Click image to enlarge
(Simpson County, Kentucky) - The fate of a planned ZAP electric vehicle plant and the 4,000 new jobs it was supposed to bring here within four years is now up in the air.
Randall Waldman got the call a few weeks back that General Electric – which he says was going to buy bonds that would have provided a majority of the financing for the plant - stopped all their U.S. projects when the economy hit the skids.
As he tries to plug into alternative sources, the answer to whether or not the plant will get built here in the bluegrass state should become clear by the end of January, Waldman told Manufacturing & Technology eJournal.
“We’re committed to Kentucky,” he said. “It’s just that I’ve never seen economic times like we have today. Right now the banks are scared to engage anybody and companies like ours are the backbone of this economy.”
Integrity Automotive - owned by Waldman and several minority partners – was set to be a majority owner of the new ZAP manufacturing plant. He said Santa Rosa, California-based ZAP was also slated to be a minority partner in the facility.
Fortunately, Waldman had already been looking at other options when the call came from GE and now his big hope for the project lies in a federal fund with billions earmarked for companies, like ZAP, which are working on non-combustion engine vehicles. He says he’s been working with Senator Mitch McConnell’s (R-KY) office on securing a $200 million grant and low-interest loan package from the fund and Waldman is confident the ZAP project will get some of that cash.
“The nice thing about what we’re doing … is that ZAP actually has more electric vehicles on the road than all of our competitors combined,” he said. “So we actually deliver cars every month and are having record breaking sales months every month, that’s worldwide. That’s a big plus for us, we’re real; we’re actually delivering vehicles.”
Waldman said he’s heard a decision on the grant/loan package will be made by the end of January. At press time, Senator McConnell’s office had not responded to a request for comment.
And Waldman isn’t just waiting on federal funds to keep the project alive in Kentucky. Although GE pulled the plug on bond financing, they did put Waldman in touch with two other financial institutions, which he is currently working with but declined to name.
Here’s the bad news. If Waldman’s gets shutout on both fronts – those fates should be clear by the end of January - he’ll pack up and go to another state.
“We have to start building cars,” he said.
The man who wants to bring an electric car plant to Kentucky is adamant about one thing - he hasn’t been out shopping other sites. But Waldman admits he’s been approached by economic development officials in other states trying to replace lost auto industry jobs. Their sales pitch goes something like this: we’ll buy an abandoned production facility in our town and give it to you, then we’ll write you a check as a low-interest loan for startup costs. “If you think about it, there are car plants all across the United States that have shut down and they’ve lost tons of jobs,” he said. “What they care about is the jobs.”
Original estimates by company and state officials put a ZAP plant workforce at 1,250 to start, ramping up to 4,000 workers within four years. The state of Kentucky approved $48 million in tax credits toward the project, but Waldman said that doesn’t help get the facility up and running because the company won’t recoup that money for several years.
The Simpson County endeavor is supposed to cost about $200 million, according to Waldman. That figure includes land, facility construction, equipment, inventory and other startup costs. The building and equipment alone is going to run about $125 million, he says.
If the million-square-foot ZAP plant does stay in Kentucky, though, it won’t be built all at once as originally planned.
When the deal with GE fell through, Waldman and his partners decided to alter their approach and chop construction up into three stages. The goal is now to be able to get one part up and running he can still meet the original timeframe of producing cars by the fall of 2009. The other two sections – as well as additional capacity – would follow.
The new plant would be under contract to provide vehicles to ZAP and have the option to manufacture other product lines if ZAP can’t provide enough orders, according to Waldman. At capacity, the plant is slated to produce 300 cars a day.
In addition to his stake in Integrity Automotive, Waldman also owns Integrity Manufacturing in Shepherdsville, Kentucky. He’s already begun retooling that shop floor so he can start filling ZAP orders in the mean time. While it won’t be a full-scale manufacturing operation, he hopes to do assembly work and crank out at least 25 ZAP cars a day.
ZAP has more than $40 million worth they need filled over the next year for customers around the world, he says. And that’s above the production already going on overseas. “So I have to start building them.”
ZAP spokesperson Alex Campbell said his company - which aims to be more of a development, marketing and distribution force for electric vehicles than a manufacturer - originally started contracting with overseas production partners more than ten years ago as a to keep costs down and stay competitive. “We wanted to take the sticker shock away from electric vehicles,” Campbell said. “When we pioneered the market for electric bikes and scooters, it wasn’t long before Asia took up those products as well and flooded the market with them.”
“Now there’s a belief that if we can come back to the United States we can become more competitive. These things just take time. We fought long and hard for bringing electric vehicles to market.”
ZAP (OTCBB:ZAAP) recently announced its third quarter earnings are up 52 percent.
Waldman has been nominated to serve on ZAP’s board of directors, which would be subject to shareholder approval the company’s annual meeting November 29, Campbell said.
For more information about ZAP visit http://www.zapworld.com. For more information about Integrity Automotive and Integrity Manufacturing visit http://www.integrity-manufacturing.com.
Permission to Reproduce
Unless otherwise stated, the copyright and similar rights to all material published on this website are owned by The Manufacturers Group Inc. DBA Manufacturing & Technology eJournal. Reproduction of any article in print, electronic or any other form must acknowledge Manufacturing & Technology eJournal as the Source and include a link to http://www.mfrtech.com
