Well, that happened.
Plant will shut after $58m in state aid
Evergreen Solar to cut 800 jobs as it tries to compete with China
Evergreen Solar Inc. will eliminate 800 jobs in Massachusetts and shut its new factory at the former military base in Devens, just two years after it opened the massive facility to great fanfare and with about $58 million in taxpayer subsidies.
The company announced yesterday that it will close the plant by the end of March, calling itself a victim of weak demand and competition from cheaper suppliers in China, where the government provides solar companies with generous subsidies.
OK, a couple of lessons can perhaps be gleaned …
- China is eating America's lunch on solar and renewables. We knew this was the case. Part of it is simply the old story of lower costs, but then it seems that the Chinese government is pumping its own investment into these technologies. Cap and trade revenue, by the way, would have done that for the US. Oh well.
- From MA's perspective, it really makes you wonder (and some can say we told you so) if it's wise to invest taxpayer $ in a particular company, rather than working on the overall environment for economic development: infrastructure, education/training, permitting, and general hand-holding. OL says Give it back, Evergreen. Sounds right, but don't hold your breath.
- On the global environmental front … this probably represents good news. If the Chinese are competing like hell vs. the Americans for renewable energy markets, the market itself will benefit. And if/as the global economy recovers, energy prices may well rise, making renewables relatively more competitive with the dirty stuff.
Giffords installed nine solar panels on the roof of her Tucson home and detailed the cost ($12,500 for equipment and installation) and payback period (7.4 years), after federal and state tax rebates, which she also fought for.
The system, installed one year ago this month, was expected to cut her home energy bills by half.
In Congress, Giffords was appointed to the Committee on Science and Technology, where she has pushed hard for funding increases in science, technology, engineering and mathematics education and for research funding — especially research into solar power.
I just hope she's able to come back, and that she has some other folks to help take up her case.
eaboclipper says
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p>Until we as a nation take a serious look at the regulatory environment at home, we will never manufacture in large scale again. We have regulated ourselves to non-competitiveness.
charley-on-the-mta says
What does China allow that we don’t? And do we actually want to make those choices?
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p>And don’t you think that China’s artificially weak currency has something to do with it, too?
paulsimmons says
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p>Of course; along with subsidized research,development, industry, and finance; a more technologically and geo-strategically proficient military; and five times more science and engineering graduates than the U.S., China is ascending as the United States declines.
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p>I can deplore our decline, but I note that China is advancing its national interests. That’s what nations do, and until we recognize the fact that the “Global Economy” is simply a return to the pre-1914 world that decline will continue.
af says
come to mind, plus peons’ wages. Also, how many stories have we had in the news about products imported from China that have dangerous pollutants in them because of nonexistent product testing and regulations.
hrs-kevin says
Manufacturing goes to where the cost of wages/benefits are the lowest. Regulations are a minor factor.
mannygoldstein says
And they have lots and lots of regulations, as does all of the EU. Ask anyone who’s designed or manufactured products for EU export.
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p>On whole, the EU is doing much better economically than we are, and Germany is flirting with underemployment. In particular, the EU has a Middle Class. They don’s see eviscerating workers as a proper sport for the wealthy.
paulsimmons says
According to the European Community’s Eurostat, Eurozone unemployment is currently 10.1%.
mannygoldstein says
Those countries are sill much poorer and having a tough time.
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p>In any case, Germany’s success is all that’s needed to disprove the “regulations kill jobs” meme.
paulsimmons says
I cited Germany and Canada in an earlier comment.
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p>Although you would also have to remove Southern Europe, the UK, and Ireland (possibly France) from your economic model. E.U. “success” is purely Nordic-Teutonic these days.
amberpaw says
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p>2. Poorly structured incentives: What if 58 million in credits/incentives went to homeowners who installed solar if and only if the solar equipment was manufactured in Massachusetts?
