Thursday, December 15, 2016

Who is the mysterious auto startup that wants to bring jobs back to a shuttered Mitsubishi plant in Normal?

Auto plant in Normal

The Mitsubishi automobile plant in Normal, Ill., is seen in 2006. The plant, which closed in mid-2016, could be purchasd by Rivian Automotive as part of the startup's plans to become a car manufacturer. (John Smierciak / Chicago Tribune)

Robert ReedRobert ReedContact ReporterChicago Tribune

The town of Normal, Ill., which desperately wants to reopen its massive and shuttered Mitsubishi auto plant and create needed jobs, is hitching a ride with a mysterious carmaker that, right now, is raising more questions than it's answering.

Nonetheless, Normal's Town Council took a leap of faith this week by conditionally awarding Rivian Automotive a five-year property tax incentive pact and a $1 million grant that will help the Michigan-based firm acquire the car factory and hopefully start hiring within a few years.

While Normal's taxpayers will bear most of the risk, we could all have a stake in this deal should Rivian succeed in winning state tax credits or incentives. Rivian and state officials will be discussing the matter, according to the state's commerce department, so expect some sweeteners.


Rivian Automotive's CEO is R.J. Scaringe, inset, who founded the company in Florida. In 2011, it teased an affordable coupe.

(Rivian Automotive / Handout)

It would be exciting to cheer the debut of a dynamic new automaker, especially in central Illinois, which is reeling from Mitsubishi's midyear exit and the loss of over 1,000 good-paying jobs. But let's hold the applause until Rivian emerges from behind its curtain and becomes more forthright with the taxpayers who are now its partners.

Presently, this company is a master of disguise.

For starters, Rivian has virtually no internet presence, having shut down its previous web page a while back. Now it only floats a bare bones "place holder" with no information or data. In this communications era, who does that? Especially when going to a community to ask for tax abatements and 1 million bucks.

Moreover, Rivian has not disclosed important governance and financial information to the public. This includes: Who is on its board of directors; names of major investors; the amount of money raised to finance operations; and its access to capital, which is essential to building a car manufacturer.

Then there are some nagging operational alarms, even for an upstart. For instance, its "leave a message" phone response at the Michigan headquarters sounds like it was recorded in an echo chamber or someone's basement. And no one returned my calls.

What do we know about Rivian?

Not very much, but here's some basic background assembled from various company, trade and government reports.

Rivian is a small automotive engineering and technology concern that started in 2009 as Mainstream Motors. The firm became Rivian in 2011 and relocated from Florida, where in its early days it talked of expanding operations, to Livonia, Mich., just west of Detroit.

Robert Joseph Scaringe, founder and CEO of Rivian, has a doctorate from the Massachusetts Institute of Technology, according to biographical information listed by Bloomberg News. A few years ago, Scaringe was heralded by the White House as one of its "Champions of Change," a designation which recognizes emerging community and business leaders.

To date, Rivian has worked on prototypes but has never produced a single car.

In comments this week before the Normal Town Council, Scaringe conceded that Rivian is going through an ultraquiet period after suffering some startup snafus.

It went dark after Rivian had made predictions about the timing of when it might enter parts production. The prediction didn't pan out, he said, and the company decided it would be better to say nothing than to keep backtracking.

Moreover, the company, which now has about 100 employees, was relocating its headquarters from Florida to more autocentric Michigan, he added.

Rivian is refining its technologically advanced prototype car that's geared toward serving the emerging ride-sharing and driverless car markets, Scaringe said.

The CEO also said he'll be talking more openly about Rivian's business in the days ahead.

"Over the next 12 months, you'll see a lot of information coming out," he assured Normal's council members.

Normal's staff and the Bloomington-Normal Economic Development Council, which recommended the tax abatement deal, are apparently already comfortable with what Scaringe has told them in private.

After doing some independent due diligence, they concluded Rivian has the financing prowess to get production rolling, make capital improvements and bring back some good-paying jobs to the old Mitsubishi plant within a couple of years.

Speaking of finances, Securities and Exchange Commission documents show the company raised only $1.2 million over the past few years. That reported amount does not reflect the company's deeper financial resources, Scaringe told the council.

In its heyday the Mitsubishi site, which opened in 1988 as a joint venture with Chrysler, employed nearly 3,000 people. It's also no stranger to government-backed inducements, having received state and local incentives totaling nearly $250 million over its life span.

Still, it doesn't look like Normal, or the other area taxing bodies involved in the Rivian transaction, are giving away the keys to the city.

This is a qualified deal calling for the auto company to acquire the Mitsubishi site, with over 2 million square feet, from the current owner, a business liquidation firm.

Rivian also must meet an agreed-upon timetable over a couple of years, to make significant capital improvements and achieve certain hiring levels before the tax abatement kicks in or the $1 million grant check is cut.

The town's agreement also requires Rivian to invest $40.5 million in the project's first five years.

