François Legault did not come forward on Tuesday to say whether or not he still believes in the Northvolt project in Quebec. The Prime Minister expects “an update” from the company “in the coming hours”. What do we know about the difficulties of the Swedish battery manufacturer Northvolt? Duty takes stock.
Rumors of bankruptcy in the United States
Northvolt is in serious financial difficulty. So much so that the company is considering filing for bankruptcy protection in the United States, according to information released in recent days by the Reuters news agency and the Swedish financial media. Today's Industry.
Specifically, the company is reportedly considering filing for Chapter 11 of the U.S. Bankruptcy Act. This provision would allow it to “protect itself for a certain period of time to restructure its operations and recapitalize itself,” summarizes Michel Magnan, professor at the John Molson School of Management at Concordia University.
“If they go down this avenue, it shows a desire to make the business work. Certain requirements must be met to reasonably believe that the company can get out of this difficult period,” underlines François Dauphin, CEO of the Institute on the Governance of Private and Public Organizations.
Northvolt is currently seeking US$300 million in emergency funding. But negotiations are stalling, reports Today's Industry.
A new president for the Swedish factory
In the turmoil, Northvolt made a change within its management team. On Tuesday, the company's parent company confirmed that its co-founder and current CEO, Peter Carlsson, would no longer serve as chairman of the board of directors of its Northvolt Ett. This is the entity that oversees the gigafactory located in Skellefteå, in the north of Sweden.
In this role, Mr. Carlsson will be replaced by Paul O'Donnell, a restructuring expert. “It makes sense to strengthen the board of directors with someone who has extensive experience supporting companies in a complex operating environment,” the company said by email.
“It's difficult to see it as anything other than a questioning of Mr. Carlsson's ability to rectify the situation in the Swedish factory,” argues François Dauphin.
Professor Magnan sees the possibility that Mr Carlsson wants to concentrate on financial negotiations. “Right now, I imagine he's pretty busy. If he also has to manage a factory, that's a lot of things at the same time,” observes the professor.
At the beginning of October, another big change occurred: Mark Duchesne left his position as CEO of Northvolt Ett. He was replaced on an interim basis by Angéline Bilodeau, who until then held the position of vice-president of operations at Northvolt Six in Quebec.
The Northvolt factory in Skellefteå is not running as quickly as hoped. According to Reuters, the company has failed to meet its weekly production targets since the beginning of September. In July, German giant BMW withdrew an order worth nearly 3 billion Canadian dollars due to delivery delays.
The fate of the project in Quebec pending
“All these announcements do not bode well for the project in Quebec,” maintains Mr. Dauphin.
Michel Magnan believes that, without a sufficient new stage of financing, “questions arise” about the parent company's ability to inject “financial, human and technological resources” into a project at the start-up stage in Quebec.
“It’s not even a factory, it’s a factory project. But it still remains an opening to the American market, which could work in favor of the project,” explains the expert.
The unveiling of the restructuring plan planned for the fall — that is to say before December 21 — should allow us to know more about the fate reserved for the Quebec project.
“Usually this process should not take too long. The risk is that local employees will start to look elsewhere… And then, Northvolt would risk losing expertise,” underlines Mr. Magnan.
