US Solar panel producer closes MA plant

An article in the International Herald Tribune (January 15,2011) describes closure of the MA plant of Evergreen Solar – that shifted production to a plant in China.   The article reports that company had plans to decrease its costs from $ 3.39 per watt in 2008 to $ 2 by 2010, but Chinese manufacturers were selling the same panels for $ 1.60 per watt.  In the article, the company’s managers cite the ability of Chinese plants to form partnerships with local government entities and thus avail of low cost financing with no interest payments due until 2015.    Thus, even with labor costs being a small part of the overall costs, capital financing costs caused the closure of the plant.  How much of the lack of competitiveness of US manufacturing can be tracked to higher financing costs ? Is there a strategic reason to provide low cost financing for alternate energy industries or should global comparative advantage determine sourcing locations ?

About aviyer2010

Professor
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