Archive for the ‘Green Jobs’ Category

Solyndra’s Fossil Fuel Cousins

Thursday, September 22nd, 2011

Republicans show no signs of relenting in their effort to exploit the bankruptcy filing of federally-backed solar equipment company Solyndra to delegitimize not only the Obama Administration’s renewable energy policies but the very concept of green jobs.

A key element of the campaign is the depiction of Obama as having a hippie-like preoccupation with wind and solar energy. What the Republicans conveniently ignore is that Obama hedged his bets. While running for the presidency and after taking office he also promoted non-flower-power forms of energy such as nuclear and coal. Much to the chagrin of his supporters in the environmental movement, Obama embraced the industry-contrived idea of “clean coal,” otherwise known as carbon capture and storage (CCS).

It is widely forgotten that the 2009 Recovery Act (ARRA), now being vilified for appropriating funds for the loan guarantees given to Solyndra and other solar firms, also included a provision for subsidizing CCS projects. ARRA provided $3.4 billion for the Department of Energy’s Fossil Energy R&D Program. Of that amount, $1.52 billion was to support large-scale demonstration projects involving the capture of carbon emissions from industrial sources. “Stimulus Money Puts Clean Coal Projects on a Faster Track” was the headline of a March 2009 article in the New York Times.

The brave new era of CCS did not begin auspiciously. In August 2009 it was revealed that consultants working for an industry front group called the American Coalition for Clean Coal Electricity had forged letters from non-profit groups to members of Congress expressing opposition to a climate bill that was being considered at the time.

In October 2009 the Energy Department announced a set of modest-sized CCS grants to companies such as Archer Daniels Midland, ConocoPhillips and Shell Chemical. Two months later, DOE handed out a set of much larger grants totaling $979 million to American Electric Power Company, Southern Company and Summit Texas Clean Energy.

And in August 2010 the Energy Department awarded $1 billion in ARRA funds to a large CCS project operated by several companies under the name FutureGen Alliance. In a previous incarnation, FutureGen had been funded by the Bush Administration—largely to justify inaction on greenhouse gas emissions—but that money was cut off as the result of a cost study that later turned out to have a major math error.

So how has all this turned out? In July, the CCS movement was dealt a severe blow when American Electric Power announced that, despite the federal aid it was receiving, it would suspend work on its flagship Mountaineer carbon capture project in West Virginia. AEP said it based the decision on the weak economy and the uncertain status of climate policy.

Later that month, Bloomberg BusinessWeek published a report called “What’s Killing Carbon Capture,” which pointed out that the Mountaineer suspension was only one of a series of recent cancellations or postponements of CCS projects in the United States and other countries. Meanwhile, FutureGen 2.0 is years away from operation and may never justify the federal government’s huge investment.

In other words, renewables are not the only kind of energy alternatives that are in trouble. If Republicans want to use the Solyndra case to argue the failure of green job creation, they have to acknowledge that clean coal initiatives promoted by the fossil fuel sector are also going nowhere.

And if they really want to be honest, they would admit that the reasons for setbacks in wind and solar as well as in carbon capture go far beyond the handling of ARRA grants by the Obama Administration. The feeble economy presents a formidable obstacle for any new industry. A dysfunctional policy environment made even more toxic by the rise of climate change denialism creates even more turmoil for energy industry innovators, whether in the renewable or the CCS camp. It may also be the case that those innovators just don’t have a viable business plan.

Of course, the Administration’s critics are not going to concede any of this. Anti-green job demagoguery will be with us for some time to come.

Green Accountability

Thursday, September 15th, 2011

Obamacare, abortion, gay marriage and taxes are apparently not enough to complain about. Conservative politicians have a new whipping boy: green jobs. Republican members of Congress and GOP Presidential hopefuls seem to think these days that the greatest sin of the Obama Administration is its effort to encourage employment growth in the renewable energy sector.

Mitt Romney’s recently released economic plan accuses Obama of having “an unhealthy ‘green’ jobs obsession.” In her response to the President’s jobs speech, Michele Bachmann charged that the Administration is imitating the green-jobs policies of Spain, which she bizarrely suggested were responsible for that country’s astronomical rates of unemployment. Rick Perry’s attacks on the reality of climate change imply that green jobs are unnecessary.

At the same time, Republicans in Congress are trying to turn the bankruptcy of solar company Solyndra, which leaves the federal government on the hook for $535 million in loan guarantees, into a morality tale not only about supposed cronyism but also about the folly of government support for green jobs.

As usual, there is a high dose of hypocrisy among those making the criticisms. As USA Today points out, while he was governor of Massachusetts, Romney supported the use of public funds to support renewable energy businesses. What the paper did not mention was that one of the recipients of those funds was Evergreen Solar, which got a $2.5 million state grant in 2003 and went on to receive $44 million more from Romney’s successor Deval Patrick. Earlier this year, Evergreen announced plans to shift its production to China and later filed for bankruptcy.

