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Thread: U.S. tariffs on Chinese solar cells fuel debate about green jobs

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    U.S. tariffs on Chinese solar cells fuel debate about green jobs

    U.S. tariffs on Chinese solar cells fuel debate about green jobs

    Some domestic solar manufacturers praised the recent import levy as a victory for job creation, but an analysis of the industry suggests the duty may actually be a job killer.

    by Ken Bensinger, Los Angeles Times April 23, 2012, 12:49 a.m.


    A simmering trade dispute is highlighting a debate about the kinds of jobs America can sustain in a greening economy.

    The Obama administration's recent decision to slap import tariffs on Chinese solar cells was hailedby some domestic solar manufacturers as a victory for job creation, leveling the field while also sending a powerful message to Beijing about monopolistic behavior in crucial industries.

    But a close look at the U.S. solar industry suggests that the tariffs may actually be a job killer because the vast majority of positions in the sector aren't on the assembly line. Instead, upward of 70% of U.S. solar employment is in installation, sales and distribution — and companies that hire those workers argue solar cells must get significantly cheaper to remain competitive with other energy sources.

    "What China is doing to boost its manufacturers is unfair, but tariffs could actually reduce jobs," said Gordon Johnson, a green tech analyst at Axiom Capital Management. "The price of solar panels goes up and looks unaffordable compared to alternatives."

    Although the U.S. pioneered photovoltaic solar cells decades ago, it has fallen increasingly behind lower-cost manufacturers of the technology, including China, South Korea and Malaysia. But the U.S. is among the world's fastest-growing solar consumers, opening vast opportunities for service-sector jobs in the sunlight-extraction business.

    The matter comes to a head next month, when the Commerce Department will announce a determination on a possible second round of tariffs on Chinese-made silicon-based photovoltaic cells, which convert sunlight into electricity and are by far the most popular solar technology.

    While tariff advocates say that protecting a solar manufacturing base is crucial to the nation's energy security, others argue the U.S. has already lost that footrace. Instead of swooping in to rescue remaining plants, they say, the focus should be on reducing the cost of solar to speed liberation from fossil fuels, which dovetails with the goal of reducing unemployment.

    "Installation is where all the jobs are," said John Smirnow, vice president of trade and competitiveness at the Solar Energy Industry Assn. "There are 5,600 companies in the healthy, vibrant and growing solar-services sector."

    TheCommerce Department's May 17 ruling, in response to allegations of dumping by the U.S. unit of a German solar panel maker, could fundamentally alter the solar landscape in the U.S. Dumping is when a company or industry sells its products below cost to capture the market. If additional tariffs are applied, they will probably be much higher than the relatively light first round announced in March, which ran from 2.6% to 4.7%.

    The smaller tariffs — designed to balance out Chinese subsidies of its solar factories — could squeeze margins for installers, but most experts agree they aren't enough to radically reduce consumption. Anti-dumping duties, however, could run above 20%, dramatically increasing the cost of switching to solar.

    Cost is a key factor in getting businesses and homeowners to convert to solar power. A typical residential roof setup costs about $25,000, which federal, state and local rebates and tax incentives can cut to about $13,000 in the city of Los Angeles. At that price, it still could take about a dozen years for the systems to pay back the upfront costs through lower electricity bills.

    If tariffs on Chinese cells come in as high as many predict, they could raise the out-of-pocket cost of such an installation by $1,250 — and commercial projects by far more.

    Such an increase could be a deal breaker for many would-be customers, especially with a 30% federal tax credit set to expire after 2016, said Lyndon Rive, chief executive of SolarCity, the nation's largest solar installer.

    SolarCity has 1,600 employees in 14 states and is hiring three new employees a day. The San Mateo, Calif., company puts solar panels onWal-Martstores, government offices and university campuses, as well as thousands of houses.

    "The No. 1 decision for our customers in terms of going solar is whether they can save money," said Rive, who worries that higher prices could offset government subsidies. Several European countries are already curtailing solar incentives, he said. "We have to be competitive with whatever the local power company is charging, or we're in trouble."

    According to a study by the Solar Foundation, 52,503 Americans worked in the solar installation business last year, and 17,722 worked in sales and distribution, compared with 24,064 in manufacturing. And although almost 10,000 new installation jobs were created in 2010 and 2011, manufacturing actually lost 1,000 positions while seeing several domestic makers go out of business, including Solyndra, which failed despite government loan guarantees.

    The growth in service jobs has tracked closely to the falling costs of photovoltaic cells, often the most expensive item in any installation. Thanks largely to aggressive pricing by Chinese manufacturers, the cost of solar panels has fallen 28% in the last 12 months, according to data from research firm Solarbuzz.

