Six months ago the question was: "When will this financial and economic crisis be over?"
Today, increasingly, the questions are: "Why should this ever be over?" "What's ever going to turn this around?"
Right now, with unemployment rising, it's hard to remember that capitalism is a creator of jobs, companies and industries -- as well as a destroyer.
But I see signs of the growth to come. I see a few fragile shoots of the new economy that will replace some, at least, and maybe all of the jobs lost in this recession. Just like a crocus poking up through the snow is a sign of the spring to come, these examples of growth promise that this recession will someday give way to a time of new investment and new jobs.
Economic winter easy to see
The signs of destruction in our economy are all too visible. A financial giant such as Lehman Bros. (LEHMQ, news, msgs) collapses. General Motors (GM, news, msgs) announces that it will cut an additional 10,000 jobs. Nortel Networks (NRTLQ, news, msgs) spirals into bankruptcy. Almost 600,000 U.S. workers lose their jobs in January alone.But capitalism also builds.
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It has turned dreams of high-speed communications into companies like Cisco Systems (CSCO, news, msgs) and Research In Motion (RIMM, news, msgs). It has built retail giants such as Wal-Mart Stores (WMT, news, msgs), Amazon.com (AMZN, news, msgs) and Best Buy (BBY, news, msgs) on the bones of Kmart and Circuit City (CCTYQ, news, msgs).
The creative side of the story is harder to see in today's moment, partly because we're rightly worried about how far the damage will spread. It's also partly because we're in the middle of this crisis, and growth stories are just now putting down roots and have yet to show leaves, let alone bear fruit.
A few signs of green
But look hard enough and you can find the promise of growth even in the stony soil of regions hit hardest by this recession. Even, for example, in the auto-dominated heartland of the United States and Canada.In January, A123, a privately held U.S. battery maker, applied for a $1.8 billion government loan to build lithium-ion battery plants, with the first plant targeted for Detroit. The ultimate goal is to build 7 million square feet of manufacturing capacity to turn out batteries for 5 million hybrid cars annually by 2013. Those plants would create 14,000 jobs. Currently, A123 manufactures its batteries in Asia.
The Michigan plant on the drawing board is part of a worldwide battery boom.
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Back in Japan, Toyota Motor (TM, news, msgs) is teaming with Panasonic (PC, news, msgs) to build two plants that will produce 1 million batteries for hybrids by 2011. Nissan Motor (NSANY, news, msgs) is building a plant in partnership with electronics giant NEC (NIPNF, news, msgs) to produce lithium-ion batteries for its new hybrids starting in 2010. In late September 2008, MidAmerican Energy, 87% owned by Warren Buffett's Berkshire Hathaway (BRK.A, news, msgs), invested $230 million in China's BYD (BYDDY, news, msgs), one of the world's largest producers of rechargeable batteries. BYD has ambitious goals of becoming a global leader in the production of hybrid and battery-powered cars.
Notice something that the Panasonic, NEC and BYD plans have in common? They're all building batteries outside the United States. Detroit is behind the curve when it comes to hybrids and all-electric cars. For example, the prototypes for GM's electric plug-in Volt, scheduled to go on sale in late 2010, use batteries produced by South Korean giant LG Electronics.
But that has started to change. GM has announced a small plant in Michigan, employing just 100 workers, to produce its own batteries. The contract to produce the lithium-ion battery system for Ford's (F, news, msgs) first production plug-in hybrid car, scheduled for sale in 2012, went to a joint venture between Johnson Controls (JCI, news, msgs) in Milwaukee and France's Saft Groupe (SGPEY, news, msgs). Right now, Saft produces all the joint venture's batteries in France, with cell design, engineering and testing set for Wisconsin. But as U.S. plug-in hybrid volume ramps up, the partnership will begin production of mechanical, electrical, electronic and thermal components -- as well as battery cells -- on this side of the Atlantic.
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Who wants a bailout nowAutomakers got their government bailouts. Now auto parts makers are seeking $25 billion in loans and guarantees and say that if they don't get help, a million jobs could be lost, Jim Jubak reports. (Feb. 16, 2009)
Growth in the desert
The sprouting of a U.S. battery industry for hybrid and plug-in cars isn't the only sign of new economic growth that I can see. Southern California Edison, the electric utility division of Edison International (EIX, news, msgs), recently announced a deal to buy solar-generated electricity from a solar-thermal power plant to be built in the Mojave Desert. (In a solar-thermal plant, mirrors focus the sun's light onto boilers, and turbines use the concentrated heat of the sun to produce steam and then electricity.)The planned solar-thermal plant is projected to supply 1,300 megawatts of electricity. That's enough to power about 845,000 homes. The plant, to be built and run by BrightSource Energy, a private company with backing from VantagePoint Venture Partners,Google (GOOG, news, msgs), BP (BP, news, msgs), Chevron (CVX, news, msgs), StatoilHydro (STO, news, msgs) and Draper Fisher Jurvetson, among others, could start producing power in 2013.
Continued: A few minor obstacles