to a spokesperson from the Ohio Department of Development. The company has been awarded more than $3.4 million in Third Frontier grants over the years and has collected more than $2 million of those grants so far.

UltraCell may not have to pay all of the Third Frontier money, or other grants and loans, because the state did benefit from its partnership with other organizations, such as the University of Dayton Research Institute, the spokesperson said.

In May, 2009, UltraCell reported raising $3.8 million in venture funding to help expand operations at its facility in Dayton. At the time, UltraCell has raised $30 million total since it was started in 2002, according to the company.

via UltraCell closes Dayton operations – Dayton Business Journal.

Of course, Esrati.com said it was a mistake back in December,  2008- “responsible tax dollar management: end job creation grants”

Now, can we go back and take a look at which idiots pushed our tax dollars into this operation- and hold them accountable? How about eliminating them and decreasing the tax burden for the rest of us? Maybe if we didn’t carry all the overhead of people trying to create jobs, there would be some money left for the businesses still left in Ohio to actually hire people who make something other than bad deals and broken promises.

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12 Responses

  1. Civil Servants Are People, Too August 17, 2010 / 1:00 am
    I can’t take credit for this one:

    The Spotlight fallacy is committed when a person uncritically assumes that all members or cases of a certain class or type are like those that receive the most attention or coverage in the media. This line of “reasoning” has the following form:

    Xs with quality Q receive a great deal of attention or coverage in the media.
    Therefore all Xs have quality Q.

    This line of reasoning is fallacious since the mere fact that someone or something attracts the most attention or coverage in the media does not mean that it automatically represents the whole population.

    For example, suppose a mass murderer from Old Town, Maine received a great deal of attention in the media. It would hardly follow that everyone from the town is a mass murderer.


    Yet according to your own post from last week, Dayton used grants to save jobs from 6 other companies.    So that scorecard reads: Dayton 6, Recession 1.   That’s an 85% success rate, based on that limited sample.

    Mr. Esrati says politicians make bad venture capitalists.  I think most venture capitalists would be very happy with an 85% success rate.   In fact, this website suggests a FAILURE rate of 80% is appropriate for VC.   This one found research with similar results.    So VC is  probably not the right metaphor.

    Instead of using fallacies, let’s ask the tough policy questions:

    Why should your community to be the first to give up their job programs? 

    How would cutting these programs make a city more business-friendly?  

    How would you explain these cuts to the small business owners?

    To paraphrase Churchill – it probably is the worst system for creating jobs, except for all the others that have been tried.


  2. David Esrati August 17, 2010 / 9:55 am

    @CSAPT- Dayton didn’t save jobs- they made a donation to wealthy lawyers who were looking for a handout as long as we continue to waste taxpayer dollars on “economic development” instead of top-notch public services.

    Venture capitalists are high stakes gamblers- running schools, safety forces, public utilities, street maintenance aren’t gambles- they are simple tasks- with simple returns. Do them right- and the city can bloom on it’s own.

    Unfortunately- we’ve never experienced first rate service in this community – so we don’t know what to expect- even though we can go to Oakwood and see what it looks like.

    We should be the first to cut these handouts to show that we mean business- we’re going to be bold visionaries who get it- and aren’t going to keep tilting the playing field because we don’t know what our real job is.

    We’re going to cut the “Inspector Gotcha” bs- so that we make it easy to start and run a business- and we are going to proclaim to the world that we’ve had it with crony capitalism- much in the same way we “invented” the city manager form of government almost 100 years ago.

    It’s time for reinvention- ’cause we’re dying on the vine playing this game we’re playing.


  3. bobby August 17, 2010 / 10:22 pm
    CSAPT,  Thank you for saving the law firms of the former Democratic and Republican chairmans of Montomery County- Flannigan & Lieberman. 50k . Deloitte moves to the top floor of Work Flow to save the marginal a$$ of the Port Authority, 200K is given to the aging council that makes 5 million go away in guarantees for R&R in rent. Was there any guarantee to the new EB building owners that you would find a tenant?  Most of the people I know in real estate express that the smart guys sit  on the private side of the table. Sometimes, when you think you are helping, you are just getting in the way. This time, I agree with David.   
  4. David Esrati August 18, 2010 / 8:01 am

    The company abruptly closed the plant Friday, Aug. 13, giving the Ohio Department of Development just three days notice of UltraCell’s decision to consolidate operations in California. Keith Scott, UltraCell’s chief executive officer, didn’t return calls for comment. The shutdown cost 14 jobs.

    via Ohio retains fuel cell expertise, even with loss of UltraCell.

    How much did we invest for 14 jobs? Versus spending the money on public safety, public works and the other things our tax dollars were supposed to go to?

    This corporate welfare gig isn’t working very well.

  5. David Esrati August 19, 2010 / 8:05 am

    The state Department of Development and city of Dayton have said they are assessing how much UltraCell will be asked to repay of the economic assistance it received for the Dayton startup in 2007. That included $3.4 million in state Third Frontier program grants, $16,000 so far in state workforce training funds and $200,000 from Dayton.

    State officials said UltraCell had 14 employees, far short of the 150 it promised Dayton to have locally by the end of 2010.

    UltraCell has scheduled a Sept. 16, auction to sell its plant equipment. Scott declined comment when asked if proceeds from that sale would be set aside for repaying the state and Dayton.

    via UltraCell chief: Cash-flow problems forced shutdown.

  6. jstults August 20, 2010 / 11:53 am
    Anyone got any details on the auction?  They probably have some equipment that would be good for a hackerspace.
  7. David Esrati September 15, 2010 / 6:47 am

    Good news- the State wants its money back:

    UltraCell Corp. defaulted on various forms of state economic development assistance and must repay Ohio $3.2 million after abruptly closing its Dayton fuel cell factory in August.

    That includes all the funding Ohio has provided the company except for a $16,000 work force training grant, said Katie Sabatino, an Ohio Department of Development spokeswoman. By failing to maintain operations in Ohio, UltraCell defaulted on terms under which Ohio provided the money, the department told UltraCell in two letters dated Aug. 23.

    via State wants UltraCell to repay $3.2M for lost jobs.

    Bad news is the company hasn’t been exposed for fraud on the government contracts to deliver the batteries en masse. The top management should be charged with felonies and put away.

  8. David Esrati September 16, 2010 / 8:25 am

    Now the City wants their money back too:

    Add the city of Dayton to the entities wanting UltraCell Corp. to repay economic development funding, in light of the company’s shutdown last month of its Dayton fuel cell manufacturing plant.

    The city sent a letter demanding return of the $200,000 it provided UltraCell to upgrade the company-leased plant on Dayton International Airport property, said Shelley Dickstein, Dayton’s assistant city manager for strategic development.

    But the city is also aware that UltraCell ended its Dayton manufacturing and retreated to its California base because it was running out of money, Dickstein said Wednesday.

    “We may have no other choice than to be patient, given the lack of capital the company may have,” she said.

    via Dayton also wants funding back from UltraCell.

  9. Ice Bandit September 19, 2010 / 9:12 am
    Good news- the State wants its money back:
    Now the City wants their money back too: (David Esrati)
    Good thing Uncle Sam ain’t Aunt Samantha; she’d be pregnant all the time. Any time some slick, Brut-soaked huckster came to town promising jobs it wouldn’t be long before Auntie Sam would be craving Pizza with whipped cream. But the solution to this is twofold, dear David; just quit giving these 21st Century Professor Harold Hills money; and start thinking of the dinero as the taxpayers’  rather than the city or the state’s. Problem solved……..

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