Friday, October 17, 2008

Fortune: Germany Invests in Green Jobs - in America

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I'm been very negative on this economy for a long time, and many of our posts have demonstrated the coming (and now arrived) tsunami. However, even I get tired of posting the bad news, and am trying to find some nuggets of good. Let me tell you, it isn't easy. Right now it is quite useless to talk about stock fundamentals since for so long it has meant nothing so it's simply a frustrating time for anyone who picks stocks based on the business. So I'm just continuing research and reading about broader macro topics and keeping up to date on interesting companies and sectors, while we await any semblance of normal to return to this market.

I found this "positive" story in Fortune.... (not entirely positive because you wish it was American companies and American political leadership building a constructive cocoon around the next era of jobs, but at least it is job creation in the US)


  • A solar cell factory has sprouted in Oregon’s Silicon Forest amid the region’s old-growth semiconductor plants. And who is providing these well-paid, high-tech green jobs, investing in America rather than fleeing to Asia to set up shop? The Germans.
  • Bonn-based SolarWorld AG on Friday officially flips the switch on the United States’ largest solar cell plant. The company, the world’s fifth largest solar cell manufacturer, has recycled a former Komatsu factory built to produce silicon wafers for the chip industry
  • Last week, SolarWorld America president Boris Klebensberger gave Green Wombat a sneak peak at the new Hillsboro plant ... “I know a lot of people will say, ‘You idiot, Boris. You can’t manufacture in the U.S.,’ ” says Klebensberger, 39, who sports a hoop earring and has a penchant for saying what’s on his mind.
  • That has been the conventional wisdom. While thin-film solar companies like First Solar (FSLR), Solyndra and Energy Conversion Devices (ENER) have built factories in the U.S., conventional silicon-based module makers such as SunPower (SPWRA) have outsourced production overseas.
  • But SolarWorld is counting on its expertise in manufacturing in high-cost Germany and its new American branding to give it a competitive advantage. “Made in America is a very big selling point,” says SolarWorld marketing director Anne Schneider. “Customers like that.”
  • Like other solar cell makers, SolarWorld is trying to build a brand around an increasingly commoditized product. (that will be very tough to do - generally a commodity is simply chosen on quality/price) “Even in a commodity business this is a brand,” says Klebensberger. “If you have to choose between two products that are technologically the same, you’ll probably choose the one made in the U.S.”
  • The company was founded in 1998 by, as Klebensberger puts it, “five crazy guys who people thought were on drugs” when they said they were going into the solar business. But Germany’s lucrative incentives for renewable energy quickly turned the nation into a solar powerhouse and SolarWorld went public in 1999. Revenues - $931 million last year - have been growing around 30%-40% annually and the company has a market cap of $3.1 billion. (much like Toyota had to INVEST and LOSE money to get a lead in hybrid cars, so have other 1st world countries on alternative energy)
  • SolarWorld saw a potentially huge opportunity in the U.S. but the Shell plant was relatively small - producing 80 megawatts of solar cells annually - so Klebensberger went shopping for a new factory. He ruled out California - too expensive - before settling on Hillsboro, 20 miles west of Portland.
  • The cost of living was reasonable - at least compared to California - and Oregon is on the forefront of promoting sustainability and the green economy. And importantly, Intel (INTC) and other chip companies had opened semiconductor factories, or fabs, in the area in the 1980s and ’90s. “A lot of our workforce came from established chip companies or those that closed their fabs,” says Klebensberger, sipping tea from a coffee cup emblazoned with “Got Silicon?”
  • “The manufacturing and product is different but the raw starting material is the same and there’s a lot of similarity in the equipment,” adds Gordon Bisner, vice president of operations and a chip industry veteran. “There’s a lot of the same skill sets from a maintenance and engineering standpoint and understanding the basic manufacturing principles and what it takes to manufacture a product successfully in the United States.”
  • When fully built out in a couple of years, the plant will produce 500 megawatts’ worth of solar cells annually and employ 1,400 workers. In the meantime, the target is 100 megawatts by the end of 2007, and 250 megawatts in 2009.
  • In one corner of the building, a room of steel vats cook up polysilicon, producing eight-foot-long silicon ingots in the shape of giant silver pencils. Those ingots are taken to another room where wiresaw machines slice them into wafers. The wafers then travel down a conveyor belt where robots wash them and scan for imperfections. “What’s critical here is the equipment,” says Bisner over the hum of the machines. “Our competitive advantage is how we use the equipment, how can we get every little bit of photovoltaic cell out of the end of the line. It takes equipment, it takes technology and it takes people too.” In an adjoining room, the wafers are imprinted with contacts and transformed into photovoltaic cells.
  • SolarWorld isn’t the only solar company wanting a made-in-America label. Sanyo this week announced it will build a solar cell factory in Salem, south of Portland. And Chinese solar giant Suntech (STP) earlier this month acquired a California-based solar installer and announced a joint venture with San Francisco-based MMA Renewable Ventures (MMA) to build solar power plants.
  • Says Klebensberger, “We provide green jobs. We’re not just talking about it, we’re doing it.” (thankfully, someone is)
No position


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