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p>3. so, as for me, I can individually decide that as to solar equipment our family is now considering, I won’t buy from Evergreen Solar – the only thing “evergreen” about solar will be the profits a small group made by abandoning my state and maybe, doing its business in a manner I personally consider immoral – that is making promises and then breaking them without a need to do so other than GREED.
howland-lew-natick says
I’ve never met any that have. They want to make a profit for themselves through a venture. If that involves government involvement, so be it. Competition? Equal access? Hogwash.
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p>I’m reminded of the Fore River Shipyard scandal. The politicians promised jobs and a rebirth of a dead industry. Politicians got a law changed so SBA could send the money. The principal got the dough and took off with it for Greece. No extradition with Greece. And politicians, like Hollywood people, have no responsibilities.
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p>Now the rallying cry is “Green!” As solar fades, wind will be the next industry to belly up to the bar for the free drinks. Actually, US made wind power equipment fills warehouses now as China makes the stuff better and cheaper.
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p>Oh, well, we ducked the wild pitch that struck Rhode Island. A miracle in itself…
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p>“Disbelief in magic can force a poor soul into believing in government and business.” –Tom Robbins
amberpaw says
If not, well…dyou are right Lew. Right on, I mean. All to often, “the Devil is in the details” and no one really has thought those details through.
howland-lew-natick says
Stay in the state, that sort of thing. The state is the loan co-signer.
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p>I remember well many government purchases from SBA startup companies. Created for the sole purpose of government contracts, they would ship so that the day the products were delivered, was the day they filed bankruptcy. Our uncle has deep pockets but not so much on the brains dept.
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p>“Fool and your tax dollar are soon parted.” -Anon.
nopolitician says
Try and extend yourself beyond being just a repeater for talking points. What regulations are companies going to China to avoid?
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p>I suspect that they are going there to avoid environmental regulations, child labor laws, minimum wage laws, worker safety regulations, and the 40 hour work week.
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p>Are you advocating that we eliminate those things here? If so, then do it plainly and clearly. Or are you afraid to say that directly?
sabutai says
Hearings and applications to local boards elected by the population are a massive waste of time. In China, you just grease the palm of the local Party man and the h-ll with the people.
howland-lew-natick says
;o)
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p>“I once sent a dozen of my friends a telegram saying ‘flee at once – all is discovered.’ They all left town immediately.” –Mark Twain
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p>
sabutai says
paulsimmons says
… read their history and economics.
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p>From Alexander Hamilton, through Henry Clay (and Clay’s fan, Abraham Lincoln) to Herbert Hoover, American conservatism was supportive of subsidies and tariffs to protect industry, government support of infrastructure and other improvements; and public education as a means of insuring equal opportunity.
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p>Far from opposing regulation, honest conservatives considered it necessary, given human fallibility and the inevitable corruption of elites. The nuance here is that regulation should not degenerate into bureaucratic micromanagement. Reread your Adam Smith.
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p>Two asides:
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p>Charlie, China’s advantage consists of a political culture more patriotic – to the point of chauvinism – than ours. The economic system there is authoritarian Hamiltonianism, with an overlay of pro forma Marxism to protect the country’s elites. Think nineteenth century America with red flags.
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p>Kevin, there are examples such as Canada and Germany where value-added manufacturing provides wages and benefits greater than those earned by U.S. workers. Again the reason is cultural: neither country suffers from the managerial nihilism afflicting the U.S.
david says
Here’s a serious look at the regulatory environment in China. Personally, I’m glad most of this can’t happen here anymore.
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p>
Guiyu, Guangdong province, rivers and reservoirs have been contaminated, the villager is washing in a seriously polluted pond. November 25, 2005
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p>
In Inner Mongolia there were 2 “black dragons” from the Lasengmiao Power Plant covering the nearby villages. July 26, 2005
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p>
Jiangsu province Changshu City Fluorine Chemical industry land sewage treatment plant was responsible for collection and processing of the industrial sewage. However they did not, the sewage pipe was extended 1500 meters under the Yangtze River and releasing the sewage there. 2009 June 11
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p>Plenty more where these came from.
christopher says
If that’s the case is it too crazy an idea to transfer those subsidies to greener energy?
smart-mass says
We’ve done dozens of projects using Evergreen panels but in the last year or so, they have not been price competitive. We’ve been able to purchase equal or better panels for 12 to 15% less. Given that panels are the major cost in any solar installation, this translates into substantial savings for our customers. Unfortunately, all of the panels we use now are made in Asia.
