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August 08, 2019 02:10 PM

Battery maker A123 Systems to lay off 42 as it steps back from manufacturing work in Michigan

Annalise Frank
Crain's Detroit Business
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    Lithium-ion battery maker A123 Systems LLC plans to lay off 42 employees at its Livonia headquarters as ends manufacturing in Michigan to focus on research and development.

    The cuts affect "manufacturing-related employees" including production operators, technicians, plant supervisors, engineers and others, A123 said in a notice it filed with the state last month.

    Lithium ion batteries use a polymer film in its core and often have plastic housings and other structural parts

    The company is eliminating jobs at 39000 W. Seven Mile Road, the site that's the center of A123's global operations. It also has research and development facilities in Massachusetts, manufacturing in China, an engineering and sales office in Germany and a presence in the Czech Republic.

    A123 expects to lay off the employees, all non-union, no earlier than Sept. 27.

    "As a company we're transforming our footprint that we have here in Southeast Michigan to more of a development and R&D center," said Mike O'Kronley, executive director of corporate strategy for A123.

    The manufacturer announced in 2017 it wouldbuild a $40 million headquarters in Novi and complete it by the end of last year, Crain'sreported at the time. That strategy included the shuttering of its battery cell production plant in Romulus that resulted in 200 layoffs.

    Construction is nearly done in Novi and the company expects to move in well before the end of the year, O'Kronley said. As part of the transition, it is ending manufacturing operations in the region — thus the layoffs.

    A123 has hired 52 engineers so far this year, O'Kronley said. It employs nearly 400, including those set to be laid off.

    "We do have a commitment to the area and the region," he said. "We think there's a rich talent pool here. We want to remain good tenants of the community."

    The manufacturer has a history of bankruptcy and buyout.

    Founded in 2001 out of materials developed at the Massachusetts Institute of Technology in Cambridge, Mass., A123 spun out of the university in 2005, announcing a new fast-charging lithium-ion battery based on revolutionary chemistries of nanophosphate materials. It earned government grants in that decade, and spent $300 million to retrofit a plant in Livonia.

    The plant, the largest lithium-ion plant in North America, produced a thin battery for use in plug-in hybrid and electric vehicles. But electrification never materialized on a mass scale, and the company sank. It filed for bankruptcy in 2012 and was acquired by Wanxiang, with whom it broke even for the first time in 2015.

    As of 2017, A123 expected to generate revenue of $500 million that year and exceed $1 billion in 2019. O'Kronley declined to comment on current financial results and projections.

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