Baltimore energy company eyeing Ford Wixom plant

The shuttered Ford Motor Co. assembly plant in Wixom has been a source of frustration over the past few years as state, county and local officials have consistently but unsuccessfully sought to transition the property into the hands of a viable business owner. Now that a pair of renewable energy companies — Xtreme Power and Clairvoyant Energy — have backed out of purchasing the property due to financial challenges, a new lithium battery developer has stepped up efforts to redevelop the property.

The potential transaction has merit, according to local officials who are cautiously optimistic since talks are still in the infancy stages.

Townsend Energy Solutions, LLC, headquartered in Baltimore, Md., has expressed interest in the Ford property. Founded in 1975, Townsend Energy Solutions invests in real estate, energy, and sporting and manufacturing companies. Their investment holdings topped $1.5 billion in 2008, and the company is currently involved in a joint venture with Dow Kokam to produce batteries for automotive and consumer use.

“As a developer they’ve had a lot of home runs and that’s what interested us,” said Wixom Mayor Kevin Hinkley.

Now that Xtreme Power and Clairvoyant reneged on their commitment after almost four years, Hinkley said each business that expresses interest in the sprawling Ford property is a contender.

“We’re cautious, but still taking every opportunity seriously,” Hinkley said.

In addition to Townsend, Caterpillar has expressed interest in the property.

“It’s an open game now that Ford is marketing the property globally,” Hinkley said.

However, talks are ensuing with Townsend as the front runner.

“Townsend is still in talking stages with Ford Land on whether to lease or buy a portion or all of the property,” said City Manager Mike Dornan. “They are also talking about demolishing the plant and starting new.”

To sweeten the deal, the state Senate Economic Development Committee convened on Thursday, Dec. 1 and unanimously supported legislation to amend the state’s battery tax credit available under the Michigan Business Tax Act so the company can move forward and renovate the shuttered property.

“We would like to thank state Sen. Mike Kowall (R-Commerce, Highland, Milford, Walled Lake, Wixom, Wolverine Lake, White Lake, Orchard Lake, West Bloomfield) for taking the charge on this,” Dornan said.

If passed by the state Legislature, it would reduce the previous battery credit from $100 million to $50 million while increasing the job creation requirement by 50 percent, from 500 jobs to 750 jobs.

“Townsend is a venture capitalist company that helps start-up businesses through connections, and turns over operations once the product is proven,” Dornan said.

The legislation, Senate Bill (SB) 855, has also been expanded to allow for credits on battery-related components and equipment. The U.S. Department of Energy recently issued a $161 million incentive to Dow Kokam to develop battery technology. Half of Xtreme Power’s battery credits would be reassigned to Townsend, but they must be secured by Dec. 31, 2011.

“If the credits are issued and not used then nothing is lost, but if used we’re talking about a substantial number of jobs,” Dornan said. “That’s what the Legislature must ask — is the venture worth approving? Otherwise, Townsend may not come to Michigan.”

Townsend’s proposal calls for moving into more than 400,000 square feet of space that would be constructed between 2012-2013. A $238 million capital investment would be made to develop and manufacture automotive batteries. As a direct result, Townsend plans to hire 875 high-tech workers, resulting in a $30 million-plus payroll, according to data from Kowall’s office. Another 5,600 would be hired for ancillary jobs. Total tax collection by the state spanning a 10-year period would be over $66 million.

While many lithium battery manufacturers are suffering losses and market-value declines due primarily to cost and safety issues, Townsend has developed a strategy to produce relevant products to substantially reduce the price of the electric vehicle battery pack by offering up solutions based on existing technologies.

The second problem facing lithium battery manufacturers is low power density, or the measure of how quickly a car can be accelerated. Townsend apparently has improved upon technology to mitigate this concern.

“Right now, electric cars are slow to get up to speed and Townsend’s product solves that,” Dornan said.