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p>I applauded the Commonwealth’s efforts to keep Evergreen local because it was, IMHO, the right thing to do. It was quite satisfying to install Massachusetts made solar panels and many of our customers are proud to say they have Evergreen panels.
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p>It pains me to see the Evergreen production go away. It disturbs and baffles me that panels can me made in China and shipped to the US cheaper than can be made here… (or in some cases, components can be made here, shipped to China, assembled, and shipped back for less than the cost of making the whole thing here)
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p>Mark Durrenberger
President
New England Breeze Solar
978-567-9463
stomv says
or, at least, slow shipping is cheap. Cargo containers are remarkably energy and man-hour efficient.
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p>To me, what’s disturbing is that China’s labor force and environment suffer as a result of China’s lax policies. The upshot is that the US is taking some action. For example, due to what might be considered a technicality, The DOD won’t be buying Chinese solar panels.
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p>I wonder: could MA include a requirement/additional subsidy that the solar panel be manufactured within 200 miles of the location? They might not be able to require made in MA, but a distance requirement is pretty common for green construction — sourcing materials, etc.
johnt001 says
At $0.10 per watt, up to 5,000 watts capacity, it caps out at $500. Not much, but it’s better than nothing!
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p>One thing to realize is that solar panels are warranted by the manufacturer to maintain at least 80% power production capability for 25 years. The drawback on that is that it’s only good as long as the manufacturer is solvent – if they go belly up, the warranty isn’t worth the space it’s taking up in the world. For that reason, you should really only use panels from a manufacturer that looks to remian in business for at least 25 years.
smart-mass says
There are literally dozens of solar panel makers that have gone into business in the last five years. Yet every one of them offers 25 or greater warranties (because they have to to compete).
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p>Perhaps it’s my engineering background, but I believe that “past performance is the ONLY RELIABLE indicator of future results” and if you’ve only been in business for five or fewer years, we have nothing to go on.
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p>At the present we are using solar panels made by two companies that started business in the early 1950s.
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p>While there are lots of installers out there that can undercut my price – is it worth saving $1000 or $2000 now only to spend it because you can’t get warranty support in 5, 10, or 15 years?
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p>Mark Durrenberger
President
New England Breeze Solar
http://www.NewEnglandBreeze.com
warrior02131 says
With the forecast for higher fuel costs in the near future, hopefully the cost difference between foreign and domestic solar panels will become negligible. Then, it might make more sense to keep those jobs here.
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p>Sincerely,
Wayne Wilson
Roslindale
stomv says
China has oodles of coal, and it’s cheap. Rising petroleum costs will have an impact on shipping costs, but shipping is a tiny fraction of the total cost. In the mean time, energy costs will (rightfully) rise in tUSA in order to transition away from coal/oil and toward renewable electricity.
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p>It’s not clear to me that long run energy prices will help US manufacturers in the future.
paulsimmons says
It’s not necessarily a given that the US will transition away from fossil fuels, alas.
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p>The short-term politics of energy may lead to more dependence on coal and natural gas, in the absence of a comprehensive government-funded research and development plan to provide economically feasible alternate energy sources.
trickle-up says
is that these tax subsidies at the state level rarely yield anything permanent.
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p>I don’t mean to say that they can’t ever fertilize economic growth, or that Evergreen Solar was in any way dealing in bad faith. But their usefulness is very limited and market forces trump all the good faith in the world.
christopher says
…on either their 2010 or 2011 tax filings for jumping ship?
trickle-up says
What purpose would it serve?
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p>Jamie Eldridge said it better than I did.
christopher says
…that if we gave tax breaks to companies on the premise that they would stay and create jobs, then it stands to reason that if they bail on us and cut jobs, the state should get its money back.
johnd says
Why can a Chinese company produce the panels in China, then ship them here and sell them to homeowners (who can’t use the “made in MA” rebate) and still ends up cheaper than Evergreen.
