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Ellen Belcher is the Dayton Daily News opinion pages editor. She writes about state government, education, the environment, higher education and all things Dayton.
Martin Gottlieb is an editorial writer and columnist for the Dayton Daily News opinion pages. He focuses on the political process itself and does such national issues as war, the economy, taxes and Social Security, as well as a hodge-podge of local and state issues.
Scott Elliott is an editorial writer and columnist for the Dayton Daily News opinion pages. He writes about education, city and suburban issues, politics, business, workforce and consumer issues.Home > Blogs > A Matter of Opinion > Archives > 2010 > August > 24
Tuesday, August 24, 2010
Editorial: Investors took risk, but does UltraCell owe?
The private investors — national and local — and the governments that got behind UltraCell Corp. in 2006 and wooed it to Dayton thought they were banking on a sure thing.
At least the company’s position was as sure as things get in the world of new technology.
UltraCell was started in 2002 using technology developed at Lawrence Livermore National Laboratory. The company has a product the military wants. In time, the Air Force, gave the company a contract.
UltraCell had collaborators at UD’s Research Institute, the Edison Materials Technology Center and Mound Technical Solutions Inc.
The Air Force contract was managed out of Wright-Patterson’s Air Force Research Laboratory, giving UltraCell a reason to want to be in Dayton and Ohio.
The state’s Third Frontier program was a funding resource for the firm’s research, and, through that competitive grant-making process, would be vetted by independent researchers.
Once the prototypes for the small battery packs that could power, for instance, laptops on the battlefield were put into volume production, Ultra Cell would be the sort of high-tech manufacturing operation that the region wants to locate here.
It all added up to so much. But, on Aug. 13, production was abruptly shut down and the operation was moved back to California. Fourteen people were working for the company in Dayton; the initial goal in 2006 was to have 360 by this time.
It wasn’t just money from Dayton and the state’s Third Frontier program that didn’t earn a payback. Venture capitalists also are feeling the sting. Still, public money is precious, and it’s never good when a private business gets a lot of government support and then doesn’t do well.
Back in May 2007, the company was promising to put $74 million in its Dayton operation.
In May 2009, it was billing its Dayton facility as “the first and only volume-production micro fuel cell facility in North America.”
As late as November 2009, an UltraCell executive was quoted as saying, “We’re building 100 percent of the XX25 (the fuel cell systems) here in Dayton. We also have transferred almost the entire supply chain from California and other places to Ohio.”
Now, of course, the questions become: Are any of the governments entitled to some of their money back? Is there any hope of seeing any of it? So far, everyone from Dayton to the Ohio Department of Development is saying that they’re exploring their options.
Critics will say that’s a euphemism for saying, a) no; b) we don’t know or c): here’s hoping everyone forgets about this investment.
Funding for these sorts of projects is always complicated. In this case, for example, not all the Third Frontier money went directly to UltraCell. Its research partners also benefited; they and their work remain.
But, one hopes, there were also commitments from UltraCell that it has to honor — or pay some financial penalty if its best-laid plans didn’t materialize.
The Third Frontier — especially because of the size of the multiyear, multibillion program — needs to be making a public accounting not just of its successes, but also of its losses. Everyone understands that losses will happen, but the ledger needs to be complete in spelling them out.
That’s as central to the integrity of the program as awarding its grants fairly.
UltraCell is an example of what can go wrong even when the state bets on an industry it has good reason to think can grow jobs. The loss is a disappointment, but as significant is how it’s dealt with.
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