Tariffs are critical to protecting America's solar industry

Tariffs are critical to protecting America's solar industry
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It never occurred to me, as chief engineering officer, leading the build out of our flagship factory in Norcross, Georgia that our company would go bankrupt along with nearly 30 other U.S. solar manufacturers in less than five years. Yet, even as demand for solar increased, that is what happened. The “how” of this is at the heart of a trade case before the United States International Trade Commission (ITC) that now moves to President Trump for a final remedy.

Here are the facts. The ITC unanimously ruled that the U.S. solar cell and module industry was seriously damaged by large quantities of cheap imports that were dumped into the U.S. market. Suniva, the Georgia-based solar manufacturer where I served as lead engineer, brought this case before the ITC (along with an American competitor) to give new life to this important manufacturing sector. 

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Suniva was founded in 2007 using technology developed at the Georgia Institute of Technology under research programs sponsored by the U.S. Department of Energy — U.S. technology. Like all technology-driven products, the cost of solar decreases predictably over time, and a manufacturer must plan to maintain the normal pace of cost reductions.

 

Suniva successfully followed this strategy, achieving dramatic improvements in costs and product performance. However, China aggressively promoted its own solar industry during this same period, giving Chinese companies access to billions in cheap loans, and enabling them to sell solar products below their total cost of production. As a result, the price of these products fell artificially much faster than normal. Despite two rounds of tariffs imposed by the ITC, the price fell another 50 percent from the end of 2015 through 2016, just as Suniva was tripling its solar cell production in Georgia. Suniva was forced to close its operations in 2017.

The global tariffs and minimum price remedies Suniva has asked for are necessary because, after earlier tariffs, many of these foreign companies gamed the system by shifting their operations to other countries not covered by the initial tariffs, continuing to operate unabated. The relief requested by Suniva would close those loopholes, allowing domestic manufacturers to operate in a predictable environment. Those who oppose the ITC remedies worry that additional tariffs will raise the price of solar products enough to harm the rapidly growing solar installation sector. But this same argument was used against the two previous rounds of tariffs, and was proven wrong both times, as the installation sector continued to grow.

And manufacturing also creates substantial job growth in the U.S. Building a solar manufacturing plant creates local jobs in the construction phase and even more in operation of the completed facility. Suniva engaged a local general contractor, a local architect, and used local trades people in the construction of our state of the art manufacturing facility, and we did it with the support of the city of Norcross and the Gwinnett County governments, as well as from the State of Georgia through the Georgia Quick Start program. Our local roots went further, we partnered with Gwinnett Technical College to help train prospective employees. We saw in practice what we already expected, that high-tech jobs have a multiplier effect, meaning whole communities and their businesses are energized economically and benefit from those who are employed in the factory itself.

I firmly believe that American solar manufacturers can compete against any foreign competitor, but they need a level playing field. I also believe in free and fair trade, but trade is not fair when foreign competition is subsidized. A tariff is not a subsidy. It is a tax on imports that provides revenue to the U.S. government and creates a more favorable business environment for American manufacturing. And this case isn’t about just two companies, it’s about our entire industry. Mississippi-based Stion Corporation was the latest to close its doors just last month as the damage to solar manufacturing in the U.S. continues. 

The ITC commissioners have recommended remedies less than what Suniva and its co-petitioner asked. This is unfortunate. Solar energy will be one of the world’s great industries in the 21st century. Without appropriate tariffs now, the manufacturing segment of this American-born industry will disappear like so much of U.S. manufacturing. The president knows this issue. He should impose remedies strong enough to put the people of Norcross and others like them across America back to work. To get it right, he will have to go beyond the recommendations the ITC commissioners made.

Dr. Stephen Shea has held senior research and management positions in the solar industry for nearly 40 years. He was previously vice president and chief engineering officer at Suniva, a Norcross, Georgia-based manufacturer of solar cells and modules. ​​