In 2008 the Texas Enterprise Fund, a subsidy program overseen by Gov. Perry, gave $1 million to the solar company HelioVolt. The company has also struggled and earlier this year put itself up for sale. A report by Texans for Public Justice noted that the fund had relaxed HelioVolt’s job-creation requirement. Perry’s fund also gave $2.5 million to SunPower Corp.

Romney and Perry are far from the only Republic governors who have overseen the use of taxpayer funds to invest in renewable energy companies. Under the leadership of Gov. Jan Brewer, Arizona has been offering a Renewable Energy Tax Incentive. In her State of the State speech last year, Brewer said she was “proud to announce the arrival of Suntech Power Holdings. It’s the first solar company to come to Arizona because of the renewable energy tax incentive program I signed into law in June.”

Recently, Mississippi Gov. Haley Barbour, who flirted with a run for the Republican Presidential nomination earlier this year, supported and then signed legislation that will provide a whopping $75 million subsidy for Calisolar, a California company that plans to produce solar cells in the Magnolia State. The law also includes $100 million in financial assistance for biomass energy company HCL CleanTech.

The fact that Republicans are disingenuous in their criticism of the Obama Administration’s renewable energy efforts does not mean that green subsidies at the federal or state level are necessarily a good thing. While the need to develop alternative energy systems is an urgent task for the nation, it does not make sense to repeat the mistakes of conventional economic development policy in helping the green sector.

That means, for one thing, not simply throwing money (including tax breaks and loan guarantees) at companies simply because they are making green promises. In many cases it may make more sense to let the private sector finance new renewable energy ventures and save public funds for energy infrastructure investments and for worker training in green occupations. Adopting aggressive renewable portfolio standards is also a key role for government to play.

In cases where some direct government assistance makes sense, public officials need to perform due diligence on the recipient company and impose strong safeguards, including job quality standards and clawbacks if the firm does not live up to its job-creation obligations.

As the Solyndra and Evergreen episodes show, the fact that corporations are focused on renewable energy does not make them angels. They may still be incompetent or engage in the same types of corporate misconduct seen among their conventional counterparts. Green business must also be accountable business.

Green Jobs Blues

Thursday, September 1st, 2011

President Obama’s grand plan for job creation has not yet been released but it is already struggling. The capitulation to Speaker John Boehner on the scheduling of Obama’s speech to Congress about the plan is a sign of things to come.

Yet perhaps even more troubling is the announcement by a company that served as a showcase for the administration’s campaign to promote jobs in renewable energy that it is shutting down, sticking taxpayers with the bill for $535 million in federal loan guarantees. Solar panel maker Solyndra’s decision to close its manufacturing plant in California and file for bankruptcy will put more than 1,100 people out of work.

Conservatives are having a field day arguing that Solyndra’s demise illustrates the folly of government involvement in the market. It is hilarious to hear many of the same lawmakers who refuse to end subsidies to the ethanol industry and tax breaks for Big Oil get indignant about assistance to wind and solar companies.

It is also amusing to see Republicans try to turn the Solyndra debacle into a story about Obama Administration stimulus cronyism. Solyndra was approved for loan guarantees in 2007 by the Bush Energy Department based on the Energy Policy Act passed by Congress in 2005, though funding for the program was not appropriated until the 2009 Recovery Act.

The real issue is why Solyndra, even with the loan guarantees, was not able to succeed in a market that is supposed to be the wave of the future. And it’s not just an issue of this one company. Evergreen Solar, which received more than $40 million in state government subsidies in Massachusetts, filed for bankruptcy recently. Other U.S. renewable energy firms are also facing difficulties.

Rather than simply debating this country’s half-hearted industrial policy, more attention should be paid to the failures of the companies themselves. U.S. solar panel producers, for instance, were slow to get started and allowed foreign competitors to gain a strong foothold in the international market.

It is customary for firms such as Solyndra and Evergreen to cite low-cost producers in China as a key reason for their plight. What the U.S. renewable energy manufacturers fail to mention is that some of them helped develop the Chinese solar industry by locating some of their own facilities in that country. At the same time, companies like First Solar and SunPower Corporation have intensified global cost competition by building plants in other cheap-labor havens such as Malaysia and the Philippines.

Some European companies have shown it is possible to compete without depending on low wages offshore. Germany’s SolarWorld, which is in the top tier of global producers, does most of its manufacturing in its home country and in the United States (including a plant in Oregon that has received state subsidies). In June it sold off its share in a joint venture in South Korea, saying that it had “decided in favor of production at locations with the highest quality, environmental and social standards.” Imagine a major U.S. corporation saying that.

