Evergreen Solar Outsources to China

Massachusetts-based solar cell manufacturer Evergreen Solar , bellwether of the Bay State’s push for clean energy, announced on Wednesday its plans to move solar panel assembly to China. The statement, appearing in the company’s filing of earnings for the third quarter of 2009, arrives less than a year after Evergreen opened the doors to its much-lauded plant in Devens, the recipient of $58.6 million in state aid. Of the 577 full-time and 230 contract workers at the Devens location, half are involved in assembling the panels, though the company declined to comment on how many would lose their jobs as a result of the move.

From the Boston Globe:

In a statement [Wednesday] night, Evergreen said it “remains committed to the investment it has made in Massachusetts. Marlborough is the home of our company headquarters and R&D facilities. Devens will continue to be our US manufacturing location for wafer and cell production, and our staffing plans will remain well within the employment commitment we made to the state when we first announced our plans to build the Devens facility.’’

The company’s intentions to shave costs by shifting assembly to the city of Wuhan and contracting with Chinese manufacturer Jiawei Solar have been out in the open since April, though the recent announcement confirms the industry’s (and presumably Governor Deval Patrick’s) worst fears. When it inked its $58.6 million deal with the Patrick administration earlier this year, Evergreen had promised to repay the state grants, loan, land, tax incentives and other forms of aid with 350 jobs, a promise that has been more than met. But financial difficulties have posed setbacks to the company, thanks to overseas competition and declined solar panel prices. It had also recently requested $5 million from the state to cover equipment purchases, though Evergreen has yet to see the money.

Not surprisingly, the Patrick administration is not pleased.

“Governor Patrick and I are disappointed by Evergreen Solar’s decision to begin moving the final panel assembly component of their business to China,’’ said Ian Bowles, secretary of the state’s Executive Office of Energy and Environmental Affairs. “In just two short years, Evergreen Solar has become a significant employer in Massachusetts, and we will work hard to make sure the company protects the maximum number of jobs in our state.’’

For a company that lost a troubling $167 million over the past nine months, the move to Wuhan—where Evergreen expects to be able to produce solar panels at $1.50/watt—is a decision grounded purely in economics. But at a time when the distribution of federal or state money is closely scrutinized and the creation of green jobs is one the government’s hopeful cures for the ailing economy, the decision has the potential to produce a ripple effect of discontent.

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8 Comments Already

stonewall Said,

November 6th, 2009 @10:33 am

What a shame! Its a real disappointment that wind turbines and solar panels etc that are supposed to save $$ and reduce greenhouse emissions have to be produced so far away and transported across the world. The carbon footprint of these products will be much greater when produced so far away. Now if this was to satisfy demand for this product in that region of the world I would be OK with that but that is not likely the case with the restrictive import environment of China. It takes a significantly longer time to offset the carbon footprint from all the transport of goods and materials not to mention the stimulus $$ that will be shipped overseas for this process rather than to build up green industries here. Throw in the inefficient coal burning power plants necessary for manufacturing and the environmental benefits are even worse. Last year I saw great hope that the US was serious about becoming a green center of innovation. Now just like every other industry those jobs and $$ will go overseas. If Germany can become the worlds biggest exporter why can’t we keep our manufacturing jobs here. I was seriously thinking of installing Evergreen panels on my home over the next year due but won’t do that now.

Connie Zheng Said,

November 9th, 2009 @9:58 pm

Hi stonewall,

Your frustration that American renewables aren’t always made domestically is understandable and a concern that’s shared by many, hence the major federal (and, depending on where you live, state) push toward cultivating a home-grown renewables industry. Still, it’s important to keep in mind that Evergreen is moving solar panel assembly to China–not production–and that a manufacturer’s outsourced carbon footprint depends largely on its specific case.

As I’m certain you well know, the global oversupply of solar panels has contributed significantly to their lowered prices. Particularly in the case of smaller companies such as Evergreen, this sort of situation may force them to cut costs in politically unpopular ways but which do save money and appease shareholders, whose wallets are tied to the companies’ bank balances. This way, outsourcing allows the companies to focus their money and attention on their key strengths and business–in Evergreen’s case, the production of solar products that are among the most environmentally-friendly in the industry.

You’re right that avoidable emissions are created by Evergreen’s decision to outsource, but the changed size of its carbon footprint depends on the specific costs associated with the panels’ production and assembly. It’s impossible to know for sure the carbon impact of such a move without doing a detailed carbon inventory, and even then the numbers may not be exact, especially since it’s still a burgeoning field. The lower energy-intensive processes in developing countries like China may result in lower CO2 emissions overall–but the fact that most of China’s factories are still powered by coal may counteract that. I can’t pretend to know what Evergreen’s (or its contractor’s) exact labor costs are. Regardless, because China is a coal-intensive economy, the emissions produced in the transport of Evergreen’s assembled-in-China panels are far less than those that would be produced by a comparably-sized competitor who had outsourced production there.

It’s crucial to keep in mind that Evergreen would likely go out of business quickly if it didn’t adapt its business practices to suit the economic climate, and that moving part of the supply chain overseas is standard industry practice virtually everywhere around the world, including Germany. Evergreen isn’t the only solar manufacturer to look to Asia–German manufacturer Q-Cells and Norwegian producer Renewable Energy Corp. have both already begun to set up plants there, for example. Ideally, Evergreen would keep both production and assembly in the U.S. But the solar industry is currently undergoing a lot of change–both good and bad, though I like to think mostly good–and perhaps it’s too early to write Evergreen off so quickly.