"I do believe they are a credible organization," said Normal Mayor Chris Koos.

That's encouraging to hear.

Now it's up to Rivian to prove to the rest of us that it's the real deal.

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Rivian Automotive plans for driverless future




RJ Scaringe, Rivian Automotive CEO, talks to State Rep. Dan Brady, R-Bloomington, before addressing the Normal Town Council Monday evening.


NORMAL — Rivian Automotive isn't just ready for the auto market to change. It's counting on it.

"Our second set of vehicles ... is designed for pure mobility-as-a-service. You press a button on your phone, and a vehicle shows up. Of course, the vehicle is driving itself, and of course you don't own the vehicle. You're paying for that service on a variable basis," CEO RJ Scaringe said on Tuesday.

"That's something we see happening in the post-2020 environment. ... We've designed our organization to facilitate a lot of that transformation."

The Normal City Council approved a $1 million grant Monday and became the first taxing body to approve a five-year property tax abatement — both based on performance — for the automaker that plans to buy the vacant Mitsubishi Motors North America plant, which ended production a year ago, and make electric cars there, employing 1,000 workers and investing $175 million in the site through 2024.

Driver-operated passenger vehicles would be just the beginning.

Rivian, Scaringe said, wants to make cars that can succeed both in the current market and in a future dominated by a ride-hailing model such as that promoted by Uber and Lyft.

"If I didn't tell you that asset was a vehicle, you would ... say, 'Why do I want to purchase this thing that I never use that loses 65 percent of its value (within five years) and takes a ton of money to keep operational?" Scaringe said. "Our purpose and our vision is to design a company that helps us transition from the world of very low utilization to a world of increasing levels."

The company has research locations in the Detroit and San Francisco areas with about 100 employees. It was founded in Florida in 2009, but left that state to get closer to its suppliers after satisfying the terms of a $2 million state grant, he said.

Scaringe previously acknowledged that the company has operated in secret in the past, but will be much more transparent going forward.

The first step, Scaringe said, is a line of electric cars "that fit between five and seven passengers" and "have a very high level of utility combined with a very high level of performance," as well as "a very high level of efficiency."

Normal City Manager Mark Peterson, who has driven the prototype, said, "It made me feel better that that's a real car and it's very impressive."

The company plans to unveil its first mass-produced vehicle in the next 12 to 15 months, Scaringe told The Pantagraph.

"Those are designed to exist in a world where there's still an ownership-centric customer experience," he said. "But the vehicles are also designed to enable people to share ... either through fractionalized ownership or subscription."

Scaringe referred to the car as "sports-car quick, but a vehicle your whole family can fit into."

Rivian must now tailor the former Normal auto plant to those needs, Scaringe said. Despite the car's technological advancements, he affirmed there will be opportunities for former Mitsubishi employees to work at the plant.

"The body shop is going to be changing quite significantly. The stamping operation will continue to run as it did. ... The general assembly line will be used as is with modifications," he said. "It sounds like a long time, 'three years before we see significant hiring ramp-up,' but it's really not."

Scaringe thinks the vehicle can be successful in Bloomington-Normal and beyond — starting with Rivian employees.

"We hope people who build these vehicles are also able to purchase these vehicles," he said. "We hope to see many of these vehicles on the road here."

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Feds grant GLB RR’s request for time out

Feds grant railroad's request for time out

The federal agency overseeing the environmental review for Great Lakes Basin Transportation's proposed freight railroad looping around Chicago has granted a request to suspend work while GLBT continues its own planning.

In a letter dated Tuesday, the director of the Surface Transportation Board's Office of Environmental Assessment told GLBT that the office would suspend its work, which is required by the National Environmental Policy Act, despite the fact "that stopping and starting the NEPA review process often adds time and expense to the process and increases the burden on all stakeholders."

GLBT had requested the suspension earlier this month, asking the Office of Environmental Assessment to allow it to complete the required application to build and run the railroad before continuing the work that will ultimately produce an environmental impact statement.

"The application likely will provide information that will help the accuracy of OEA's NEPA review," office Director Victoria Rutson wrote. She asked GLBT to submit a status update on Feb. 28.

GLBT's chief legal and administrative officer, Mike Blaszak, said he "wouldn't rule out" the possibility of having the application complete by the end of February.

"Once GLBT files its application with the (Surface Transportation Board), OEA will resume work on determining a range of reasonable and feasible alternatives to be addressed in the Environmental Impact Statement," Rutson wrote.

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The alternatives will be published and opened to public comment, with the potential for public scoping meetings, Rutson wrote. Then, the Office of Environmental Assessment will begin preparing a draft environmental impact statement.

GLBT's request for a suspension in the environmental work came after it had submitted a response to a third information request from the Office of Environmental Assessment regarding its plan to build a 260-mile railroad from the LaPorte area through Illinois to Milton, Wisconsin. 

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