Solar Manufacturing in the US Surrenders
“That loud sucking noise you hear is the sound of American jobs going south to Mexico.”
–Ross Perot, 1992
Ross Perot was concerned about the effects of the North America Free Trade Agreement, but almost twenty years later, the loud sucking noise you hear is the sound of solar manufacturing going overseas.
If it were not clear before this month, it is now abundantly evident that manufacturing of solar panels that you may want to put on your home in the United States are not going to come from the US anymore. The trend of manufacturing of solar panels in China is only accelerating as the news in the past few weeks has shown.
The evidence is plastered on every news release—we surrender and are leaving town as fast as we can shut down operations in the US. BP Solar hammered shut its operations in Maryland. Evergreen Solar filed for bankruptcy. And now Solon is closing its US plant. All in all, not a very good month for those who think that going solar should mean creating solar manufacturing jobs in the US.
The irony is that the future for solar is bright, but the future for solar manufacturing in the US is not. The solar industry is what Greentech Solar aptly calls the “profitless prosperity in solar.” More solar modules are being sold, but the margins on these products are getting thinner and thinner.
The solar manufacturing industry in which the US excelled has been thrown to the wolves—or maybe not the wolves, but certainly the Chinese. This basic strategic approach is not anything new in which an overseas manufacturer would cut margins to the bone to capture market share and wait it out as the competition, unable to compete, eventually call it quits.
We have said on these pages that solar modules should not be considered commodity products, and we still think that solar panels are differentiable products. A informed consumer, whether the end user or the installer, should decide which solar panel to put on your home for the next 25 years based on a number of factors. We discuss these factors with our customers all of the time. Output is of course the number one criterion, but there are some panels that do better in low light conditions. If there are space constraints on a home, a small footprint for the panel may be very important. If you are putting a solar panel system on a flat roof, then you may be concerned about the weight of the panels. These are just some of the factors that may influence the purchaser’s decision.
Solar panels are not like nails or screws, but more akin to refrigerators or dish washers—consumers pay more for quality and features. We still hold that view and will advise our customers to shop wisely and look at various criteria to rate solar modules, and of course one of those is cost, but that should not be the end all. The market, as shown by the flight of solar manufacturing, is going elsewhere. Thinning margins means a commodity market and the Chinese are willing to tough it out in the long to capture the lion’s share of the business. The future for manufacturing of solar panels in the United States is bleak.