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Battery maker cuts 30 Mass. jobs

Boston-Power expanding in China with private and government aid

By Erin Ailworth
Globe Staff / September 20, 2011

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Lithium-ion battery maker Boston-Power Inc. plans to cut about 30 jobs in Massachusetts as it expands in China, where the Westborough company is receiving $125 million in private equity and government support to build batteries for electric vehicles.

Under the deal, which Boston-Power officials are scheduled to detail today, the company will employ several hundred workers at a research and development center in Beijing and a manufacturing facility elsewhere in China, according to Christina Lampe-Onnerud, founder and international chairwoman. Boston-Power also will hire a new China-based chief executive and chief financial officer.

“The electric vehicle focus is really what’s driving that,’’ Lampe-Onnerud said of the shift. “Our biggest customers are in China.’’

Boston-Power is one of dozens of Massachusetts companies with a growing presence in China, according to state officials. Many are attracted by low manufacturing costs.

A Boston-Power competitor, A123 Systems in Waltham, has two offices in China. Evergreen Solar, a Marlborough solar panel maker that recently filed for bankruptcy protection, has a factory in Wuhan, and American Superconductor Corp., which makes advanced technologies for wind turbines and power utilities, has sales, manufacturing, and service staff throughout China.

Julian Chang, executive director of the Rajawali Foundation Institute for Asia at Harvard University’s John F. Kennedy School of Government, said it’s a challenge to prevent US clean-tech companies from being lured to China, mostly because of the large subsidies the Chinese government offers as enticements.

“We can’t compete on subsidies,’’ Chang said. “The green push is on in China.’’

The $125 million in funding being used to woo Boston-Power comes in large part from GSR Ventures, a venture capital firm with offices in China and California that primarily invests in technology companies looking to expand in China.

As part of its deal to back Boston-Power, Sonny Wu, GSR Ventures’ managing director, will chair the battery company’s board of directors.

The deal was also contingent upon Boston-Power boosting its presence in China, a requirement that is not unusual, some industry observers said.

“The Chinese usually make that part of the process,’’ said Natixis Global Asset Management chief executive John T. Hailer, who oversees the Boston investment company’s business in the United States and Asia. “The Chinese [also] usually make you share technology.’’

Lampe-Onnerud, who started Boston-Power in 2005, said the decision to expand in China was not an easy one, especially since she once hoped to increase the company’s manufacturing presence here in Massachusetts. But two years ago, her firm lost out on $100 million in federal stimulus money it had planned to use to build a 450,000-square-foot battery plant in Auburn.

“We had thousands of people rolled up in that plan,’’ Lampe-Onnerud said. “The day we were informed we did not get [that stimulus money], we were back on the China track.’’

Now, Boston-Power will shrink its Westborough staff by about 35 percent.

The job cuts could begin as early as this week, Lampe-Onnerud said.

Hailer said that if the United States hopes to stem the number of jobs being lost to China or other countries with low-cost manufacturing, tax policies need to be fixed so that companies don’t have as many incentives to create jobs abroad. He also said immigration and education policies need to be revamped so that foreign students educated here have an easier time finding work after they graduate.

“Before we start blaming the Chinese for all our problems and for the companies leaving, we need to look at ourselves,’’ Hailer said.

Erin Ailworth can be reached at eailworth@globe.com. Follow her on Twitter @ailworth.