Powered by batteries: Holland area vies to be national hub for lithium-ion manufacturing

Posted on February 15, 2011

Drive along a certain two-mile stretch of 48th Street amid the cornfields of rural Holland, and you will see firsthand why West Michigan is contending to be the capital of lithium-ion battery manufacturing for electric vehicles for all of North America.

Two sprawling factories serve as the endpoints for the short drive: To the west, the Johnson Controls-Saft Advanced Power SolutionsMeadowbrook plant, which is working the bugs out of its battery-making equipment; and to the east, the LG Chem Ltd. factory, still under construction.

As you drive between the plants, along what some locals now call “battery boulevard,” you’ll passTrans-Matic Manufacturing Co., which makes deep-drawn metal canisters for the batteries, andTUV SUD America, another industry supplier of battery testing equipment being used on the east side of the state in Auburn Hills, as well as in Toronto.

Now extend your trip 40 miles north, where the Swiss-German manufacturer Fortu PowerCell Inc.hopes to get final site plan approval from Muskegon Township so it can break ground this spring on a 100,000-square-foot lithium-ion battery manufacturing plant. Plans call for an expansion to 1 million square feet as early as 2013 in the 400-acre industrial park.

‘Not just looking at cornfields’

“It’s no longer what can be — we’re not just looking at cornfields now,” says Randy Thelen, president ofLakeshore Advantage in Zeeland, a grassroots organization credited with helping bring battery manufacturing to the Holland area. “We are looking at steel going up in the air and parking lots filled with people working at the plant, as well as contractors.”

Not bad for an industry that didn’t even exist three years ago in America — or anywhere else, for that matter.

“For all intents and purposes, the lithium-ion battery industry for transportation purposes did not exist globally anywhere three years ago,” said Eric Shreffler, sector development director of advanced energy storage for the Michigan Economic Development Corp.

“Companies have been building lithium-ion batteries in Asia for years, but those were primarily for consumer electronics. You’ve got vehicles such as the (Toyota) Prius, but those run on nickel metal hydride batteries. Here you’re talking about taking lithium-ion chemistry and turning it into what they call large format, for automotive applications.”

Johnson Controls-Saft is completing a retrofit and build-out of a 180,000-square-foot plant in Holland for large-format lithium-ion batteries. The company — a joint venture between Milwaukee-basedJohnson Controls Inc. and the French battery company Saft Groupe S.A. — contends that it was the first to commercialize the technology in 2008 when it opened its Nersac, France, plant. There it produces batteries for the Mercedes S-class hybrid sedan.

Why in Holland?

Officials at Johnson Controls-Saft say a fortunate combination of factors made Holland the logical choice for their new plant. Johnson Controls already has a strong presence in the area, with about 2,800 employees in its interiors division — the outgrowth of its purchase of Prince Corp. in 1996. The city is conveniently between customers in the Detroit area and the supplier’s technical center for batteries in Milwaukee. Also, a number of its suppliers are nearby.

“And Holland’s got a fantastic workforce,” said Elizabeth Rolinski, vice president of hybrid operations for Johnson Controls-Saft, herself a native of Spring Lake, just south of Muskegon. “The work ethic is very strong here, and people already have the automotive-type experience and understand the quality levels that we are going after.”

LG Chem and Fortu PowerCell officials cited similar reasons when they announced the construction of their plants.

Fortu PowerCell’s close association with Bayer AG also played a role in selecting Muskegon. Fortu has a manufacturing site in a Bayer industrial park in Dormagen, Germany, and hopes to replicate that arrangement in West Michigan.

‘An entirely new industry’

“This is an entirely new industry. This is battery production, not assembly,” said Cindy Larsen, president of theMuskegon Area Chamber of Commerce. “We have a lot of precision manufacturing here, and we know that part of the reason (Fortu PowerCell) selected Muskegon was our pool of skilled technical workers.”

Larsen said that if it reaches full capacity and employs more than 700 people, the Fortu project would be the biggest single jobs generator for the Muskegon area in decades.

