Tariffs On Cheap, Chinese Solar Panels Divide Energy Businesses And Workers

Nov 1, 2017
Originally published on November 2, 2017 6:30 am

Hillsboro, Oregon – At the SolarWorld Americas plant outside Portland, John Clason loads a stack of solar cells into a machine that builds them into panels.

He used to be a cabinet maker, but he switched industries after the 2008 recession.

"The job I had dried up," he said. "So, I looked around and I thought solar panels would be great – the wave of the future, you know?"

But the panels he’s making here can’t compete with a surge of cheap solar panel imports SolarWorld says are being sold at below-market prices  — in violation of trade rules.

Earlier this year, SolarWorld Americas’ German parent company declared bankruptcy, and Clason was laid off – along with more than 300 other workers at the factory.

SolarWorld and another manufacturing company, Suniva, took their case to the U.S. International Trade Commission, calling for tariffs and quotas on all the solar panels coming in from overseas.

So far, they're winning their case. On Tuesday, the trade commission recommended adding tariffs and quotas to imported solar panels. It's good news for Clayson and and other workers who make solar panels, but critics say these trade barriers will hurt the rest of the U.S. solar industry by driving up solar panel prices.

Saving solar panel manufacturing

For Clason, getting laid off were more evidence of a worrisome trend in U.S. manufacturing that he’s also seen as a consumer.

"I try to buy American products and it's hard," he said. "I tried to buy a shower head. I said, ‘I’m going to buy American.’ Every single one was made in China. Eventually, if all the products come in from overseas, the middle man – low-income, middle-income – is going to be in dire straits."

Tim Brightbill, an attorney whose firm is representing SolarWorld, blames Chinese subsidies for fueling global overproduction of solar panels. He said raising the price of imports is the only way to save what’s left of U.S. solar panel manufacturing.

"Solarworld and Suniva were the two largest manufactures in the United States," he said. “We documented more than 30 US solar cell and module manufacturers who were driven out of business in the last five years. These are the last two surviving companies. ”

SolarWorld won two previous trade cases against China and Taiwan in 2012 and 2014. The company argued those countries were illegally dumping cheap solar panels in the U.S.

Brightbill said the tariffs imposed on imports from China and Taiwan were successful – but only for a little while.

"Unfortunately Chinese companies quickly found a way around those tariffs by building additional capacity in countries like Malaysia and Vietnam and all around the world," he said. "So those duties didn’t apply to the goods from this new manufacturing capacity anymore."

To address this "whack-a-mole" problem, Brightbill said, SolarWorld is now asking for tariffs that would apply to all imported solar panels.

A few weeks ago, when the International Trade Commission first ruled in SolarWorld’s favor, Clason got called back to work.

“On my caller ID I saw my lead man’s name," he said, and I thought, ‘Wow, what’s he want?' He said they were ramping up again and was I going to be interested in coming back? And I said yeah — absolutely.”

Killing more jobs than it saves?

Unlike SolarWorld, other businesses in the U.S. solar industry benefit from cheap imports – and don’t want to see panel prices go up.

This week, solar panel installer Energy Solutions was laying the foundation for a solar project at a house in Oregon City that will use imported panels from South Korea.

Company Director Chet Zimmer said when he started in the business nine years ago, about 90 percent of the solar panels his company installed came from SolarWorld, but now, those jobs are few and far between.

"Because the price difference has become bigger and the quality is not much different, more and more installers have started using foreign-made modules,” he said.

Zimmer said most of his customers are "pocketbook environmentalists – meaning they want to do what’s right and install sustainable solar power but only if it makes sense financially.”

So, raising the price of solar panels with tariffs could mean fewer customers for him.

The tariffs requested by SolarWorld and Suniva would roughly double the price of imported solar panels, but the tariffs recommended by the trade commission were significantly less than that, Zimmer noted.

“We're preparing for the impact of it," he said. "If we can buy them for less, we’ll pass that savings along to our customer, but their project costs are going to be more next year than they are this year.”

Dan Whitten of the Solar Energy Industries Association represents a thousand businesses across the solar supply chain – from solar panel installers to the manufacturers of the racks and mounts, batteries and electrical equipment that get installed with them. He says raising the price of imports would kill more solar jobs than it saves.

“What made solar successful over the last 10 years is that we were competing on price,” he said. “Our growth has been fantastic. It’s created hundreds of thousands of jobs. If this trade case goes through the growth will be stopped dead in its tracks.”

Trump will make the final call

With the prospect of tariffs helping SolarWorld compete with imports, the company plans to re-hire 200 workers by May and ramp back up to full production.

Meanwhile, companies that install solar panels have begun stockpiling their inventory in case prices go up. That could happen soon, with the trade commission recommendations going to President Donald Trump for his final decision.

Zimmer said he's worried that politics could end up making the trade case worse for businesses like his.

"I think the political climate is ripe to hurt the solar industry in this way," he said. "Under the guise of protecting U.S. manufacturing jobs, this would be a really easy way to impose a tariff and actually impact the hundreds of thousands of people who are involved in solar installations across the U.S.”

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