The fact that many U.S. companies—green or otherwise—cannot or will not compete by adopting a high-road approach does not bode well for the country’s future. As long as wages remain low or stagnant, the buying power of American workers will remain weak, and this in turn will keep the economy in a funk.

Compounding the problem is that, apart from a few tech sectors, innovation in American business seems to be limited to finding new ways to lower tax bills and increase executive compensation. A new report by the Institute for Policy Studies does a good job of linking the two, showing that numerous large corporations are now remunerating their CEOs more each year than the firms are paying in federal income taxes. Many of these same companies are not hiring in the U.S., preferring to rely instead on those offshore labor havens and extracting more work out of their existing domestic employees.

This is the dilemma facing the job proposals of the Obama Administration and state governments: they all ultimately rely on action by corporations whose outlook these days is dominated by executive self-enrichment, tax dodging and labor exploitation—not the creation of quality jobs.  Happy Labor Day.

Putting Off Corporate Absolution

Thursday, February 10th, 2011

I was just beginning to recover from President Obama’s dismaying speech at the U.S. Chamber of Commerce when I found myself in the middle of another effort to gloss over the misdeeds of big business. This occurred at the annual conference of the BlueGreen Alliance, which brought together some 1,600 labor and environmental activists to discuss the prospects for a sustainable economy but also invited representatives of some supposedly enlightened corporations.

When we gathered for lunch on the first day we first had to listen to a presentation by David Kiser, a vice president at International Paper, which is listed in the conference program as one of the “Platinum Sponsors” of the event. Kiser went on about IP’s commitment to “environmental stewardship” and “caring for employees.”

I had to restrain myself from laughing out loud. IP has one of the worst track records of any major corporation when it comes to both labor and environmental practices. Some of the earliest anti-corporate research I ever did was to assist a campaign launched by the Paperworkers union (now part of the Steelworkers, which co-founded the BlueGreen Alliance) to resist company demands for contract concessions in the 1980s.

After workers at an IP mill in Mobile, Alabama voted against the concessions, they were locked out by the company. The Mobile workers then made a coordinated bargaining pact with their counterparts at three other IP mills—in Jay, Maine, Lock Haven, Pennsylvania, and De Pere, Wisconsin—where contracts were expiring and the rank and file had decided to strike rather than concede.

IP responded by bringing in replacement workers from around the country, many of them recruited by BE&K, an Alabama-based construction company that had diversified into strikebreaking. The campaign by the striking and locked-out locals was eventually crushed by the company.

Yet during that campaign, workers at the mill in Jay, Maine (photo, from 1973) drew national attention to the environmental hazards of IP’s operations, which were a major contributor to the dioxin problem due to chlorine used in the paper bleaching process. The labor and environmental issues intersected in February 1988, when unskilled strikebreakers hired by the company accidentally broke the valve on a tank containing chlorine dioxide gas in pressurized liquid form. About 112,000 gallons of the liquid poured out and vaporized into a huge green cloud that floated out from the mill, forcing the evacuation of some 3,000 people from homes, schools and businesses. If the weather had been warmer and the winds weaker, many could have died.

Paperworker union members helped enact local ordinances in Jay that cracked down on IP’s emissions and pressured Maine state officials to file suit against the company for environmental violations. IP paid $885,000 to settle the charges. Later, the U.S. EPA also brought action against the company, which in 1991 pleaded guilty to five felony charges and paid a fine of $2.2 million. Over the following decade, IP was implicated in state and federal environmental violations in states such as New York, Massachusetts, Wisconsin, Mississippi, Florida, California, Georgia and Virginia.

Since the early 2000s the company has been trying to rehabilitate its environmental image by actions such as donating land to conservation groups and appointing the head of one such group to its board of directors.  Yet the company remains a heavy polluter. In the EPA’s most recent Toxics Release Inventory, IP mills rank first and second among all paper facilities in the total volume of releases and account for 15 of the industry’s top 50 polluters, with total toxic releases of more than 43 million pounds.

IP’s labor relations are a lot less tumultuous these days, but in the last decade the company has slashed its U.S. hourly workforce from 45,000 down to 24,000.

The International Paper of 2011 is not the same as the IP of 1988, but I still find it difficult to regard the company as an ally in the effort to shape the green economy of the future. It takes a long time for the impact of past transgressions to dissipate.

This was brought home to me at another session at the BlueGreen Alliance conference. An official of the EPA was talking about how Recovery Act money is being used to help clean up a Superfund hazardous waste site in New Jersey where a long-defunct company had dumped large quantities of radioactive thorium once used in the production of gas lamps. Thorium, the EPA guy noted, has a half life of 14 billion years.

When the impact of business misbehavior can endure for eons, it will take more than a few social responsibility gestures to redeem corporate sinners.

