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Westmoreland

As Aquion heads to China, Pennsylvania awaits recovery of its $13 million

Joe Napsha
| Wednesday, Sept. 20, 2017, 6:06 p.m.
Sen. Bob Casey spoke at a news conference at the Allegheny County Courthouse Friday morning, denouncing a Republican health care proposal that the Senate is expected to vote on next week.
Wes Venteicher | Tribune-Review
Sen. Bob Casey spoke at a news conference at the Allegheny County Courthouse Friday morning, denouncing a Republican health care proposal that the Senate is expected to vote on next week.

As the new owners of bankrupt Aquion Energy Inc. prepare to move what's left of its operations out of the former Sony Corp. plant near New Stanton and ship it to Shanghai, Pennsylvania is left waiting to see how much it can recover from the $13.65 million the company owes taxpayers.

The state Department of Community and Economic Development, which gave Pittsburgh-based Aquion Energy $16.6 million in grants and loans over the past five years, has to wait until Aquion files its Chapter 11 reorganization plan in bankruptcy court in Delaware to see how much money the state will recoup, said David Smith, a department spokesman.

That plan, which details the distribution of Aquion's remaining assets, is not expected to be filed until early next year, Smith said.

All of Aquion's assets were auctioned off in June, including the state's collateral of equipment and machinery used to produce its saltwater-based batteries, Smith said. At least $5.6 million of the state financing is unsecured, according to Aquion's bankruptcy filing in March.

An American-based ownership group, Juline-Titans, led by CEO Phillip Juline, bought Aquion in July for $9.8 million. It received financial backing from China Titans Energy Group Clean Power.

Aquion's half-dozen employees at the Regional Industrial Development Corp.'s industrial site in East Huntingdon will have the 330,000-square-foot plant cleaned out by the end of the month, said Liam Cooney, manager of Aquion's deployment and field service. Production has been shut down since March, when the company filed for bankruptcy and eliminated about 50 jobs.

By moving manufacturing to China, Cooney said the company will be able to lower production costs of the batteries and build a larger manufacturing line. Filing for bankruptcy in March gave the company time to refocus its operations, Cooney said.

“It really made financial sense. We'll reenter the market in the spring of 2018,” he said.

While Aquion is moving to China, its headquarters and research and development office will remain in Lawrenceville with about 10 to 15 employees, Cooney said.

The company hopes to move back to the United States in a few years, when it will open plants on the West Coast and East Coast, Cooney said. One site could be in Pennsylvania, he noted.

Aquion's move to China after getting millions in state funding again brought into question the wisdom of public financing of business operations, particularly start-up businesses.

“It is not up to the state to back untested and untried research, unless it is at a university,” said Jake Haulk, an economist and president of the conservative think-tank Allegheny Institute for Public Policy. “To give it to a company that has yet to be tested and economically viable is just throwing good money after bad.”

There are times when the government is “too eager to do something” to help spur economic development. “It's a real crap shoot,” Haulk said.

When Gov. Tom Corbett's administration approved the financial package for Aquion, James Smith, president of the Economic Growth Connection of Westmoreland, said there were significant investors behind the project.

“I don't blame the administration for doing it. It was a tough call. This was a company to bet on,” Smith said.

Had Aquion gone to another state and been successful in selling its batteries, critics would have said the state let an employer leave, Smith said.

State spokesman David Smith said that under Gov. Tom Wolf's administration, “economic development projects receive the utmost scrutiny prior to any public investment.”

U.S. Sen. Bob Casey, D-Scranton, said he was disappointed to see Aquion moving overseas after receiving federal and state funding to support their growth.

“We must continue to make strides in Washington to ensure that companies like Aquion aren't rewarded for this type of behavior,” Casey said.

While Westmoreland County did not invest in the company, Commissioner Ted Kopas said that he still believes the public sector has a role in facilitating the business environment, when appropriate. Kopas pointed to the success of the county's 17 industrial parks as a “public investment that has lead to a robust business sector.”

U.S. Rep. Tim Murphy, R-Upper St. Clair, said in a statement that, “President Trump's policies have had a tremendously positive impact on the Southwestern Pennsylvania economy, and I'm proud to continue supporting his policies in Congress to keep it ‘Made in America.' ”

Jason Rigone, executive director of the Westmoreland Industrial Development Corp., did not return messages seeking comment.

Neither state Sen. Kim Ward, R-Hempfield, nor her aide, Rob Ritson, who is running for Hempfield supervisor, returned calls for comment.

Another Trump supporter, U.S. Sen. Pat Toomey, R-Allentown, did not respond to a request for comment.

Joe Napsha is a Tribune-Review staff writer. Reach him at 724-836-5252 or jnapsha@tribweb.com.

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