Thelen at Lakeshore Advantage estimates that battery manufacturers will invest $2 billion in plants and equipment over the next decade in the region, which may result in 10,000 direct and indirect jobs.

He concedes that any number of factors can change those outcomes, and the estimates amount to “wetting my thumb and sticking it in the wind.”

But it’s an educated thumb. More than $1 billion already can be accounted for in plants under construction or announced projects for the area. Johnson Controls-Saft will spend an estimated $220 million on its plant, LG Chem expects to invest $303 million in its plant, and Fortu PowerCell plans to spend more than $600 million on its Muskegon Township plant.

Johnson Controls-Saft finished first and LG Chem third among nearly 50 companies competing for some of the $2.4 billion in federal stimulus grant money earmarked for lithium-ion battery manufacturing in the United States.

Other regions in the hunt

Although West Michigan has much to crow about, the battery-capital designation can shift quickly to other areas of the state as plants open and technologies conquer.

A123 Systems Inc. (Nasdaq: AONE) — the second-largest winner in the federal stimulus sweepstakes, with a $249 million grant — trumpeted in September that its 291,000-square-foot plant in Livonia is the largest lithium-ion automotive battery production plant in North America.

Dow Kokam — a company owned by The Dow Chemical Co. (NYSE: DOW), TK Advanced Battery LLCand Groupe Industriel Marcel Dassault — have completed the exterior walls of a 400,000-square-foot, $322 million plant in Midland that is scheduled to be operational in 2012.

Regardless of which region wears the ceremonial crown as battery capital, the influx of battery manufacturing to West Michigan probably will be the spark for startups and spinoff companies as residents develop skills in the industry.

Nearly 30 percent of the workforce in Ottawa County is involved in some aspect of manufacturing — about three times the national average, Thelen said.

That knowledge base, combined with the region’s entrepreneurial spirit, has proved to be the catalyst for many startups in office furniture manufacturing, for instance.

The spinoff effect

Aside from the 55 full-time employees at the Johnson Controls-Saft Meadowbrook plant, most of the job creation has been through local companies and contractors that will either supply or service the fledgling lithium-ion battery industry.

The Grand Rapids-based Huizenga Group has coaxed business out of both building and outfitting the Johnson Controls-Saft plant through three companies it manages: JR Automation Technologies LLC, Dane Systems LLC and Parkway Electric & Communications.

JR Automation, in Holland, designed and manufactured some special machinery used in assembling and packaging at the plant, said Jim Kramer, the company’s vice president of sales. Employment at JR Automation has risen from 160 full-timers two years ago to 220 now, thanks to rising customer demand, projects in various industries and the work at Johnson Controls-Saft.

Dane Systems, in Stevensville, has added 10 employees for a total of 45 people to handle the additional demand for battery-related manufacturing, assembly projects and other work.

Parkway Electric, a Holland electrical contractor at the Johnson Controls-Saft plant, now employs about 115 full-time employees to handle that work and other construction projects, up from 90 about a year ago.

Trans-Matic Manufacturing, a Holland-based company specializing in deep-drawn metal components in the automotive, hardware and other industries, will supply cell casings to the Johnson Controls-Saft plant.

Robert Stander, vice president of advanced product development, said his company is doing container development and prototyping work with auto companies that are looking to add the transportation type of battery cell configuration to their portfolios.

Trans-Matic also is collaborating with H&T Battery Components, a division of the Heitkamp & Thumann Group of Dusseldorf, Germany, to supply metal containers, components and assemblies to lithium-ion power storage cells and other energy storage technologies, according to H&T’s website.

Shreffler of the MEDC said there probably will be more announcements of activity in Michigan as companies receive word on loans from the U.S. Department of Energy — or they simply decide to enter the fray.

“We’ve got some very major players here now,” he said. “And there are other major players that aren’t even here yet.”

“Right now, this is somewhat akin to the early days of Silicon Valley and computer technologies. Just about anything can happen.”

By Matthew Gryczan, Crain’s Detroit