Obama Says Grants Will Spur Innovation, Create Jobs      

By Kate Andersen Brower and John McCormick

Aug. 5 (Bloomberg) -- President Barak Obama said 48 projects will share in $2.4 billion worth of federal government grants to spur development of electric vehicles as part his plan to put the U.S. economy on firmer footing.

"We're making a historic commitment to innovation," Obama told workers at an Indiana manufacturing plant. "These grants will create tens of thousands of jobs all across the nation."

The president made the announcement of the federal government grants, which were part of the $787 billion economic-stimulus plan passed earlier this year, at a Navistar International Corp. factory in Wakarusa, Indiana. Vice President Joe Biden also announced grant recipients in Detroit as the administration seeks to demonstrate the stimulus is helping pull the nation out of the worst recession since the Great Depression.

Companies in Indiana and Michigan will get the bulk of the Department of Energy grants, which are going to makers of batteries and other components of electrically powered vehicles. Warrenville, Illinois-based Navistar will get a $39 million grant to manufacture 400 electric-powered trucks.

"I want the cars of the future and the technology that powers them to be developed and deployed right here in America," Obama said.

Trickle-Down Effect

Daniel Ustian, Navistar's chief executive officer, said the new federal money will have a trickle-down effect on northern Indiana.

"Helping fund a program like this is very important," Ustian said in an interview. "It's more than just the $39 million."

Kay Toolson, president of Navistar subsidiary Monaco Coach Corp., said the stimulus money will allow the company to add "hundreds of jobs." He said the new employment will either be in Wakarusa or nearby Elkhart.

Still, Toolson said the broader economy needs added liquidity before business will really pick up.

"Our customer base is still strong," he said. "But the banks aren't willing to loan."

The federal government government grants will go to companies in more than 20 states, including $299 million to Johnson Controls Inc. and $249 million to A123 Systems Inc. for battery projects at facilities in Michigan and Oregon. General Motors Co., Ford Motor Co. and Chrysler Group LLC will get parts of more than $400 million in grants to Michigan-based automakers.

Battery Makers

The funding includes $1.5 billion for battery manufacturing and $500 million for U.S.-based companies making electric motors and drive-train components, according to a White House news release. An additional $400 million will be used to purchase hybrid and electric vehicles for testing and training and for creating systems to charge vehicle batteries.

Biden said the federal government grants would help the U.S. develop battery and electric engine components that are now mostly made in foreign countries.

"We've got to get ahead of this curve," Biden said in Detroit. "We're going to get left behind."

Wakarusa is in Elkhart County, a part of Northern Indiana where the unemployment rate was 16.8 percent in June, up from 4.8 percent at the end of 2007. Obama used the city of Elkhart in February as the backdrop for his campaign to press Congress to approve the stimulus plan.

'Perfect Storm'

"This area's been hit with a perfect storm of economic troubles," Obama said. "You're living everyday with the consequences of this recession."

Lori King, the administrator of a church-run food pantry in downtown Elkhart, she said the number of people seeking help at her facility has doubled in the past six months.

"I'm hearing that it is getting better, but that's not what I'm seeing," King, 48, said.

"We have a lot of first-timers," she said. "We have moms who ask if they can take plates home because their teens are too embarrassed to come."

Cornelio Castillo, 34, was one of those visiting for the first time yesterday. He drove roughly 30 minutes from his home in Nappanee, Indiana, after a cousin suggested that he put aside his pride and seek some free food.

Payments Running Out

Castillo said he lost his job doing cabinetry work at a nearby factory that builds recreational vehicles. He said his unemployment payments run out next month and he is thinking about moving, even though his wife has managed to keep her job.

"I can't see a solution around here," he said. "I have to pay bills."

While the president has cited signs the recession is abating, the administration is bracing for the Aug. 7 release of the July unemployment rate. The rate was at a 25-year high of 9.5 percent in June and Obama has said he expects it will exceed 10 percent before growth is strong enough for companies to begin adding jobs.

The economy has lost 6.5 million jobs since the recession began in December 2007, marking the biggest drop in employment since the Great Depression.

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