“It’s like Evergreen solar on a cosmic level”
Nate Little, executive director of the Massachusetts Republican Party Jan 2011, on President Obama’s SOTU Speech
“They’re two leaders who have a similar long-term vision’’
Greg Bialecki Massachusetts secretary of housing and economic development on Deval Patrick & Barack Obama. Jan 2011
It’s a shock and a boondoggle for taxpayers. A green energy company touted by environmentalists and used as a photo-op by the chief executive is given millions of dollars of government support to “create jobs” now files for Bankruptcy leaving taxpayers paying the bill, workers out of work and pols scrambling for explanations.
Ah but it’s not what you think, this movie is not about Solyndra it’s the story of Evergreen Solar, touted by Deval Patrick, showered with Massachusetts taxpayer funds which filed for Bankruptcy in August 2011.
Evergreen Solar Inc. filed for Chapter 11 bankruptcy protection yesterday, completing a stunning reversal of fortune for a high-flying alternative-energy company that once seemed to herald a new era for the Massachusetts economy.
It was just a few years ago when Deval Patrick made his big move to court the money losing Evergreen Solar to the state:
In 2007 Governor Deval Patrick decided to “lure” a company called Evergreen Solar to the state. In one of the largest investments the state has ever made in a private company, Massachusetts taxpayers paid Evergreen some $58 million dollars to locate a plant there. Curiously, Evergreen wasn’t even remotely profitable at the time.
Strange, the Globe story last month called it a “reversal”, yet the company was awash with red ink at the time of the deal (over 340 million+ according to the WSJ). That didn’t keep the Boston Globe from showcasing the deal as an example of Deval Patrick creating jobs:
Evergreen Solar’s CEO, Richard M. Feldt (right), says Governor Deval Patrick’s commitment to solar power played a key role in the company’s decision to expand in Massachusetts
Alas, the happy times didn’t last, it was only 19 months later that Evergreen announced that they were creating new jobs…In China:
Evergreen Solar is shifting some of its production, currently done at a plant in Devens, to China next year, after posting an $82 million loss in the third quarter.
But Gov. Deval Patrick looked at the bright side:
“I’m disappointed about the manufacturing,” Patrick said, “but I’m delighted that they will continue to grow jobs in Massachusetts and they will be a part of our emerging clean tech sector.”
The exact number of jobs to be lost wasn’t specified at the time, but 14 months later the Globe discovered the number… …all of them:
Evergreen Solar Inc., which received $58 million in state aid to open a factory in 2008 at the former military base in Devens, announced today it would shut the plant and let go 800 workers by the end of this quarter.
Naturally conservatives were not surprised and asked questions:
Who did the analysis? Who gave the go-ahead to give the company $58MM?
And even environmental economics blogs asked questions:
All economists know that you have to tell a powerful externality (positive spillover) story to justify strategic subsidies of industries. Did the Governor commission such a study? For the “researchers” who did the study, what evidence did they provide?
but those questions weren’t quickly answered:
The Patrick administration yesterday dragged its feet on releasing public records of its ill-fated, $58 million taxpayer investment in Evergreen Solar even as energy experts questioned why officials ignored early warnings that the firm’s new Devens plant stood little chance against cutthroat overseas competition.
But not to worry said the state at the time:
Massachusetts officials noted the state may have the opportunity to recover some of the funds Evergreen received.
and as late as March the Governor insisted that it wasn’t a loss for the state
The governor also disputed that the state was a net loser in the deal brokered by his administration. El-Hillow has said he may pay back some of the state assistance but not all, saying his company’s intention is to “honor” the agreement.
“I would say that the actual math of it suggests that the commonwealth just about broke even, when you consider the income taxes on the payroll, but it’s still a blow, and it’s not the commitment that they made,” said Patrick.
And I’m sure he believed it…right up ’til the end.
Michael Graham noted it could have been a lot worse if Patrick got his way:
Patrick originally wanted to give them $100 million, and in 2009 “offered Evergreen more than $76 million in grants, land, loans, tax incentives and other aid,” according to The Boston Globe-Democrat.
He’s right. It could have been worse, it could have been as bad as the remake Debra Saunders watched:
Solyndra had not turned a profit since it was founded in 2005. The plant in which Obama stood was bankrolled with a $535 million federal loan guarantee. Two months before, PricewaterhouseCoopers questioned Solyndra’s “ability to continue as a going concern.”
If the president wants to send a positive message on the U.S. economy, I wondered, then couldn’t his people have found a California company that doesn’t rely on a federal loan and actually makes money?
Bad advance work, I figured.
A month later, Solyndra canceled a planned $300 million public offering. In November, Solyndra closed its older plant and cut its workforce. Today Solyndra’s lights are out.
None of this explains the why. Perhaps it’s because neither Deval Patrick nor Barack Obama asked Reason online to explain the facts of life:
Politicians are not venture capitalists, they aren’t marketers, and they certainly are not innovators. Whether or not a company succeeds or fails, is green or brown, or employs workers in America or China doesn’t matter. What matters is that this all be determined by private investors who know the risks going in and have a stake in the capital, location, and technology needed to either fail or succeed.
What this Solyndra story adds up to is just another Hollywood squeal that’s worse than the original. It does have one advantage for American viewing public:
Solyndra unlike Evergreen didn’t implode two months after it’s patron won re-election.