Firefly article ...
Bibo: Former worker, investor still hope for Firefly encore
By TERRY BIBO (tbibo@pjstar.com)
Journal Star
Posted Mar 24, 2010 @ 10:37 PM
"Ya got trouble, my friend. Right here, I say trouble right here in River City."
- Professor Harold Hill from "The Music Man"
As the guys at the top prepared to launch Firefly Energy Inc., the sky was the limit on a technological breakthrough touted to save energy, the local manufacturing base and the dwindling number of head-of-household jobs in central Illinois.
"On behalf of the Firefly team, I sincerely appreciate the community's support, and I think you'll be excited by the next couple of years and what we'll be able to deliver to the local economy," Firefly CEO Ed Williams said as the Peoria County Board OK'd its part of a deal to underwrite a $6 million loan in May 2007.
Tan-ta-ra!
Considering that the county and the city of Peoria were acting on the threat that the Caterpillar Inc. spinoff would leave town with its magical - but as yet unseen - new products, there was more than a whiff of "The Music Man," even then. Fast forward a couple of years.
When Firefly flickered and burned out before ever leaving the ground, the sky had fallen and the economy was to blame.
"After 15 months of unsuccessful attempts to raise $20 million in equity capital, in the midst of this worldwide financial crisis, funds that would have enabled the company's transition to full production and commercial sales, the Firefly Energy board has decided to cease operations and voluntarily file for Chapter 7 bankruptcy," Williams said in mid-March.
Bleah. Cancel the brass band.
In part, such statements are not too surprising. Marketing is what companies do on the way up; spin control is what they do on the way down. A $13.5 million bankruptcy is about as down as it gets. Expect some blame shifting.
But the guys who were not at the top have a different view of what really happened at Firefly over the last few years. A couple of them would like to clear some smoke. They don't want their names used; this mess is headed to court, and jobs are hard to find. But based on what they say, here's where to figure on fog as the blame game commences: It wasn't Caterpillar Inc. It wasn't Joe O'Neill. It wasn't the product. And it wasn't the economy.
"The economy hit us. I can't say it didn't. But we were in trouble long before the economy tanked," says one former employee.
It will take months, if not years, for the full story to come out. For starters, he would have picked a different market than trucks. Firefly's new technology involved the creation of lighter and more powerful lead-acid batteries by replacing the lead plates with graphite foam. It could have been applied to many different products, produced in other places and gradually demonstrated its worth by starting small. But the decision was made to produce a portion of that battery here - and not in a small way.
"Instead, we built a $6 million machine that can build 240,000 at a time," he said. "And we've never built one for a customer."
To this day, he says, there are only 150 or so prototype Firefly batteries out there in use.
"That manufacturing line?" corroborates one of the investors. "It's like the treadmill in your basement that you never use."
The former staffer said they complained they weren't given enough resources and advised the brass to proceed step by step: Get Firefly's name out there, keep prices low, and let the buzz build. They were told to make do and blast ahead because there was no other option: Venture capitalists demanded almost immediate results, profit margins needed to be high, and a $450 battery would sell.
"We nicknamed the whole thing the 'bet-the-farm' plan from Day One," he says. "To think it's going to be perfect from Day One is to set yourself up for failure. . . . I've never done so much flying by the seat of my pants in my life."
For a while, it looked like Firefly might take off anyway. There were major contracts and offers on the table, including ones from the U.S. Army as well as the aircraft manufacturer Hawker Beachcraft. There were major players on board, including Caterpillar and its former CEO Glen Barton, as well as P. Joseph O'Neill of G&D Integrated.
But all the hoopla and hype never quite converted into reality. Even with backing from the city and county, by last summer there were layoffs and reduced wages.
Where did all the money go?
"I don't know. He won't show me his books and never would," the staffer says of Williams. "It's above my pay grade."
According to the bankruptcy filing Tuesday, the higher pay grades got a chunk of their money. Williams got $78,000 in salary for 2009-2010, as well as a $75,648 expense reimbursement for the same period.
In the bankruptcy filing, O'Neill/G&D Integrated is listed as a creditor for well more than $2 million. Caterpillar is listed as a 19.36 percent stakeholder in Firefly. O'Neill prefers not to comment; Caterpillar doesn't say much.
"The technology for Firefly came from Caterpillar, but the company was independent of Caterpillar in its operations and decision making," Caterpillar spokesman Jim Dugan said via e-mail. "Caterpillar is one of several minority shareholders in the company."
Dugan encouraged a call to Ed Williams. Two were made; neither was returned.
If there is good news in all of this, it probably lies in that technology. According to all accounts so far, it works.
"The battery is good. It is. I firmly believe it will be the norm," says the ex-staffer.
"I'm still hoping, a year from now, you can do an article on Firefly - that it's a phoenix," says the investor.
It would be a pleasure, and it could happen. For those who are familiar with "The Music Man," much to the surprise of Professor Harold Hill, the think system actually worked, too.
In the meantime, my friends, we got trouble.
TERRY BIBO is a columnist for the Journal Star. She can be reached at tbibo@pjstar.com, 686-3189, or 1-800-225-5757, Ext. 3189.
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