Published on April 20th, 2012 | by Andrew0
Economic Multiplier at Work: US Solar PV Manufacturers Boost Local Economies, Spur Innovation
Four founding members of the Coalition for American Solar Manufacturing (CASM) purchased more than $400 million in goods and services from other manufacturers and employers in 46 states in 2011, according to a CASM survey. The survey results highlight the ripple effects and positive impact a healthy US solar PV manufacturing sector can have on job creation, income growth and economic development, particularly in areas hard-hit by the exodus of manufacturers from US shores.
The survey results arrive as CASM and solar energy industry participants across the US, China and worldwide await a Commerce Dept. ruling on the imposition of countervailing duties on Chinese manufacturers’ illegal dumping of silicon solar PV cells and panels that’s expected in May.
“This flow of business highlights just one dimension of solar manufacturing’s multiplier effect in supporting jobs and spurring activity across the U.S. economy, according to CASM.
“The coalition of about 190 U.S. employers of more than 16,000 American workers contends the nation cannot afford to lose its own industry, particularly in light of advanced manufacturing’s power to generate high-paying and stable jobs and beneficial ripple effects, including research and innovation. Instead, CASM seeks trade-law enforcement to restore legal international competition and domestic manufacturing growth.”
Manufacturing’s Economic Multiplier at Work
Applied Materials’ Cathy Boone noted in a March, 2011 blog post, “Solar energy generation produces more jobs than any other form of energy generation, and each dollar of public money invested generates an additional $4-$6 in private investment.”
CASM’s purchasing survey provides detailed insight into these economic ripple effects. Four of CASM’s seven founding US solar PV manufacturers purchased more than $1 million in goods and services in 21 states and at least $50 million in four states, according to the survey results.
Their purchases in Oregon totaled $86 million, in Pennsylvania $74 million, in Michigan $80.6 million and in California $50 million. This includes purchasing products, hence supporting businesses, in upstream glass fabrication, polysilicon production and aluminum extrusion, along with downstream businesses, including auditing, lab analysis and transportation.
CASM founding members Helios Solar Works of Milwaukee, Wis. and MX Solar USA of Somerset, N.J. each have production capacity equal to or greater than the only Chinese-owned solar factory in the Western Hemisphere, a final assembly production line in Arizona, according to CASM.
The survey didn’t account for downstream spending to other businesses on the part of the four solar PV manufacturers’ employees or their vendors, which includes spending on day-care firms, supermarkets, and car and TV dealers, nor does it include the personal income taxes they pay or the properties they purchase.
A more detailed look at the survey results are available on CASM’s website.
The Ripple Effects of a Strong Manufacturing Base
“I would say that our economy needs machines and new factories and new buildings and so forth in order for us to have a strong and growing economy.” — US Federal Reserve Board Chairman Ben Bernanke
CASM’s leader, the US subsidiary of Germany’s SolarWorld AG, has ranked as the largest U.S. solar manufacturer for more than 35 years. SolarWorld USA employs more than 1,100 workers in Oregon and California whose average annual compensation for permanent, full-time employees exceeds the Bureau of Labor Statistics’ national average of $45,230, CASM points out.
The arguments supporting strong support for and defense of US manufacturing is compelling. “While PV creates significant job creation in the installation of solar modules (over 50% of total solar jobs are in installation and sales), long-term job creation in manufacturing will create greater economic stability through a greater multiplier effect that will generate significant additional employment in adjacent industries,” according to a March SEMI PV Group white paper.
Cited in SEMI PV’s white paper are studies from the National Association of Manufacturing (NAM) and the Commerce Dept., both of which found that “each dollar’s worth of manufactured goods creates another $1.43 of activity in other sectors, twice the $.71 multiplier for services.”
Also significant is the mutually supportive and reinforcing linkage between manufacturing and innovation, an interrelationship that former Intel chairman and CEO Andy Grove, along with other US business pioneers and leading thinkers, has emphasized in his public writings and statements.
“Manufacturing companies in the United States are responsible for over two‐thirds of the industrial R&D and employ the majority of domestic scientists and engineers,” according to a January report on US competitiveness produced by the Commerce Dept. in consultation with the National Economic Council, CASM notes. “Furthermore, manufacturing R&D is the dominant source of innovative new service‐sector technologies; hence, its benefits reach beyond the manufacturing arena.”
Upcoming Ruling on Chinese Dumping
The Commerce Dept. on March 20 announced it had concluded that the Chinese government provided illegal export subsidies to Chinese silicon solar PV cell and panel manufacturers. Commerce imposed import tariffs of 2.9%-4.73% on Chinese imports, smaller than what had been anticipated. Commerce found that “at least 10 categories of Chinese government programs illegally subsidize Chinese producers of solar cells and panels,” CASM notes in a press release.
Though its petitions to the Dept. of Commerce and US International Trade Commission regarding Chinese silicon solar PV dumping and illegal trade subsidies are one in a long line of such filings against China on the part of US businesses and industry, calls for stronger and stricter enforcement of international trade rules have been intensifying since CASM’s filings.
The Commerce Dept. on May 17 is expected to announce its preliminary determination on whether Chinese manufacturers have illegally dumped products in the U.S. market. If Commerce has found that this is indeed the case, then it will also announce percentage margins. Importers of Chinese silicon solar PV products would then be required to post bonds or cash deposits in the amounts of those margins as duties on further imports.