Video: Green-tech stimulus recipient went broke … a second time

posted at 2:01 pm on June 24, 2012 by Ed Morrissey

This isn’t a recent case, nor the worst we’ve seen from the Obama administration’s green-tech stimulus bubble.  However, it may be one of the most instructive about how governments don’t pick winners and losers in markets, but just losers.  Genesis Poly of Mankato, Minnesota received subsidies from almost every level of government — city, state, and federal — to open its recycling center that transformed agricultural plastic waste into pellets used to create plastic goods.  Both the city and state spent hundreds of thousands of dollars each, part of which got backstopped by $500,000 in Obama stimulus money.  Meanwhile the federal Department of Agriculture guaranteed 70% of a $7.44 million loan to Genesis Poly issued in the fall of 2009.

By the spring of 2010, however, Genesis Poly had closed its doors, swallowed by bankruptcy.  For the second time.  KEYC in Mankato reported on the case of Genesis Poly’s collapse in October of last year:

In the spring of 2010, Genesis Poly went belly up. And with it went Mankato’s money. Along with a $100,000 loan from the Minnesota Pollution Control Agency, and another $7.44 million through a loan with U.S. Bank… 70% of which was backed by the Department of Agriculture.

Genesis Poly was in talks with the Minnesota USDA well before they went to U.S. Bank, and small government advocates are saying the USDA’s involvement could have played a role in U.S. Bank’s willingness to throw money at Genesis Poly.

David Strom, a policy fellow at the Minnesota Free Market Institute says, “There’s an implicit sense of Too Big To Fail. If the government is in, they’re going to keep throwing money at it. It looks like a less risky way to spend your money. You don’t even have to look at the books, ’cause it doesn’t matter. Government is going to back you up.”

But perhaps the most disappointing aspect of this whole story: this isn’t the first time Genesis Poly has gone bankrupt.

Back in 2008, with the same idea and the same investors, AGSI Recycling, as it was called, out of Savage, disintegrated as well, costing another $57,000 for the MPCA, and taking the 8 million pounds of plastic they had collected for production and dumping it all in a landfill.

Strom says, “This company in particular had already gone out of business once. The business model didn’t work. Yes they could produce something that was useful, but not at a price that anyone was willing to pay. If government has to shove money in, you’re burning up that kind of green to create another kind of green coming out the other side. And it just doesn’t make sense.”

Hey, it’s not like Genesis Poly’s first bankruptcy was a big secret.  In January 2010, the Minneapolis Star Tribune wrote glowingly of the second chance the firm formerly known as AGSI would get, courtesy of taxpayer intervention, and they weren’t the only ones singing hosannas, either:

The USDA liked the idea of ag waste recycling so much it guaranteed 70 percent of Genesis’ U.S. Bank loan. The MPCA kicked in a $100,000 loan, while the city of Mankato’s economic development team worked hard to secure the old Spartech plastics plant for Genesis. On Nov. 30, the City Council voted to let the city buy the entire building so it could lease its 97,000 square feet to Hauschild and Schmitz and get production going.

For jobs and the environment

It’s all about “jobs, jobs, jobs,” said Mankato Community Development Director Paul Vogel.

The Mankato City Council voted Monday night to endorse Genesis for millions in state JOBZ tax credits and $500,000 in state economic development loans.

“It’s a wonderful project,” said Mankato Mayor John Brady. “It’s great for the environment.”

Vogel agreed. “What really sold Mankato on this was the potential for job retention. They are looking to start out with 42 jobs and grow in two years to 115 jobs. These are jobs that pay livable wages.”

That’s just what former Spartech workers Clem Hall and Greg Westphal want to hear. They’ve been nagging City Council members for weeks about the Genesis deal.

“We’ve been calling them left and right and coming to the meetings. There were 80 to 90 people like us who lost their jobs,” when Spartech closed in August 2008, said Hall, who is still collecting unemployment. “So a lot of these guys are praying like me that they may have a chance of getting in the door at Genesis. Many of them have 10 to 30 years of plastics experience.”

U.S. Bank’s Sowers said it’s a win-win for the community and the environment.

“We believe in this. That’s why we did the loan,” he said. “The buy-in that we have seen from farm producers and the collection network is impressive.”

Many farmers don’t know what to do with silage and crop wraps so they burn them. Now that there’s an environmentally friendly alternative, farmers are “signing on the dotted line for [Genesis] to come in and collect their plastic and ship it away for free,” Sowers said.

How long did all of these fabulous opportunities exist?  We’ll let a Mankato city councilman explain their facepalm moment:

Mankato City Councilman Mike Laven says, “I don’t think anyone of us saw a 2-month window and that closing. That wasn’t our process.”

