U.S. solar equipment manufacturers SolarWorld Americas Inc. and Suniva Inc. are asking Washington for protection from foreign competitors.
After running its plants in Germany and Oregon at full capacity through the first half of 2016, SolarWorld AG was forced to cut back operations by a midyear drop in demand. Already reeling from a costly legal battle with a supplier, the solar equipment manufacturer in May said it was filing for bankruptcy. Less than a month later, its U.S. subsidiary SolarWorld Americas Inc., which was increasing production of a new line of solar panels around the time the market turned, joined a trade case asking Washington for protection from foreign competition.
The case was brought by Suniva Inc. in April, shortly after the solar panel maker, which is headquartered in Georgia and majority-owned by Hong Kong-based Shunfeng International Clean Energy Ltd., declared bankruptcy. The company's collapse came on the heels of a manufacturing expansion that coincided with the same market downturn that hit SolarWorld.
At a hearing scheduled for Aug. 15 in Washington D.C., the two companies are expected to argue that they were victims of an oversupplied global market that wrecked America's solar manufacturing industry. Without a recommendation from the U.S. International Trade Commission that President Donald Trump set tariffs and minimum prices on all imported solar cells and modules made from crystalline silicon, they say solar cell and panel manufacturing could disappear from the U.S.
"At a time of such rising demand, the U.S. industry should be flourishing, with sales increasing in line with the demand surge and improved financial performance. Instead, the U.S. industry has been decimated," Suniva's lawyers wrote to the International Trade Commission.
Suniva and SolarWorld's opponents say imports aren't the primary cause of the industry's problems.
The Solar Energy Industries Association, or SEIA, a trade group, said domestic manufacturers were unable to make enough of the panels used in the biggest segment of the U.S. market, allowing rising demand to pull in imports. Suniva and SolarWorld were also dogged by "complaints from a litany of dissatisfied customers over late shipments, damaged products and general product unreliability," SEIA said. The companies said that is untrue.
The European Commission, which warned that tariffs and price controls could violate a World Trade Organization rule that safeguards only be used when an "unforeseen development" leads to a surge in imports, questioned why domestic companies had expanded production in recent years rather than optimize unused capacity.
"It appears there is no correlation between the increase of imports and the difficulties experienced by the domestic industry," the European Commission wrote in a filing.
A year after solar ranked as the top source of new power generation in the U.S., there are fears that the case could slow the industry's momentum and cost the country tens of thousands of jobs. On Aug. 11, 69 U.S. lawmakers signed letters urging the U.S. International Trade Commission to consider the "negative impact that the high tariffs and minimum prices" could have.
Suniva and SolarWorld say those concerns are unfounded. According to their analysis, tariffs and price controls would actually boost solar employment.
|From 2012 through 2016, which is the period the trade commission is investigating, employment in the U.S. solar industry grew 119%, with the number of people working in manufacturing rising by about 28%, according to The Solar Foundation, an industry advocate. |
Source: Associated Press
From 2012 through 2016, which is the period the International Trade Commission is investigating, employment in the U.S. solar industry grew 119%, with the number of people working in manufacturing rising by about 28%, according to The Solar Foundation, an industry advocate. The group does not track how many people worked specifically in solar cell and panel production.
In a pre-hearing report, staff for the International Trade Commission said the number of production-related workers employed by U.S. companies making crystalline silicon solar cells and panels increased by 4% during the investigation period. Panel production, measured in kilowatts, increased by 24%.
However, with a roughly 490% increase in the amount of solar photovoltaic capacity installed in the U.S. during that period, most of the manufacturing gains went to foreign companies. From 2012 through 2016, solar imports rose by 482% while the domestic industry's share of the U.S. market was cut nearly in half, falling to 11% in 2016, according to filings in the trade case.
In deciding whether a domestic industry has suffered or is threatened with "serious injury" from competing imports, the Trade Act of 1974 directs the International Trade Commission to consider all economic factors it deems relevant, including significant idling of production facilities, an inability among a significant number of companies to operate with a reasonable level of profit, significant unemployment or underemployment, and a decline in sales or market share.
Suniva's lawyers at Mayer Brown said the overall increase in production-related workers masked "extreme volatility" in the labor market. Trade commission staff counted 26 plant closures during the investigation period.
Had U.S. companies captured a proportional share of rising domestic demand, employment in the manufacturing sector would have grown to approximately 40,400 in 2016, Suniva's lawyers said in a report that cited data from The Solar Foundation. Instead, approximately 38,100 people worked in solar manufacturing last year, according to the foundation.
All of that is evidence of the failure of existing duties on China and Taiwan, Suniva and SolarWorld said. Rather than invest in the U.S., companies circumvented the tariffs by shifting operations primarily to other Asian countries, grabbing market share while selling equipment at prices below where "any producers can recover their costs," Suniva's lawyers said. Suniva and SolarWorld are pursuing their case under a provision that does not require a finding of an unfair trade practice.
With "meaningful relief," U.S. companies would be "fully competitive," Suniva's lawyers said. "Foreign producers have no competitive advantage in the cost of production for solar products." The U.S. Department of Energy in 2016 said it was about 6 cents per watt cheaper to manufacture solar panels in China than in the U.S., primarily due to lower labor costs.
If the U.S. International Trade Commission determines that the domestic solar manufacturing industry has been seriously injured by imports, it will have until Nov. 13 to deliver its findings and recommendations to President Donald Trump.
SEIA fights 'bailout'
Already the subject of sharp disagreement within the solar industry, the trade case has grown more contentious heading into the Aug. 15 hearing.
Days after SEIA claimed that shoddy products were partly to blame for Suniva and SolarWorld's problems, the group's president and CEO, Abigail Ross Hopper, said safeguards would amount to a "bailout" for companies that "couldn't make it in a thriving industry."
The "few hundred jobs" at stake at Suniva and SolarWorld are "deeply" concerning, Hopper wrote in an op-ed published by GreenTech Media on Aug. 10. But "propping up these two companies" could cost the industry "many thousands of good U.S. manufacturing jobs across the various solar energy segments."
"SEIA's statements are false, misleading and disingenuous, and their tactics are shameful in the face of the thousands of real American manufacturers who have lost their jobs due to unfair imports from China and globally," Suniva and SolarWorld shot back in a joint statement. "SEIA has yet to offer any constructive path forward to helping U.S. manufacturing."
The companies framed the tariffs and price controls as a lifeline until the Trump administration can negotiate a reduction in excess global capacity.
John Carroll, the former senior vice president of finance and legislative affairs at defunct solar panel-maker Silicon Energy, said safeguards would just "create more problems in the market, and God knows I don't think we need more of that."
Silicon Energy was ultimately done in by "quality-related problems," according to a dozen Minnesota state lawmakers who signed letters to the trade commission opposing safeguards. An Ontario-based solar manufacturer called Heliene Inc. that took over Silicon Energy's plant in Mt. Iron, Minn., is producing about twice as many panels as the former tenant did, they said. Heliene did not respond to messages seeking comment.
"Heliene has relied on automation. They relentlessly beat out the cost so they can be competitive with the Chinese manufacturers at a scale that makes sense for them," Carroll said in an interview.