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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 > Entry
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.
Permalink | Comments (11) | Post your comment | Categories: City of Dayton, Economy, Editorials, Ellen Belcher, Local Business, Ohio government, Wright Patterson Air Force Base
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By joe_mamma
August 24, 2010 7:42 AM | Link to this
What? The government can’t just decree a business is successful? You mean they actually have to efficiently and profitably produce a product that satisfies what their customer wants.
By Getting To The heart Of The Matter
August 24, 2010 7:43 AM | Link to this
This debacle again brings me to question the competency of the local and state people we have staffing these economic development agencies, and why they are still here. They have delivered near nothing in terms of growth, and certainly were out-to-lunch in the recent years of mass exodus from this area and the state in general.Who are they and what are their credentials. While this is a noteworthy national/global recession, other states are eating our, and generations to follow, lunches at enormous expense.
By Getting To The heart Of The Matter
August 24, 2010 7:45 AM | Link to this
This debacle again brings me to question the competency of the local and state people we have staffing these economic development agencies, and why they are still here. They have delivered near nothing in terms of growth, and certainly were out-to-lunch in the recent years of mass exodus from this area and the state in general.Who are they and what are their credentials. While this is a noteworthy national/global recession, other states are eating our, and generations to follow, lunches at enormous expense.
By riverdog
August 24, 2010 8:20 AM | Link to this
Joe Tuss has been running this show for how long ? His track record looks more like the car that hit the bridge yesterday on 675 than path to sound job growth with checks and balances. Remember the leadership worked to give him more money in 2010 to build jobs !!!! The only thing worst is Murray is still calling himself Economic Director in Riverside.This continued leadership will most certainly turn our region around to a vibrant job growing area.
By Tom
August 24, 2010 8:31 AM | Link to this
Joe Tuss is not at fault. Not every venture is going to work out but it appears this company was not be honest about their status with state and local people. Let’s go get the money back from them
By David Esrati
August 24, 2010 1:55 PM | Link to this
Ms. Belcher- prove there ever was a production line for the X-25. In fact, had the AF not pulled the plug on this debacle, they State would have kept believing these charlatans and gracing them with our tax dollars that were supposed to pay for ESSENTIAL SERVICES. That’s the part of the equation that you don’t seem to understand- tax dollars aren’t for politicians to play venture capitalists. http://www.esrati.com/ultracell-ultraripoff/5513/ Not only should the assets of UltraCell be auctioned off or turned over to the State- the company should be prosecuted for fraud- along with the people from Ohio Department of Development who allowed this company to play with our tax money.
By Mark Dues
August 24, 2010 9:22 PM | Link to this
Please post messages only from those who give their real names. The comments above, except for David Esrati’s, are a joke. If DDN isn’t willing to establish this policy, pull the plug on article comments!
By Davidss2
August 27, 2010 8:49 AM | Link to this
Sounds like mr. dues should go start his own blog on the internet. However, attempting to quelch the First Amendment of others sounds like the typical Democrat game. Don’t like critical comments, start your own blog and set your own rules for there, mr. dues. One reason for not using real names is that it makes it easy for others, who disagree, to identify one by looking up telephone numbers, e.g.
By Davidss2
August 27, 2010 8:50 AM | Link to this
Sounds like mr. dues should go start his own blog on the internet. However, attempting to quelch the First Amendment of others sounds like the typical Democrat game. Don’t like critical comments, start your own blog and set your own rules for there, mr. dues. There’s a reason for not using my real name.
By Josh
August 28, 2010 10:01 PM | Link to this
If the government wants to play investor, its not immune from the risk! Public or private funds! They ask these companies to put together expectations/forecast on product revenues and employee counts, but its all like looking through a cloudy crystal ball. The voters approved 3rd Frontier, that put us (the State) in the investor seat, there is a long proposal writing, review, interviews, and award process involved. The comments here seem to know every little about the process, the company, its product, or its employees. All I got to says is, fold the hand, the State and Taxpayers (including the 14 employees) lost!
By Joshua
August 28, 2010 10:05 PM | Link to this
If the government wants to play investor, its not immune from the risk! Public or private funds! They ask these companies to put together expectations/forecast on product revenues and employee counts, but its all like looking through a cloudy crystal ball. The voters approved 3rd Frontier, that put us (the State) in the investor seat, there is a long proposal writing, review, interviews, and award process involved. The comments here seem to know very little about the process, the company, its product, or its employees. All I got to says is, fold the hand, the State and Taxpayers (including the 14 employees) lost! Try to get back, what you can, according the the original investment agreement…but the this game is over.