Comment
0
Tweet
0
Print
RSS Feeds

Amid probe, car company's plans haven't panned out

Monday - 8/12/2013, 4:52am  ET

In this July 30, 2013 photograph, Perry Turner, 21, who lives across the road from the planned site for GreenTech Automotive's Tunica, Miss., assembly facility, said there was a lot of talk about the new car company years ago in the county of about 11,000 people south of Memphis, Tenn. But that talk has faded and Perry said there has been little activity at the site until recent months. (AP Photo/Rogelio V. Solis)

HOLBROOK MOHR
Associated Press

TUNICA, Miss. (AP) -- Four years ago, a startup car company announced with great fanfare big plans for the Mississippi Delta: Using money from foreign investors and other sources, it would build a massive auto plant to churn out a new line of energy-efficient cars and bring thousands of jobs to the area.

It seemed like a win for everyone involved. The foreign investors who plunked down at least $500,000 for the venture would get the opportunity to stay in the United States and a path to citizenship, an impoverished area of Mississippi would get some desperately needed jobs, the state would generate tax revenues, and the political leaders involved would be able to tout job-creation prowess.

Today, the place where the plant was to be remains mostly vacant except for a temporary construction trailer. The company -- GreenTech Automotive Inc. -- is under investigation by the Securities and Exchange Commission and the probe is reverberating well beyond Mississippi's borders, bringing scrutiny to a Virginia gubernatorial candidate and the company run by the brother of former Secretary of State Hillary Rodham Clinton.

"Back in 2009, it was a big deal," said 21-year-old casino employee Perry Turner, who lives across the highway from GreenTech's mostly empty site in rural Tunica County. "I haven't heard much else about it."

Some analysts say it was a risky business plan and foreign investors may have been more interested in an easy way to get a visa and a chance at citizenship than trying to support a venture that had a good chance to turn a profit or create jobs.

In October 2009, GreenTech's owner, Chinese businessman Xiaolin "Charles" Wang, unveiled four prototype cars during a flashy ceremony and promised to build a $2 billon plant in the heart of the Mississippi Delta.

Besides backing from foreign investors, some 100 acres were donated by Tunica County's economic development foundation, at a cost of $1.8 million, and in 2011 the state gave a $3 million loan toward site preparation. For a time, the company's chairman was politically connected heavyweight Terry McAuliffe, a close adviser to both former President Bill Clinton and his wife, a former Democratic national chairman. McAuliffe is now a contender for Virginia governor.

The cars were supposed to start rolling off the assembly line in 2012. The company now hopes to start producing cars next year. And while they say they still plan to build a plant in Tunica County, all that was on the land on a recent afternoon was a construction trailer, a few pieces of equipment and a few workers strolling around.

The company instead now uses a former elevator factory 30 miles away in Horn Lake. A McAuliffe spokesman said about 100 small electric vehicles were built by the time McAuliffe resigned from the company in December. The thousands of promised jobs have yet to materialize.

"It takes time to build a brand new company in a capital-intensive industry like electric vehicles, and we will not cut corners on quality or safety as we progress. We have a plan. The plan is working. We're sticking to it," GreenTech said in a statement.

The company said it has more than 100 workers and "once production is ramped up" should employ at least 350 -- the same number of jobs required under the state loan agreement.

Jeff Rent, a spokesman for the Mississippi Development Authority, said the company has assured the agency they're on track to meet hiring goals.

Industry analysts say the company faces hurdles to succeed.

"A brand-new electric car company without an established U.S. partner, or global partner, is a lofty goal," said Joe McCabe, president of AutomotiveCompass, which forecasts global vehicle and power train production. "They're one of several other electric manufacturing startups entering a tough market. They have to come with something better to the game, not just an also-ran."

Other analysts say GreenTech exposes problems with a program used to attract foreign investors -- known as the EB-5 visa program.

David North, a fellow with the Center for Immigration Studies, a nonprofit based in Washington, D.C., that examines immigration policies, said the foreign investors in the EB-5 program are primarily motivated by a desire to get green cards for them and their families, not to find lucrative propositions.

"So this EB-5 program by its very nature is often linked to second- and third-class investments," he said.

Under the EB-5 visa program, foreigners can invest $500,000 or $1 million in American business ventures depending on the location of the project. In GreenTech's case, the program called for $500,000 investments.

   1 2  -  Next page  >>