Published on November 24th, 2017 | by Steve Hanley0
Solar Cell Tariffs Won’t Create A Significant Number Of Jobs For Americans, Will Eliminate Tens Of Thousands
November 24th, 2017 by Steve Hanley
Suniva and SolarWorld have filed a complaint with the US International Trade Commission claiming cheap solar cells and solar panels from China made it impossible for them to compete and drove them into bankruptcy. The claim is not about subsidies given to those companies by the Chinese government, only that the imported products are cheap and hurt Suniva’s and SolarWorld’s business. (Note that Suniva itself is a subsidiary of a Chinese solar company that opposed the complaint.)
The ITC found their complaint had merit and recommended the Trump administrations impose tariffs on both products to help level the playing field. The companies want a tariff of 32 cents per watt on solar panels (a typical solar panel has a maximum capacity of around 250 watts) and 25 cents on each solar cell. The ITC has recommended smaller tariffs. The administration has until mid-January to decide what to do.
The case is custom made for the foaming-at-the-mouth, America-first drivel Trump is famous for. Jobs! Jobs! Jobs! That has been his mantra since before the election. Imposing tariffs would accomplish several goals for him. It would give the illusion that he cares about American workers (the current tax bill before Congress gives the lie to that idea). And it would allow him to give China a poke in the eye. Trump loves to demonize the Chinese as economic vampires and currency manipulators.
But an analysis by Bloomberg suggests the number of jobs that will be created if the tariffs are imposed will be quite a few less than most people think. Meanwhile, the number of jobs lost in the solar installation business would be huge, in the tens of thousands.
“Lower costs in China have destroyed U.S. solar industry jobs — that’s true,” Angelo Zino, a New York-based analyst at CFRA — an independent market research firm in New York City — says. “But while tariffs might compel Chinese manufacturers to open plants here, does that create an enormous amount of domestic jobs? Probably not.”
The situation is similar to what happened in the auto industry 40 years ago. The US government slapped Japanese car makers with high tariffs. In response, the Japanese manufacturers opened factories in America, which may sound like a good thing, but it means the profits went mostly back to Japan. International trade is complex and it is highly unlikely Donald Trump has more than the most rudimentary grasp of the subject.
At least 6 Asian solar companies are considering opening factories in the US if the tariffs go into effect, but that doesn’t mean a lot of domestic jobs will be created. According the the Solar Energy Industries Association, about 260,000 people were working in the solar industry last year, but the majority were in construction, engineering, or other supporting roles such as sales or finance. Of 38,000 manufacturing jobs, only 2,000 involved making solar cells or modules. Today, after the layoffs at Suniva and SolarWorld, that number is down to 1,000.
If Asian companies decide to build factories in the US, they will be highly automated. Automation is what killed it for Suniva and SolarWorld, not cheap imports. Suniva’s claim that tariffs will help it rehire its laid of workers is wrong. Unless it is willing to invest heavily in new production facilities, its business is dead, as in kaput.
A gigawatt of solar cell production today would need about 800 new jobs, half the number of workers needed in 2011, says Xiaoting Wang, an analyst at Bloomberg New Energy Finance based in San Francisco. A gigawatt of panels would cover about 8,000 acres. Longi Green Energy Technology is one of the companies considering a US manufacturing facility. It says a new factory would need only 300 to 400 workers to make a gigawatt of solar cells and 350 to 400 to make a gigawatt of solar panels.
The upshot of all this is that if the administration decides to whack foreign suppliers with high tariffs, that decision will deal a severe blow to the solar power industry, forcing domestic companies to lay off tens of thousands of workers in order to add a few hundred elsewhere. Trump, with his characteristic bombast, will call that a “Big, beautiful gift to the American people,” but in reality it will be just one more step in making America irrelevant in the world market while increasing its carbon footprint at a time when carbon reductions are critically needed.
Solar tariffs will be a lose-lose-lose proposition for America, solar power, and the world. But considering Trump’s proclivity for choosing the worst possible option from a menu of choices, that’s probably what we can expect. The worst of it is, for all their wishing and hoping, there is nothing Trump or anyone else can do to make Suniva or SolarWorld competitive players in the solar industry again.