Tuesday, March 6, 2012

Next in the bankruptcy queue: Abound Solar?

Coming in at number seventeen on the White House's 100 Recovery Projects That Are Changing America list is Abound Solar, which received a $400 million DOE guarantee in 2010. The company had been renamed just a year before, after being founded in 2007 as AVA Solar. Now, a little over a year after that loan closed, Abound Solar is laying off around 70% of its workforce--280 people--at its Colorado production facility.

Note that some reports indicate only 180 layoffs, but that number appears to only include full-time employees. Regardless, management at Abound Solar insists there is nothing to worry about, that the company is fine and that these layoffs are a temporary thing:
In order to compete, [CEO] Witsoe said Abound is retooling its manufacturing facilities to bring to market a more advanced, more efficient solar product that will keep the company ahead of its foreign competitors. But while that work is being done, he said, the company could not maintain the size of its workforce and had to make the painful job cuts. 
"The jobs will definitely come back," Witsoe said. "When we rescale with the new product, we will need to hire back likely as many people as we had. We know this is a really difficult thing. We hate to have any job loss in the company. But it was the right decision for the business."
How many times have we heard that song and dance? Thankfully--for the taxpayer--Abound has drawn only $70 million of that loan guarantee, so far. But note what the White House said about the company and what it would do with that loan in the above-mentioned list:

The project [Abound Solar] includes two facilities: the capacity expansion of an extant facility in Longmont, Colorado and the construction of a new facility in Tipton, Indiana.  When fully operational, the company will produce millions of solar panels annually at a lower cost than some competing technologies due to the use of cutting‐edge solar manufacturing technologies.  The company anticipates that the project will create approximately 2,000 jobs during construction and 1,500 permanent jobs.
If the Longmont facility has to be retooled and the Tipton facility has been put on indefinite hold, where exactly did that $70 million go? If the construction of both (and surely retooling requires some construction) was supposed to create jobs, then why are so many people being laid off?

By the way, the DOE had the audacity to attempt justifying the Abound loan by noting that Indiana Governor Mitch Daniels helped get Abound a tax credit from Indiana:
Energy Department officials noted Wednesday that the federal loan to Abound had Republican support, including an $11.8 million tax credit from an Indiana economic development board chaired by Republican Gov. Mitch Daniels.
Obviously that credit was for the Tipton facility, which has not yet been built or even started. So, Governor Daniels' ass is covered, unlike that of Secretary of Energy Steven Chu. Because aside from this new Solyndra-type mess at Abound, Chu is also facing questions regarding the handing out of big money bonuses by companies that received DOE loans and have now gone belly up (and kudos to ABC News for pursing these stories, by the way):
President Obama's Department of Energy helped finance several green energy companies that later fell into bankruptcy -- but not before the firms doled out six-figure bonuses and payouts to top executives, a Center for Public Integrity and ABC News investigation found.
The smart move--the logical move--right now for the DOE would be to turn off the cash spigot for Abound Solar. We've already seen $70 million go down this drain, no need to see any more. Would that doom Abound? Perhaps. But it's not their money they've been playing with, so screw 'em. Enough is enough.

Cheers, all.

6 comments:

  1. a note from the engineer:

    energy can neither be created nor destroyed.
    play with the numbers for cost all day and all night. redefine the concept of money entirely.

    you will never succeed if your intention is to acquire more usable solar energy than the sun is willing to radiate.

    is stupid ugly, or is ugly stupid, or can we have both?

    "yes" - "at times" - and "of course".

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  2. OT. Don't know if you've seen this, but it's good and relates to much of what you've been writing recently
    http://www.economist.com/node/21547789

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  3. Roy, considering the yield of most solar panels is around 16%, there is still lots and lots of room for improvement :-)

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  4. Alternative energy will cost us all a whole lot more upfront and so much less in the long run. It's about investing in the future and not in the present. We never get from Point A to Point B without taking the first step and then keep going.

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  5. I used to work for one of the so-called leaders of this company, when he was the president of a glas factory called Spec-Temp in Antwerp, Ohio. Dennis Ceshi was a backstabbing cheat than and I'm sure he still is. If he has anything to do with the decision making of this company, the USA can kiss it's millions down the drain. He has probably pocketed most of it and is getting ready to run to his next company and loot it.

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  6. Great post full of good insight. Free electricity will not be around forever, so now is the time to enquire and act. This company really helped us.

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