Battery maker EnerDel retrenches, dodges clawbacks

EnerDel Inc. is regrouping under a strategy of targeting niche markets—a plan that has convinced Indianapolis and Hancock County officials to back off threats to yank economic development incentives over lagging investment and job creation.

The maker of lithium ion batteries now is moving to sell replacement battery packs for transit buses, starting with Allison Transmission hybrid units.

Its second priority is a mobile power station for the military, and the third is adapting the military units for stationary use by hospitals and other institutions.
CEO Mike Canada projected revenue of $10 million this year, at least $45 million next year and $55 million in 2016.

EnerDel will begin hiring more workers in early 2015 and then a year later turn its first profit, he said.

“It’s essential for us to penetrate the [bus] market very quickly,” Canada said. “We’re very excited.”

The company was founded in 2004 and five years later snagged a $55 million renewable energy stimulus grant from the federal government. Russian industrialist Boris Zingarevich acquired EnerDel parent Ener1 out of bankruptcy in 2012 and took it private. EnerDel parent Ener1 is headquartered in New York City.

But patience of some government officials was wearing thin until they learned of the new strategy.

The Department of Metropolitan Development this fall demanded that a $2.3 million tax abatement issued in 2008 be repaid by Dec. 31. Last week, however, DMD said it was “working toward an agreement” to avoid ending the agreement. The Dec. 31 date was arbitrarily set to clear up the matter before the new year.

In 2008, EnerDel promised $12.1 million in real property improvements, $78 million in personal property investment, and 67 jobs paying an average of $29 an hour for its battery-making facility at 8740 Hague Road.

Employment at the Hague Road location on the northeast side increased as assembly of Think electric cars ramped up in Elkhart, but then plunged when the Swedish company filed for bankruptcy protection in 2011.

The Hague Road location now has a handful of employees in research and development, Canada said.

In September, the Hancock County Council summoned EnerDel brass to a meeting to ask why job promises, which started as high as 1,193 in 2008, hadn’t been fulfilled. EnerDel made the batteries in Indianapolis and trucked them to Mount Comfort just east of Indianapolis for assembly into packs.

EnerDel has asked for no incentives for improvements to the property or for equipment.

The last time EnerDel filed a report with the county, in May, it cited 65 jobs at Mount Comfort; Canada said the location currently has about 50.

Hancock County has extended no money to EnerDel; it only abated taxes for 10 years on any property improvements. EnerDel filings show it has spent $25.4 million on real estate improvements but didn’t disclose spending on equipment, according to the Auditor’s Office. In 2008, it projected $25.4 million in real estate improvements and $252.5 million in spending on equipment.

However, the council members were convinced the company still has potential.

“Our goal in life is not to kick someone while they’re down,” said Hancock County Council member Bill Bolander. “We felt like they were trying to make the company survive.”

EnerDel is betting the farm on the replacement batteries.

Early this month, Allison approved EnerDel’s aftermarket pack for its H 40/50 EP transmission—which dominates the domestic hybrid transit market. Panasonic, which supplied the original batteries, is the only other approved maker, said Allison spokeswoman Melissa Sauer.

In July, EnerDel beat out Panasonic to ink a five-year deal with King County Metro in the Seattle area to replace as many as 48 batteries a year in its bus fleet. King County runs about 700 of the 6,000 Allison units in operation around the world.

Oahu Transit Services in Hawaii and Washington, D.C., also have contracts for the packs, which are priced at $45,000 each.

EnerDel intends to use the aftermarket contracts as a foot in the door to persuade Allison and other transmission makers to use them as original equipment. WHO SAYS??

As EnerDel moves to nail down replacement contracts in Chicago, Cleveland and other places with high concentrations of the buses, it is experimenting with the military power station in the hope it will find its way to hotspots where global positioning systems and other portable devices need recharging. The units are supplemented with diesel generators.