Crain's Detroit Business - 25th Anniversary Issue, May 3, 2010 - (Page E13)

May 3, 2010 CRAIN’S DETROIT BUSINESS Page E13 25 Companies to Watch: Green/Energy A123: 2010 marks ‘Michigan ramp-up’ A123 Systems Inc. Michigan locations: Ann Arbor, Livonia, Romulus Local employees: Currently 150-200, including contractors. Projections call for 540 at Romulus and Livonia by 2012 2009 revenue: $91 million Founded: 1992 by Ric Fulop, Yet-Ming Chiang and Bart Riley CEO: Dave Vieau 25 Mainstays Bedrock businesses of Southeast Michigan Why it’s one to watch Investments could create up to 5,000 jobs 123 Systems Inc. had a big year in 2009, and the company expects the coming years to be even bigger. The Watertown, Mass.-based lithium ion battery systems manufacturer announced plans to spend more than $600 million on two plants, in Livonia and Romulus. The operations could create more than 5,000 jobs as A123 Systems pursues its plan to develop a vertically integrated advanced battery manufacturing infrastructure in the United States, mostly in Michigan. The Livonia plant is expected to increase its battery cell output gradually this year, and the Romulus plant is expected to be operational in the second half of 2011. A123 also has its Advanced Research and Government Solutions Group in Ann Arbor. “A123 Systems is dedicated to creating a world-class lithium ion battery manufacturing infrastructure based here in Michigan,” CEO Dave Vieau said in a statement prepared for Crain’s. “We view 2010 as the year of our ‘Michigan ramp-up’ and we are looking forward to playing a role in enabling Michigan JOE WILSSENS A From left: A123 Systems CEO Dave Vieau, GM’s Bob Lutz and Dave Cole of the Center for Automotive Research stand in front of the Chevrolet Volt. — the heart of America’s vehicle production — to continue its culture of innovation in automotive and green technologies.” A123 Systems was founded in 2001 by Ric Fulop, Yet-Ming Chiang and Bart Riley, based on technologies developed at the Massachusetts Institute of Technology. The company made local news in 2006 when it acquired Ann Arbor-based alternative-energy research company T/J Technologies Inc. It since has seen revenue more than double to $91 million in 2009 as it has emerged as one of the leaders in a group of high-tech firms developing and manufacturing batteries for hybrid, plug-in hybrid and electric vehicles. Lithium ion battery systems are expected to be the dominant power source for electrified vehicles of the not-so-distant future. They’re rechargeable, smaller and more powerful than traditional lead-acid batteries and the nickel metal hydride batteries that power the lion’s share of current hybrid vehicles. A123 Systems kicked off its near-regular stream of news in January 2009 when it announced plans to install high-tech coating, battery cell manufacturing and battery pack assembly operations in the United States with enough capacity to power more than 5 million hybrid cars or 500,000 electric cars by 2013. In April, the company announced plans to spend more than $600 million on a 300,000square-foot manufacturing plant in Livonia, creating as many as 5,000 jobs, along with its other Michigan locations. In December, A123 signed a 15-year lease for a 287,000-square-foot plant in Romulus to be its second Michigan manufacturing location. The company plans to invest about $132 million in the plant and have it operational by the first half of 2011. A123 had some help along the way, with the Michigan Economic Growth Authority authorizing about $125 million in state tax credits over the next 10 years. The U.S. Department of Energy also gave the company a jolt by issuing a $249 million grant to help fund its assembly plants. In September, A123 went public and raised $391 million in an initial stock offering that saw share prices jump more than 50 percent in the first day in trading. Backing up these investments are a number of deals to supply or develop its advanced battery systems to major automakers. In place are agreements with Chrysler Group L.L.C., Delphi Automotive L.P., BMW, Ford Motor Co., General Motors Co. and others. Most recently, A123 signed a deal to supply battery systems to luxury electric-vehicle maker Fisker Automotive and commercial-truck engine maker Navistar International Inc. — Ryan Beene Henry Ford Health System, Detroit The health system, which began with Henry Ford Hospital, is one of the many lasting contributions of the original Henry Ford. The hospital was staffed with doctors who were employees of the hospital, a model Ford instituted after conversations with Dr. William Mayo, founder of the Mayo Clinic. That relationship remains. The system now encompasses several hospitals as well as an insurer, Health Alliance Plan. Kelly Services Inc., Troy William Russell Kelly moved to Detroit from Chicago after World War II with the idea of providing office services to the automakers and other manufacturers. Russell Kelly Office Service opened its doors in 1946 with two employees and a roomful of office machines. The original intent was for customers to bring work to the office, but it evolved into sending employees into customers’ offices. The company adopted its