The Five-Year-Long Siege of the U.S. Solar Industry

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By Roy L Hales
Originally published on The ECOreport
Part one of a two-part series.

A Chinese publication depicts  former Vice-Minister of Commerce Long Yongtu saying Chinese solar firms descended on the overseas market like a “swarm of wasps.” Testimonies from the U.S. International Trade Commission describe how a deluge of cheap Chinese solar modules wreaked havoc on US Industry. Oregon Senator Ron Wyden describes it as a five-year-long siege of the American solar industry.

Courtesy SolarWorld
Courtesy SolarWorld

One of the first companies to go under was the California manufacturer Solyndra, which filed for bankruptcy in 2011.

“More than 20 U.S. companies went out of business, went bankrupt, or had significant layoffs.  Thousands of workers lost their jobs, impacting their families, communities and local businesses,” testified Minnesota Congressman Rick Nolan.

“We sourced panels from a number of manufacturers, including U.S. sources like Sharp, Schott, BP Solar and SolarWorld – all good companies with excellent products. Today, of those U.S. companies, only SolarWorld remains. The rest were driven out of business by dumped and subsidized imports, first from China and then also from Taiwan,” said Mike McKechnie, President of Mountain View Solar in Berkeley Springs, WV.

More than $2 billion Chinese solar modules were sold in the US during 2012, while the U.S. International Trade Commission was conducting an investigation. The resulting antidumping and countervailing duty orders brought some benefit to the American industry, but did not apply to Chinese modules assembled from non-Chinese cells!

“Even before preliminary duties were imposed, Chinese producers began using third-country cells, mostly from Taiwan, in the modules they assembled in China – either by buying the cells from Taiwanese producers outright, or shipping wafers to Taiwan for processing into cells, then shipping them back to China for assembly into modules,” testified Mukesh Dulani, President of SolarWorld Americas.

SolarWorld's plant in Hillsboro, Oregon - Courtesy SolarWorld
SolarWorld’s plant in Hillsboro, Oregon – Courtesy SolarWorld

His Vice President of Sales and Marketing, Ardes Johnson, testified:

“SolarWorld and the U.S. manufacturing industry have been in a downward spiral. By flooding the U.S. market with unfairly priced product, subject producers caused a collapse in pricing, which crushed U.S. manufacturers’ sales channels. Chinese and Taiwanese imports have surged into the United States in huge quantities. The majority of these imports were of 60-cell modules – the type that SolarWorld produces and by far the most commonly used module in the market. SolarWorld competes head-to-head with all of these subject imports, including 72-cell modules.

“Since 2012, Chinese and Taiwanese producers have used price to drive in large volumes of solar panels, and supply-and-demand market principles simply do not seem to apply to them. I negotiate prices with potential customers all the time, and I know that the price per watt of solar products is the primary factor in customers’ purchasing decisions. As the surge in subject imports has accelerated, we have seen lower and lower Chinese and Taiwanese price offerings, which could not have related to their production costs. We have been under constant pressure to drop our prices, just so we would have a chance at competing and maintaining some sales volume.

“For my job, my sales team travel and I around the country visiting customers and attending various solar trade shows. We have found Chinese and Taiwanese producers offering solar products at cut-throat prices. From one trade show to the next, their prices continue to decline. They even advertise that their products are not subject to antidumping duties, or are, quote, tariff-free. In addition, I am constantly confronted with Chinese and Taiwanese price offers. This year, we are being harmed every day by subject imports, and we are seeing them offer modules for 60 cents per watt and even less. That is one-third of where prices were just three years ago. No one should be forced to compete with these dumped and subsidized price levels.”

The Senate tour of SolarWorld's plant in Hillsboro, Oregon - Courtesy SolarWorld
The Senate tour of SolarWorld’s plant in Hillsboro, Oregon – Courtesy SolarWorld

About 70% of Chinese solar modules entering America now use Taiwanese cells.

“The price is relatively low and it is natural for mainland module manufacturers to purchase Taiwan-made cells,”Ren Haoning, of  China Investment Consulting, told China Daily.

According to Seth Kaplan, of Capital Trade, 3,178  American workers in the solar cell production sector have lost their jobs because of in Chinese manufacturers.  About 650 of these were from SolarWorld Americas

“SolarWorld was forced to shut down all production at our Camarillo facility, which had made solar products since the late 1970s,” Dulani testified. “We have now closed even our sales, marketing and other commercial activities there. In Oregon, we also had to lay off workers and curtail production on our 100-acre campus. In August 2013, we were forced to shut down our U.S. production of ingots and wafers, and our state-of-the-art crystal and wafer production equipment now sits idle in our facility. Despite rising demand for solar products, and even after winning the first trade case, we were still forced to dismiss workers and idle facilities. We have suffered huge operating losses and lost market share.”

The influx of cheap solar modules also impacted US installation companies.

“Many distributors and installers have given into the pricing pressure. They have either left the business or now buy their panels from Chinese and Taiwanese producers. In fact, these installers and developers have business models that, quite simply, depend on the use of dumped and subsidized solar products,” said Mike McKechnie, President of Mountain View Solar in Berkeley Springs, WV.

His company has been almost driven out of the Maryland market by cheap competition.

SolarWorld's plant in Hillsboro, Oregon - Courtesy SolarWorld
SolarWorld’s plant in Hillsboro, Oregon – Courtesy SolarWorld

” … Chinese and Taiwanese unfair trade has resulted in material injury and threatens additional material injury to U.S. producers, including those in Oregon. A strong determination from the Commission, coupled with antidumping and countervailing duties covering the full scope of unfair trade, will ensure the growth and resurgence of the domestic industry. U.S. innovation and efficiency started the world-wide growth of solar and will continue to fuel that growth so long as unfair trade practices are fully addressed. Let us not allow the innovation economy to be undermined by innovative cheating on trade. Trade enforcement must keep pace with the times,” said Senator Ron Wyden from Oregon.

On December 15, the Department of Commerce will decided whether to throw out it’s previous criteria whereby two of the three manufacturing steps must take place in China, for modules to be considered as manufactured in China.

“The Commerce Department should wake up before it walks off a cliff and inserts fatal legal and trade policy flaws into its decision, sideswiping at least two American companies — Suniva Inc. and Hanwha Q CELLS USA (my firm represents Hanwha Q CELLS) — that make solar products outside of China,” warns Paula Stern of the Stern group.

A Commercial Installation - Courtesy SolarWorld
A Commercial Installation – Courtesy SolarWorld

Some facts that need further exploration:

  • Some “Chinese” solar companies are largely owned by US shareholders. How extensive is this? And how do they fit into the  picture being described?
  • In addition to “cheap” solar modules, some of the highest quality solar modules in the World come out of China.
  • Two of the five companies that the Silicon Vally Toxic Coalition  recently named as industry leaders, because of their environmental practises and transparency, are Chinese. Trina Solar is #1 and Yingli is #3.  Only one of the US companies mentioned on this page made that cut, SolarWorld was #4.
  • Some are calling for more negotiations, rather than litigation

Meanwhile As a result of trade disputes in both Europe and the US, Chinese manufacturers are focusing more attention on Japan, India and South Africa.

“Shipments to what was once the Chinese industry’s second-largest export destination (the US) have fallen in half,” reports China Daily, and further duties could bring about a “total eclipse.”

Disclaimer: Any opinions expressed are those of the author and not necessarily those of PV Solar Report.