The case for U.S. solar manufacturing

Editor’s note: On August 15, pv magazine USA ran an op-ed by Tony Clifford of Standard Solar, arguing against the Section 201 petition which is currently being investigated by the ITC. Today we bring you a response from SolarWorld Americas, which joined this petition.

by Juergen Stein, CEO of SolarWorld Americas Inc.

Solar energy should be a success story for U.S. solar-panel manufacturing, an industry that this country pioneered over decades.  Instead, an overwhelming crush of undersold imports has all but snuffed out the industry, an American tragedy that no observer can deny has unfolded since 2012.

From 2012 to 2016, imports swelled five times over, capturing virtually all of the 350 percent increase in U.S. demand.  In 2016 alone, imports grew a staggering 50 percent – to $7 billion – as foreign producers contributed to massive global overcapacity and seized the U.S. market to dump their products.

It’s no surprise, then, that this torrent of imports shredded the U.S. manufacturing industry’s capacity utilization, prices and financial performance in 2016.

From 2012 to 2016, nearly 30 U.S. manufacturers were forced to shut their doors, casting off hundreds of line workers, specialized engineers and Ph.D. scientists. These laid-off workers were real people with real careers, not potentialities or hypotheticals.

As a result of this onslaught, only two significant domestic producers were able to hang on long enough to bring the solar industry’s latest trade action, called a Section 201 case:  Suniva Inc., which is bankrupt, and SolarWorld Americas Inc., which has suffered layoffs but still remains.

Unfortunately, solar installers and developers see the case as a potential threat to the continued rapid expansion of their businesses, despite the fact that U.S. solar-panel manufacturing is, in starkly real terms, fighting for its very survival.

Meanwhile, a third component of the struggle has driven a wedge in the U.S. industry:  Chinese and other Asian manufacturers hope we fixate on short-term pricing, because they have been relentlessly committed to the long-term goal of controlling the world solar manufacturing industry.

From the standpoint of fair trade, it hasn’t been a pretty picture.

In two comprehensive investigations, the U.S. government found that the Chinese government had sponsored its solar-manufacturing industry’s export drive under that command government’s Five Year Plan.  The Chinese government showered its industry with export-oriented subsidies, which the U.S. government two times determined to be illegal.  These producers also were found to be selling into the U.S. market at prices below production costs – an illegal practice called dumping.

Resulting duties to curb the predatory effects of this import campaign helped the U.S. solar manufacturing industry for a time within the 2014-2015 period.

But then Big China Solar, armed with state-supplied subsidized financing, built up operations in Southeast Asia to evade the tariffs.  Now the surge of U.S.-bound imports flows from Malaysia, the Philippines, Thailand, Vietnam and other countries.  Meantime, imports from China increased some 732 percent from 2012 to 2016.  These developments, combined with China slowing its purchase of solar, once again crashed U.S. domestic prices in mid-2016, causing still more U.S. bankruptcies.

Sound unfair?  That’s only the half of it.

Though the Chinese and other exporters enjoy access to every corner of the U.S. solar marketplace, including U.S. military bases as well as taxpayer-funded incentives, the Chinese market is closed to competition from imports.  In the current trade case, even Chinese producers admit it.

So far, this asymmetrical trade aggression is winning the day.

While China and other nations are building up their technological production toward energy independence, the United States is on the brink of losing its own industry.  The nation risks depending on foreign countries not only for fossil fuels but clean-energy technology as well.

Considering the growth of the U.S. solar market, the domestic manufacturing industry should be much bigger – and it still can be.  But without relief from imports, the industry will disappear – and gone with it will be decades of manufacturing expertise, R&D drive and production know-how.

Everyone should want prices to steadily decline over time, but not when import prices are decoupled from the costs of production – or illegally subsidized by foreign governments.  Indeed, domestic manufacturers have relentlessly reduced their costs and pricing down to 10 percent to 15 percent of total installation costs.  Where are similar drives to reduce the cost components of the other 85 percent to 90 percent of the total?

Some opponents of the Section 201 case have alleged that U.S. manufacturers are somehow to blame for their own U.S. decline.  But this line of argument merely amounts to blaming the victim.

Opponents also contend that relief from imports could cause layoffs in the installation business.  The same corner of the industry predicted similar job-loss fallout from the first two cases – losses that never materialized as the U.S. market kept right on growing.

Indeed, U.S. demand increased from 3.4 gigawatts in 2012 to 14.8 GW in 2016.  Solar installations grew nearly 100 percent from 2015 to 2016, marking the 17th straight year of growth. Last year, solar became the fastest-growing energy source nationwide.

But undersold imports have captured that growth.

The future should be bright for both installation and manufacturing segments, as analysts forecast robust growth to continue through 2018 and beyond.

What do opponents of the trade case imagine would happen if the last U.S. manufacturers disappeared?  What would replace the comparatively high-wage, high-benefit employment of yet another U.S. manufacturing industry?  Would the installation industry become more vulnerable to the Chinese government’s control of pricing?  Would the world industry continue to develop technologically?  Would the United States truly make progress toward energy independence?

The sun shines bountifully across this vast nation.  The U.S. and global solar markets are strong and growing.  With a domestic solar-panel manufacturing industry, the possibilities for gains in energy independence are spectacular.

But to realize these possibilities, we must take a stand against China and other Asian countries from unfairly taking over yet another U.S. high-tech industry – and in support of American manufacturing, R&D and innovation.

The views and opinions expressed in this article are the author’s own, and do not necessarily reflect those held by pv magazine.