In a deflated digital economy, can investment in manufacturing plants spur renewed prosperity? U.S. manufacturing is dead, we've been told, but A123Systems isn't buying it. The battery maker is angling to expand its U.S. production capacity and create 14,000 jobs in the process.

A123, which makes lithium-ion batteries for AES, BAE Systems, Black and Decker, Cessna, Chrysler, General Motors, and Th!nk, has applied for $1.84 billion in federal funds so it can build a manufacturing a plant in Michigan.

The location is a natural, given Michigan's skilled and available labor pool. And since A123 hopes to provide batteries for GM's all-electric Chevy Volt expected in 2010, the location is doubly appropriate.

"This [Michigan] facility would ... help ensure that the American economy replaces its dependence on foreign oil with reliance on advanced, homegrown batteries," said David Vieau, A123Systems president and CEO, in a statement.

Last month The Wall Street Journal reported:

Ralph Brodd, a Nevada-based energy-storage consultant, recently published a report on battery manufacturing for the National Institute of Standards and Technology. He said that though much of the advanced battery technology was developed in the U.S., American companies "opted out" of battery production because of the low returns the business offered. Asian manufacturers picked up the business because of their proximity to makers of electronic devices, which need a steady supply of batteries.

Mr. Brodd said American companies now face significant hurdles in regaining lost ground, including the preference by Asian car makers to use Asian-made batteries in their hybrid models. However, he said U.S. concerns could leap ahead if they developed the right technologies.

"If you manufacture everything in China, you lose control of the technology," Mr. Brodd said.

A123 is not bidding for a bailout. The loan it is asking for would not come out of the Fed's $700 billion Troubled Assets Relief Program (TARP) fund, the bucket holding the auto industry bailout and subprime mortgage bailout dollars.

A123's low-interest loan would instead come from the $25 billion Department of Energy's Advanced Technology Vehicle Manufacturing Incentive Program. Congress enacted the Energy Independence and Security Act of 2007 to jump-start development of fuel-efficient vehicles and components.

With the global economy low on juice, A123 has been in pre-IPO mode for months. Meanwhile, the battery market is getting increasingly competitive with companies such as Boston Power eager to jump in.

A low-interest loan from the Fed would help keep things moving along.