Maybe that should teach the Mankato city council to stick with delivering city services and get out of the green-tech speculation business, especially when they’re using (and losing) taxpayer money.

Note: David Strom is a good friend of mine, and the MnFMI does great work on policy in a state that very clearly needs to learn some object lessons from this fiasco.


Related Posts:

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

…campaign funds?

KOOLAID2 on June 24, 2012 at 2:03 PM

Old and busted: Too big to fail.

New hotness: Too green to succeed.

NotCoach on June 24, 2012 at 2:04 PM

Going into bankruptcy twice shows how hard they were trying. Why do you neocons hate hard working Americans?

-libfreeordie

.

fogw on June 24, 2012 at 2:09 PM

Hey, it’s not like Genesis Poly’s first bankruptcy was a big secret. In January 2010, the Minneapolis Star Tribune wrote glowingly of the second chance the firm formerly known as AGSI would get, courtesy of taxpayer intervention, and they weren’t the only ones singing hosannas, either

…can we send THEM the bill?

KOOLAID2 on June 24, 2012 at 2:09 PM

Old and busted: Too big to fail.

New hotness: Too green to succeed.

NotCoach on June 24, 2012 at 2:04 PM

…like it!

KOOLAID2 on June 24, 2012 at 2:10 PM

Genesis Poly of Mankato, Minnesota received subsidies from almost every level of government — city, state, and federal — to open its recycling center that transformed agricultural plastic waste into pellets used to create plastic goods.
======================================

They should try the IMF too!
(sarc)

canopfor on June 24, 2012 at 2:15 PM

It’s not easy, being green….

8thAirForce on June 24, 2012 at 2:15 PM

Sort of makes me want to sell all those shares of GM the Obama administration gave to us taxpayers. Oh, wait…..

Cindy Munford on June 24, 2012 at 2:20 PM

Third times a charm.

Flange on June 24, 2012 at 2:21 PM

Definition of Insanity.

RealMc on June 24, 2012 at 2:22 PM

Is our government, including city/local government, capable of learning? Seriously, CAN they learn? Seems like not.

iurockhead on June 24, 2012 at 2:22 PM

...can we take all these corporate ‘signs’ like Genesis…Solyndra… FiskerEvergreen Solar …SpectraWatt…and countless others…and install them on the White House front lawn?…just to remind us of what we have thrown down the drain!

KOOLAID2 on June 24, 2012 at 2:23 PM

So how much did this gang siphon off? I believe it was reported that Kaiser etc.from Solyndra took $80,000,000 for themselves before they declared bankruptcy.

pat on June 24, 2012 at 2:29 PM

Green energy is a colossal waste.
It would not persist without subsidies, usually massive. On the margins, it crowds out essential conventional energy sources, and raises the price of energy for all, and wastes a huge amount of $, for nothing. Further, it takes more “dirty” energy to produce a given amount of (thus, also “dirty”) green energy; it’s a ludicrous proposition that doesn’t even make sense even if the fear-mongering leftists had it right on climate change.
Yet, that’s the only conceivable justification for these green energy boondoggles: climate change. But AGW is bull. The hockey stick graph was debunked as an agenda-driven fabrication, which means that there is nothing unusual about current temperatures, which means that there is nothing wrong with the climate. Yes, there is nothing wrong with the climate. And the foundation of the AGW theory, a claim made by the ipcc about a causal correlation between CO2 and temperature has also been proven false, yet the theory continues as if nothing has changed. In this must see 3 minute video algor is called out for repeating the false ipcc contention on CO2: http://www.youtube.com/watch?v=WK_WyvfcJyg

anotherJoe on June 24, 2012 at 2:30 PM

This is all 0bama’s fault.
If he would just institute Directive 10-289, high minded, societally responsible businesses like this would have a chance to survive against the evil successful companies which are run by people who value efficiency, effectiveness and an economically viable business plan over good intentions .

LegendHasIt on June 24, 2012 at 2:31 PM

Going into bankruptcy twice shows how hard they were trying. Why do you neocons hate hard working Americans?

-libfreeordie

.

fogw on June 24, 2012 at 2:09 PM

You joke but that was the exact argument Maher made the other night about Solayndra. We as a society are to quick to punish failure when it comes to green industry. I kid you not.

lowandslow on June 24, 2012 at 2:37 PM

Just think,of all the “Shovel Ready Jobs”,that Hopey could of done
with from the Loot of the Green Energy Company failures!!

canopfor on June 24, 2012 at 2:39 PM

Back in 2008, with the same idea and the same investors, AGSI Recycling, as it was called, out of Savage, disintegrated as well, costing another $57,000 for the MPCA, and taking the 8 million pounds of plastic they had collected for production and dumping it all in a landfill.

