North Carolina taxpayers have spent about $163,000 to train employees of the Alevo battery factory in Concord that shut down abruptly last week amid a Chapter 11 bankruptcy filing.
Multi-million dollar tax incentives typically get more attention when the state awards them to companies as carrots to lure new jobs. But these firms often receive another benefit as part of these economic development packages: classes for their workers at local community colleges.
Alevo’s workers received their training through Rowan-Cabarrus Community College and other third parties under a November 2014 agreement with the state’s community college system, according to documents obtained through a public records request.
Last week, the company said it was laying off its 290 workers in Concord as part of a bankruptcy filing for the Swiss company’s two U.S. units. Alevo, which gained attention this spring for a high-profile Russian investor with ties to President Donald Trump, said it had made progress with its “groundbreaking battery technology,” but fell short on financing.
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The N.C. Community College System covered the cost of instructing Alevo’s workers on subjects ranging from safety to hydraulics to Microsoft Office software, according to the documents obtained by the Observer. The $162,956 spent provided training for 304 employees (a figure that may double-count workers who took multiple classes) for three fiscal years from July 1, 2014, to June 30, 2017, according to Maureen Little, the system’s vice president of economic development.
The college system does not look to “claw back” such spending from an employer unless it was spent on internal company training, which was not the case with Alevo, Little told the Observer this week.
“There was a lot of focus on safety and manufacturing skills,” she said. “We certainly feel that those are transferable skills to other industries in the area.”
Once the community college system develops a training program with a company, state officials create a budget for the spending and then monitor progress in creating jobs as the money is paid out, she said.
“It’s our responsibility to manage the project and expend funds and deliver training as those jobs are being created,” Little said.
Alevo declined to comment on the training program.
Hiring lagged projections
Alevo arrived in Cabarrus County in 2014 with great fanfare, vowing to create hundreds of jobs through its revolutionary technology at the site of a former Philip Morris cigarette factory. Its boxcar-sized batteries were supposed to revolutionize energy storage, allowing big utilities to save up power for when they needed it later.
As part of its agreement with the community college system, Rowan-Cabarrus Community College assessed 1,829 individuals who were interested in applying for job openings. Once workers were hired, the college provided training, with the workers getting paid by Alevo while they were taking classes.
In October 2014, the company said it planned to create 500 jobs in its first year, while the community college agreement signed a month later called for the training of 750 employees. But as of February, Alevo had just 215 workers when it announced plans to hire 200 more over five years – in return for up to $2.6 million in state tax incentives.
No incentives were ever paid because the company did not reach job-creation milestones, according to the state Commerce Department.
When the state was negotiating the tax incentives with Alevo last year, officials with the Commerce Department and the Economic Development Partnership of North Carolina – agencies that recruit jobs to the state – looked to include additional community college training in the package, according to emails obtained by the Observer from the partnership.
In an email in October 2016, Little told the officials that the community college system had “assisted the company with the recruitment, screening and assessment, and training of all current employees,” which at the time totaled 180. At the time, she said the community college system had already spent about $200,000 training Alevo workers, but she told the Observer this week that figure included money that ended up not being spent.
As for future training expenses, Little estimated the value at $1,400 to $1,600 per eligible trainee, according to a January 2017 email. The final document in February tallying Alevo’s potential incentives for creating 200 new jobs included $303,000 for training. In the end, the community college system only ended up spending about $26,000 in the fiscal year ending June 30, according to Little.
Help for displaced workers
Even before the bankruptcy filing, Alevo had faced questions about its technology and financial stability. This spring, news emerged that a Russian oligarch named Dmitry Rybolovlev had become an investor and installed executives who once worked at his fertilizer company.
In its interaction with Alevo, the community college system wasn’t in a position to evaluate whether the company’s new battery technology was working or ready to go to market, Little said this week.
“We’ve got to believe when a company makes an investment like Alevo did that the research and development has gone into the overall process,” she said. “We don’t question, ‘Is it a good widget or is it a bad widget?’ We are moving forward with making sure that employees are proficient and producing those widgets.”
The community college system has provided training to other companies in the past that have shut down, Little said, and in those cases it has worked to help laid-off employees find new jobs. Alevo has said it plans to liquidate the assets of its U.S.-based companies to maximize value for creditors.
“We are extremely sad that this didn’t work out, not only for the company but certainly for those employees,” Little said. “The bottom line is that our local college – Rowan-Cabarrus Community College – is well-equipped to assist those displaced employees in a transition process.”
Here is what the state spent on training for Alevo workers, according to the N.C. Community College System:
▪ Fiscal year ended June 30, 2015: $71,319.42.
▪ Fiscal year ended June 30, 2016: $65,048.51.
▪ Fiscal year ended June 30, 2017: $26,589.00.