Van Maker Backed By Energy Department Loans Shuts Down
WASHINGTON (AP) -- A Michigan company that received a $50 million federal loan to make vans for the disabled has stopped production and laid off its 100 workers.
Vehicle Production Group, or VPG, suspended operations in February after its finances dipped below a minimum level required as a condition of the federal loan.
The Allen Park, Mich., company received the loan in 2011 under the same clean-energy program that provided a $529 million loan to electric car maker Fisker Automotive Inc. Fisker had received $192 million before a series of problems led U.S. officials to freeze the loan in 2011. The Obama administration seized $21 million from Fisker after the company laid off three-fourths of its workers last month.
An Energy Department spokeswoman called VPG's suspension of operations "unfortunate," but said it was "the exception rather than the rule" for the loan program's portfolio of more than 30 clean-energy projects.
The loan program "was always intended to involve taking some risks by supporting innovative and cutting edge technologies that hadn't been tried on a commercial scale before," said Aoife McCarthy, a DOE spokeswoman.
Even with the Fisker and VPG losses, the program has spent only a small fraction of the money set aside by Congress to cover expected losses, McCarthy said. The DOE recouped $5 million from VPG last month, she said.
John Walsh, VPG's former chief executive officer, said Thursday that the company was a victim of poor timing.
"Sales took a little bit longer to get going" than expected, he said. "Cash got depleted."
Walsh, who now works for a bus manufacturer, said the DOE loan was a small piece of the $400 million VPG raised, mostly through private investors like Washington-based Perseus LLC.
Perseus Vice Chairman James Johnson is a major fundraiser for President Barack Obama, and he briefly headed Obama's vice presidential selection committee in 2008. A DOE spokesman said in 2011 that Johnson, a former CEO of housing mortgage giant Fannie Mae, played no role in persuading the Energy Department to award the loan to VPG.
Before its collapse, VPG sold more than 2,000 wheelchair-accessible vans that were made at an Indiana plant that formerly made H2 Hummers. The plant is owned by AM General, which made the vans on a contract basis. AM General is considered a likely buyer for VPG.
The company's main product, a van that costs about $39,000, has a built-in ramp for a person in a wheelchair. It also has room for a driver and three other passengers.
About 25 percent of the VPG models run on compressed natural gas, a feature that helped the company win the DOE loan.
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