    Walter Ellard, installation director of SunFusion, a San Diego company with 25 employees, said he pays about 40% more for U.S.-made solar cells than Chinese ones. "Some customers prefer American made, but otherwise it's not even close," he said.

    As recently as five years ago, China was a bit player in solar, far behind in both quality and cost. Then the Chinese government threw its weight behind its solar manufacturers, offering low-cost loans and other subsidies, leading to a massive production increase that dwarfed competitors
    http://www.latimes.com/business/la-f...,3951568.story (more)

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    I don't have a problem with tariffs when another nation subsidies and industry so they can undercut American companies.

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    Tariffs raise prices and costs and thereby, as annata's OP shows, kill jobs.

    Manufacturing is in decline, being replaced by service. Might as well bring back horse and buggy.

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    Quote Originally Posted by Chris View Post
    Tariffs raise prices and costs and thereby, as annata's OP shows, kill jobs.

    Manufacturing is in decline, being replaced by service. Might as well bring back horse and buggy.
    Tariffs imposed as I stated bring prices from below market levels to market levels.

    If I were a millionaire and my kids wanted to sell lemonade next to your kids' lemonade stand, how would you feel if I subsidized my kids so they could sell their lemonade for 5 cents while yours had to sell for $1?

    That is what tariffs are for.

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    "Tariffs imposed as I stated bring prices from below market levels to market levels."

    Government doesn't have the knowledge needed to centrally plan prices.

    "If I were a millionaire and my kids wanted to sell lemonade next to your kids' lemonade stand, how would you feel if I subsidized my kids so they could sell their lemonade for 5 cents while yours had to sell for $1?"

    Tell my kids to buy up the lemonade mix and sell it to your kids. Or tell them to go into watermelons because we have that big expansive garden out back.

    "That is what tariffs are for."

    I understand the intent, the effect is to raise prices on consumers. Road to perdition paved with good intentions.

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    ok

    I understand the intent, the effect is to raise prices on consumers. Road to perdition paved with good intentions.
    But you do understand that the prices paid for my kids' lemonade are not market prices. I am providing a 95 cent subsidy.

    Where is the free market?
    Last edited by Peter1469; 04-23-2012 at 08:51 PM.

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    Quote Originally Posted by Dagny View Post
    The only jobs are installations, because Chinese cells are flooding the market. Tariffs are essential for all Chinese products, but the benefits take years to realize.

    In the short run, it drives up costs to consumers. In the long run, it brings back manufacturing, but the costs for goods remains high.

    We have Chinese solar manufacturing going on in Arizona. That helped put Solyndra under. I don't know if tariffs affect these companies?

    If they're manufacturing in the United States I'd say that's one way to avoid tariffs - how're we gonna impose tariffs on something that's not being imported but instead built here in the states? Aren't those cells - Taiwanese cells bought by the Chinese? That would be another way to avoid tariffs last I checked.

    If it's not solar panels - it's pasta makers - chocolate confectioneries - the auto industry, and so on, this isn't a new never heard of before scenario...

    If we're gonna push the Chinese out then look for the Chinese firms to move somewhere else, like Africa - which is what one of the Chinese firms considered doing in the first place, at the end of the day they chose to manufacture here in the US, so long as there's some sort of investment coming in as opposed to no investment whatsoever I don't think it's anything to loose sleep over...my two cents.
    Last edited by Vilifier of Zombies; 04-23-2012 at 09:48 PM.

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    Here is a good example Chris:


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    Quote Originally Posted by Peter1469 View Post
    Here is a good example Chris:

    Did he really say that South Korea should be paying us? What kind of precedent would that set? What's to stop someone else from paying us? What if we're getting paid by two opposing forces? We've got the scratch in hand from both - what happens next, do we graft both of 'em for more, whatever pays us more wins? I had to stop listening at that point, Trump is a bit off kilter these days...

    25% would be a bit much, maybe some other type of neutral ground, kinda like what's been imposed on Japan in the past - wasn't it a car built by Toyota (Lexus) that was the only car to go through all the stages - from concept to manufacturing/production - to sales, within the borders of the United States in the last couple of decades? Volkswagen, BMW, and Mercedes also have a couple of plants to manufacture some of their more popular models...I think a 25% tariff or else neutral ground could be attainable so long as it's not at the expense of losing investment - foreign or otherwise.

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    I would have no problem with the US taking money for action that had no true impact on our national security interests. That would be about most crap out there. And we could do it is ways that really presented no real risk to us.

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