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p>I know Amber focused on greed and profits, but there must be something more than that. Profits, by the way, is one thing that will help a company stay in business for the 25 years to back that warranty. Show me a company losing money competing against imports and I’ll show you a company on life support, with dim prospects.
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p>Others have inferred it is not regulations… so what is it? Is it labor costs? Is it the Chinese government subsidizing it? I have a friend in the business and will inquire about his opinion.
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p>I’ve said a similar thing to people when they attack the banks that a “rich” liberal should start a bank and run it the way they want (no gouging, low interest loans…) but it never seems to happen. Maybe because the only way a bank can survive is to be competitive and watch every penny. Why doesn’t a some “rich” green person open up a solar panel company (like Evergreen) and give it a go? I think the answer is because our labor costs are simply far too high compared to China so maybe MA is not the right place to manufacture them.
smart-mass says
The MA rebate adder saved $0.10 per watt (and $0.25 or $0.50 per watt in earlier days). At present, Evergreen panels are trading at $0.15 to 0.25 per watt higher than the Chinese imports (even the ones coming from well established, long-lived companies).
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p>Technically, their panels perform about the same as any polycrystalline solar module so there was little differentiation on performance.
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p>What they had was a relatively low energy production process but from my product development background, I know that it’s really difficult to build a competitive edge from a manufacturing process – most buyers put how a product is made low on the list compared to price and performance.
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p>Imagine me going to a customer and saying, you can have 5,000 watts of solar for $32,000 or for $33,000 but you’ll get the same performance from either installation. Most aren’t going to spend the extra $1000.
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p>Mark Durrenberger
President
New England Breeze Solar
http://www.NewEnglandBreeze.com
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p>
gmoke says
I have a few shares in Evergreen and expect to lose the whole investment. The industry gossip about Evergreen is that it is and was a very top heavy company with more managers than factory workers with those managers getting very good salaries and perks. Not only is and was the management bloated but, evidently, they weren’t very good either.
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p>At least, that’s what I’ve heard through the grapevine.
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p>Saw the CEO of Suntech, a large Chinese PV manufacturer, at MIT in December. Very impressive presentation. My notes are at
http://www.dailykos.com/story/…
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p>Frankly, I’ve seen the US lose its lead in renewables from the 1970s till today. Occasionally, somebody starts talking about the benefits of building a renewable energy base for the economy and jobs, for instance around the Rio conference in the early 1990s and during the 2000 election when both candidates touted renewables a bit and then again in 2008 when the cry was “green jobs.” But there is no consistent support. The present Congress will in all likelihood be as adamant against renewables as the last Congress was for it. And the US don’t do industrial policy or so a panel of energy execs told me at Harvard Biz School a couple of years ago.
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p>Germany and northern Europe have spent the last 20 years investing in renewables like solar and wind, efficiency and district heating. They have been consistent and built strong(er) industries. China is going hell-bent for leather on all energy fronts because they want to continue their economic growth. Japan and South Korea have been consistently building up their options as well. The US dithers and trivializes energy concerns outside of oil, gas, nuclear, and, most importantly (thanks, Koch Bros) coal. The breaks we give those energy sources is still probably close to ten times what we give to renewables and efficiency. And just wait until the Tea Party begins telling people smart meters give you brain cancer and allow the government to turn your appliances off at their whim.
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p>It is very, very late in the day to build a US renewable industry. We’ve dithered and frittered away almost all of our opportunities. Not saying it can’t happen. Just saying history is not on our side.
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p>Still, start small and remember, Solar IS Civil Defense.
tesso says
Evergreen also lost 30.9 million in loaned shares to Barclay and Lehman Brothers. The financial meltdown in the country perhaps has a lot to do with this terrible loss of ‘good’ jobs in MA.
They had to turn to China for money, it seemed to be their only financial resource. Let’s hope they win their lawsuit against Barclay and Lehman. Not that it would help at this stage.