current name in 1966 and is now global and chaired by Terence Adderley, son of Kelly’s second wife. Adderley turned over the CEO title to Carl Cam- Adderley den in 2006. Kelly died Jan. 3, 1998, at age 92. Fuel cell maker can’t hire fast enough to meet demand Adaptive Materials Inc. Location: Ann Arbor Local employees: 57 2009 revenue: Above $7 million Founded: 2000 by Michelle and Aaron Crumm and John Holloran CEO: Michelle Crumm Its 300-watt units are already in use aboard unmanned aerial and ground vehicles, including a power pod for the PackBot, an infantry support and explosive-ordnance disposal robot made by iRobot Corp., and a portable power pack carried by U.S. Army Special Forces troops. But Crumm projects commercial uses will grow to overtake even military orders. Adaptive Materials expects the RV applications will account for less than 10 percent of all sales this year, but the product mix could be 70-30 in favor of military products next year and 50-50 by the end of 2012. “The RV makers are showing interest because many national parks have no-generator zones for campers,” Crumm said. The concern, she said, “is the noise, and our fuel cells don’t make noise.” Crumm co-founded Adaptive Materials in 2000 with her husband, Aaron Crumm, and John Holloran, who was Aaron Crumm’s adviser while Crumm was pursuing his Ph.D. at the University of Michigan. Crumm completed his Ph.D. research in a ceramic extrusion process that is used in the company’s fuel cells, but the cells themselves do not have any connection to UM research. Michelle Crumm projects that if some work can be delayed into next year to keep pace with the company’s rate of hiring, then 2011 revenue could approach $20 million. — Chad Halcom Why it’s one to watch Growing company in fuel cells ost business owners would love to face the growth obstacle that confronts Ann Arbor-based Adaptive Materials Inc. Michelle Crumm, CEO and chief NATHAN SKID/CRAIN’S DETROIT BUSINESS business officer, said 2009 revenue Aaron and Michelle Crumm, two of the three founders of Adaptive Materials. was above $7 million, compared The company employs 57 and is ready to add more — once it can find them. with $4.1 million in 2006. It could grow to $15 million this year if the “If we could instantly resize to entered a recent sales agreement company only had the staff to meet the challenge of where the market with a European maker of caravan the market deshould go this year, I’d say we can RVs, which Crumm declined to mand for its do it ($15 million revenue),” she name, and is in talks with two othportable said. “But the biggest limitation er RV manufacturers. oxide fuel right now to In December, the company won cells. our growth a $3 million contract with the U.S. Manis actually Air Force to finish development on agement how quickly a product line of 60-watt fuel cells just comwe can loand in January received a $2.9 pleted a cate and million contract with the U.S. Destrategic hire the partment of Defense for developplan, right peoment of a 300-watt fuel cell sysMichelle Crumm, Adaptive Materials Inc. however, ple.” tem. and Crumm said the company is Now at 57 That deal could lead to the sale aiming at a more conservative employees, Adapof more than 100 fuel cells at a torevenue target of $12 million. Soltive Materials should see tal value of $5 million if several id oxide fuel cells generate electric- revenue accelerate on a mix of new options are exercised. Crumm ity using a fuel compound and inproduction orders for the military said the company has been movclude an internal ceramic and a new market of internal powing from development and protoelectrolyte that carries ionized er systems for recreational vehitype work to general production oxygen between the electrodes. cles, Crumm said. The company orders on military contracts. Lear Corp., Southfield It was a big risk that created Lear in 1988, and perhaps that willingness to roll the dice is one reason the company is among the relatively small number of suppliers expected to remain part of the global supply base. Ken Way led a $500 million leveraged buyout of Lear Siegler Seating Corp. in 1988 that had management investors risking their homes and savings. A 1994 public offering repaid investors, but it didn’t end the rocky ride many suppliers have faced, inRossiter cluding a shareholder-rejected attempt to sell to Carl Icahn and a Chapter 11 last year. Robert Rossiter, part of the original buyout team, is chairman and CEO. More Mainstays on E9, E11, E15, E19 and E20 M The biggest limitation right now ... is actually how quickly we can locate and hire the right people. 

Table of Contents for the Digital Edition of Crain's Detroit Business - 25th Anniversary Issue, May 3, 2010

Crain's Detroit Business 25th Anniversary
Looking Forward
25 Companies to Watch
25 Mainstays
25 People Then and Now
25 Scandals and Dubious Deeds.
25 Philanthropic Gifts
25 Newsmakers of the Year
25 Big Stories
25 Innovations
25 Gone But Not Forgotten
Health Care
Defense
Suppliers
The Internet and Communication
Energy
Finance
Signs of the Times

Crain's Detroit Business - 25th Anniversary Issue, May 3, 2010

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