Hmmm, wonder what’s been done with the latest batch of plastic collected?

WTH is Algore when you need him?

//

GrannyDee on June 24, 2012 at 2:40 PM

Maybe The Won and his greenie buddies should read this.

http://blogs.the-american-interest.com/wrm/2012/05/24/frack-to-save-the-planet/

Cindy Munford on June 24, 2012 at 2:41 PM

“It’s a wonderful project,” said Mankato Mayor John Brady. “It’s great for the environment.”

Two phrases that are never connected by the truth.

Curtiss on June 24, 2012 at 2:42 PM

And this CEO Dan Hauschild lives in a nice neighborhood and drives a nice car when he never produced anything of value in years. All while other are struggling to get by on what little unemployment compensation is coming in while desperately looking for work.
Same for the CEO’s of all these failed entities, it’s should be criminal, they should be in jail.

lowandslow on June 24, 2012 at 2:42 PM

Just think,of all the “Shovel Ready Jobs”,that Hopey could of done
with from the Loot of the Green Energy Company failures!!

canopfor on June 24, 2012 at 2:39 PM

Speaking of “Shovel Ready Jobs.”

GrannyDee on June 24, 2012 at 2:43 PM

http://blogs.the-american-interest.com/wrm/2012/05/24/frack-to-save-the-planet/

Cindy Munford on June 24, 2012 at 2:41 PM

…gosh!…been reading great links all day…(clicking on…you look after your’re done..and it’s usually canopfor or Flora Duh )…dang! It’s Cindy!…who lit the match?

KOOLAID2 on June 24, 2012 at 2:56 PM

KOOLAID2 on June 24, 2012 at 2:56 PM

I can’t even be included with those two, they are amazing. I just happened to stumble on that piece of information and I don’t even know where.

Cindy Munford on June 24, 2012 at 3:03 PM

Wow it is interesting the my uncle began the first plastics recycling in the South back in the early 1960′s, in Beaumont, TX. He then invented the plastic boat paddle. He barely graduated from h.s. and had NOT a dime of tax breaks, subsidies or any other freebie to get started. He ended up being rather wealthy with an exotic animal ranch before it was cool and just for his own pleasure.

Kermit on June 24, 2012 at 3:07 PM

I can’t even be included with those two, they are amazing. I just happened to stumble on that piece of information and I don’t even know where.

Cindy Munford on June 24, 2012 at 3:03 PM

Canopfor and Flora Duh. They really operate at warp speed, don’t they?

GrannyDee on June 24, 2012 at 3:08 PM

OT ~ My springer just howled like a wolf in his sleep. WTH?

He ended up being rather wealthy with an exotic animal ranch before it was cool and just for his own pleasure.

Kermit on June 24, 2012 at 3:07 PM

Then, he obviously did it wrong. /

Fallon on June 24, 2012 at 3:22 PM

Genesis Poly of Mankato, Minnesota received subsidies from almost every level of government — city, state, and federal

And Obama said, “Let there be light” . . . and immediately, there was the most God-awful explosion!

TheClearRiver on June 24, 2012 at 3:36 PM

I can’t even be included with those two, they are amazing. I just happened to stumble on that piece of information and I don’t even know where.

Cindy Munford on June 24, 2012 at 3:03 PM

…on the other threads today? If you’re stumbling…grab my arm!…thanks for the linky n the other thread too Granny Dee!
o/t…someone last night said upperyeastinfection apologized to Resist (he had been a little disrespectful previously about sucking)…did I miss that?

KOOLAID2 on June 24, 2012 at 3:39 PM

Definition of Insanity.

RealMc on June 24, 2012 at 2:22 PM

Whenever I bring up Green “energy” boondoggles with my Lefty family/friends I always get the same response: “But Big Oil gets subsidies, why don’t conservatives ever harp on that?” This is, of course, a dodge. It’s also important to put things in perspective:

As the chart shows, renewable energy is far more heavily subsidized by tax carveouts than any other energy sector, including fossil fuels.

The chart does not, however, take into account the level of those subsidies in proportion to the amount of energy that each sector creates. By that measure, renewables’ federal subsidies are even more lopsided.

visions on June 24, 2012 at 3:40 PM

So how much did these Mankato looters contribute to Obama slush campaign fund ?

burrata on June 24, 2012 at 3:43 PM

Is our government, including city/local government, capable of learning? Seriously, CAN they learn? Seems like not.

iurockhead on June 24, 2012 at 2:22 PM

Learn? No. Everyone knew this place would go bust, but they did it anyway.

dogsoldier on June 24, 2012 at 3:45 PM

OT ~ My springer just howled like a wolf in his sleep. WTH?

