Archive for the ‘Market Protectionism’ Category

Losing Our U.S. Solar Manufacturing Base. Competing with WTO Scofflaws?

solar energy, solar panels

China Based Solar Cell Production

As I wrote previously on this subject, Asian companies are investing considerable resources in their domestic solar energy manufacturing companies and now have over 50% global market share. While my concern is that the U.S. has been left behind in solar manufacturing, a few Asian countries may be violating World Trade Organization regulations. China, a recent signatory to the WTO, is under the microscope on a number of fronts (tires, steel, credit cards services) with actions pending, and solar energy manufacturing may be next in line. A good article here today from the New York Times illustrates the potential violations.

This is a difficult topic as the lines are blurry and the alleged violations hard to uncover and value, if past WTO actions are any indication. Clearly, Chinese companies are making both high quality product and big inroads on the global stage. But I believe the main competitive issue is the lack of U.S. government support to foster a strong American solar energy industry, regardless of the whether any WTO regulations were or were not violated. Stay tuned as I believe this issue may become more acute going forward.

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Asia HAS Taken the Solar Energy Manufacturing Lead

As many experts in the solar energy industry have warned since earlier in the decade, the U.S has been at risk of losing the economic opportunity that new industries like the PV solar energy industry exemplify.  It is no longer a question of whether we will lose clean energy manufacturing, but rather how much of a net importer of these new products will the U.S. be, and how much money will we be handing over to other nations as a result?

Solar panel, solar energy

Offshore Manufacturing Using High Throughput Lines

While China is in the spotlight on this issue, countries such as India, Taiwan, Japan, Korea, Malaysia and Germany have created environments hospitable to clean energy manufacturing, and are now the reigning powerhouses.  In a mere 6 years, the U.S. has fallen from #2 in manufacturing volume of PV modules and related products to a distant 6th position.

The typical mantra is that U.S. labor rates are too high to compete. While labor costs are a small part of the competitive advantage, the companies based in these countries have strong government leadership resulting in access to very low cost money to start and fund operations, access to low cost land and buildings for factories, highly subsidized training for skilled workers, and access to exceptionally low cost raw materials and upstream suppliers.

solar panel, solar energy

A Rare Sight

What is lacking in the U.S. is leadership, and a recognition that the “greatest economic opportunity of this generation” is about to slip away. A great piece of journalism on this subject by Eric Pooley in Businessweek entitled, “America Sits Out The Race” , highlights how our leadership is content to sit on the sidelines and let the U.S. clean energy industry become yet another low margin, low revenue service industry. Without leadership and decisive energy and carbon legislation, large market participants such as PSE&G, GE, Siemens and others cannot plan for the future and billions of investment capital sit on the sidelines.

In the latest example of this lack of leadership issue, on August 5th, Senate Democrats and the White House eliminated $1.5 billion of stimulus funding for renewable energy and electric transmission loan guarantees to offset part of a $26 billion state aid bill to put teachers and municipal workers back on payrolls. This on top of another $2 billion redirected from renewable energy for the Cash for Clunkers program back in Q1 of 2010. While these decisions may keep the teachers union and other constituents loyal for the mid-term elections, far more jobs and economic opportunity, as well as tax base, would have been generated by supporting renewable energy.  Numerous Department of Energy and academic institution reports have demonstrated these benefits in a variety of studies over the years.

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