Fallon on June 24, 2012 at 3:22 PM

Jerry springer?

Lanceman on June 24, 2012 at 3:47 PM

KOOLAID2 on June 24, 2012 at 3:39 PM

I don’t know, I didn’t stay up. I am still recovering from a long work week in my old age.

Cindy Munford on June 24, 2012 at 3:48 PM

said Mankato Community Development Director Paul Vogel.

Community Development for MANKATO ?

Really ? How big is that community and what is the unemployment and crime rates there ? excluding the moozies ofcourse

burrata on June 24, 2012 at 3:49 PM

From the Houston Chronicle,most of the winners are energy companies not Greenies.

Page 1 of 1

Overall rank Company 2011 revenue (millions) Revenue growth
1 Magnum Hunter Resources Corp. $129 294.8%
2 Vanguard Natural Resources $320 243.1%
3 PAA Natural Gas Storage $343 242.0%
4 Evolution Petroleum Corp. $14 174.4%
5 Oasis Petroleum $330 156.3%
6 Linn Energy $1,623 110.1%
7 Energy XXI $1,167 92.1%
8 Camac Energy $39 88.4%
9 Pernix Therapeutics Holdings $61 82.4%
10 Main Street Capital Corp. $66 81.4%
11 Crestwood Midstream Partners $206 81.2%
12 Flotek Industries $259 76.1%
13 Patterson-UTI Energy $2,566 75.4%
14 Vantage Drilling Co. $485 74.3%
15 Kirby Corp. $1,850 66.8%
16 EOG Resources $9,600 64.0%
17 Key Energy Services $1,847 60.1%
18 GenOn Energy $3,614 59.2%
19 Mitcham Industries $113 58.1%
20 ATP Oil & Gas Corp. $687 56.9%
21 Vaalco Energy $210 56.5%
22 EV Energy Partners $262 52.7%
23 Global Geophysical Services $385 51.3%
24 Buckeye Partners $4,760 51.0%
25 Nevada Gold & Casinos $54 50.6%
1 2 3

docflash on June 24, 2012 at 3:53 PM

Ladies and gentlemen this is exactly how poorly the services that a government provides are provided. To think that anything government does is done well is complete denial. These examples of private sector mishaps and utter failure is SOP for governments.

jukin3 on June 24, 2012 at 3:53 PM

KOOLAID2 on June 24, 2012 at 2:56 PM

I found it at Instapundit!!!

Cindy Munford on June 24, 2012 at 3:54 PM

So WHEN are all the backers of ‘green technology’ going to come forward and PAY BACK all that taxpayer money?

………..yeah, I thought so…………………

GarandFan on June 24, 2012 at 4:03 PM

Jerry springer?

Lanceman on June 24, 2012 at 3:47 PM

The opera? No, more of a Call of the Wild-like deep guttural howl.

Fallon on June 24, 2012 at 4:03 PM

Cindy Munford on June 24, 2012 at 3:54 PM

…thanks?

KOOLAID2 on June 24, 2012 at 4:06 PM

The media has made no sound, except for crickets, on Aquatic Energy LLC and it algae plant. The auction for all the equipment is tomorrow.

Kermit on June 24, 2012 at 4:42 PM

The media has made no sound, except for crickets, on Aquatic Energy LLC and it algae plant. The auction for all the equipment is tomorrow.

Kermit on June 24, 2012 at 4:42 PM

That’s a lot of expensive looking equipment on the auction block.

http://www.pedersenandpedersen.com/AQUATIC-ENERGY-LLC-ag182498.php

Fallon on June 24, 2012 at 4:49 PM

Fallon on June 24, 2012 at 4:49 PM

Hardly expensive at all. Not much worth buying except for the lab equipment. The more expensive stuff appears to already be gone.

Kermit on June 24, 2012 at 4:59 PM

Many farmers don’t know what to do with silage and crop wraps so they burn them.

This is unadulterated hooey. Farmers over here sure know what to do with it. They tack it to the inside of their dog houses as an added wind-stopper; they duct-tape several pieces together to make swimming pools for their kids; and I’ve even seen a 1973 Dodge Ram pickup upholstered in silage wrap.

Out of curiosity, I called a farmer friend to see what he did with his. He calls it “hay wrap.”
He said: Silage wrap? . . . is that one of them vegtarian sammiches?

TheClearRiver on June 24, 2012 at 6:36 PM

Fool us once, shame on you.

Fool us twice, shame on…our governments.

From Genesis Poly to the revelation that this went bust…twice.

Taxmageddon around the corner.

Steve Z on June 25, 2012 at 4:03 PM