Attacking the Wrong Earmarks

Thursday, March 11th, 2010

Congress is once again talking tough about budget earmarks. House Democratic leaders announced that they are banning earmarks designed to benefit for-profit entities, while House Republicans upped the ante by calling for the abolition of the practice across the board.

Even if this latest in a long line of anti-earmark initiatives takes hold, it will have limited impact on the channeling of taxpayer dollars to favored interests. The earmark database compiled by Taxpayers for Common Sense indicates that in the current fiscal year they amount to only $16 billion. And many of the 11,860 individual items cannot be linked to a specific recipient, making targeted bans meaningless.

Even the largest items linked to individual corporations—such as $19.5 million to Boeing for “Maui Space Surveillance System Operations and Research” in Hawaii; $12 million to BAE Systems for “Mk 45 Mod 5 Gun Depot Overhauls” in Kentucky; and $9.6 million to Northrop Grumman for “B-2 Advanced Tactical Data Link” in California—are drops in the bucket of $1 trillion in overall federal discretionary spending and a military budget of $530 billion.

It’s amusing to watch the posturing about these small amounts at a time when Congress may be about to endorse what can be seen as perhaps the largest earmark ever: the healthcare subsidies that will pass from lower-income Americans to private insurers in a public-option-less system. A new report from the Congressional Budget Office estimates that premium and cost-sharing subsidies under the current (pre-reconciliation) Senate version of the bill would cost $337 billion over the next decade. The TARP bailout was bigger, but in that case the taxpayers are recouping much of the outlay.

Healthcare is not the only example of how reform gets built on corporate handouts. The climate bill that passed the House last June (and got stalled in the Senate) would have essentially given away many of the emission allowances for the cap and trade system rather than requiring corporate polluters to pay in full for their greenhouse gas output.

Corporate subsidies are also at the heart of the job-creation initiatives making their way through Congress. Most Democrats have embraced the Republican notion that the best way to increase employment is to decrease business taxes. The same goes for federal efforts to promote renewable energy. At the center of the green jobs initiatives in the Recovery Act were corporate tax breaks such as the $2.3 billion Advanced Energy Manufacturing Tax Credit, which the Obama Administration would like to expand by $5 billion. The Administration also wants to give $8 billion in loan guarantees to the Southern Company to build a nuke in Georgia.

In addition to the direct contracts and tax breaks, corporate America is also in effect being subsidized by the unwillingness of much of Congress to tighten regulation of business, even in cases of reckless behavior. The delay and dilution that have characterized financial reform are worth billions to the banks. The moves to exempt sectors such as payday lenders from federal oversight is an enormous boon to those businesses.

Healthcare reform, climate-crisis mitigation, job creation, renewable energy development and financial reform are all laudable goals, but it is frustrating that they are all being pursued in ways that often reward the same large corporations that created many of the problems these initiatives are meant to address. And it is mind-boggling that the critics of this business-friendly agenda repeatedly denounce it as socialistic.

Democrats should spend less time posturing on earmarks and more time trying to figure out how they can fix what’s wrong with the country without giving away the store to big business.

The Risk of Green Offshoring

Thursday, March 4th, 2010

The United States may be indirectly subsidizing the movement of renewable-energy equipment production to low-wage havens such as China and India. That’s the finding of a new report just released by the Apollo Alliance and Good Jobs First. I co-authored the report in my capacity as the research director of Good Jobs First.

My responsibility was to analyze the recipients of Advanced Energy Manufacturing Tax Credits, a component of the American Recovery and Reinvestment Act. The program, also known as 48C because of its place in the Internal Revenue Code, provides a tax credit equal to 30 percent of the value of investments in new, expanded or re-equipped facilities in the United States that produce materials used in renewable energy generation or carbon capture.

In January the Obama Administration released of list of 183 projects in 43 states that had been approved for the initial $2.3 billion round of credits. Obama’s new budget calls for expanding the program by $5 billion.

I focused on the 116 projects involving wind and solar, the two forms of renewable energy that have the most growth potential. Those projects received $1.6 billion, or 68 percent, of the total 48C credits. There are 90 unique parent companies involved (some firms have more than one project).

While the 48C projects themselves are all located in the U.S., many of the companies are also investing in wind and solar manufacturing facilities in other countries. This is not surprising, given that 25 of the 90 firms are based outside the United States, mostly in Europe and Scandinavia. They have operations in their home countries as well as other in developed economies.

What I examined, instead, was the extent to which both the U.S. and foreign 48C recipients are also expanding output in the low-wage countries we typically refer to in discussing offshoring. It turns out that a quarter of them are doing so.

Most of these are companies from places such as Germany and Spain that are leaders in the global clean-energy manufacturing market—the likes of Gamesa, Nordex, Siemens and Winergy. Thirteen foreign 48C recipients produce in China, three in India and two in Mexico. There are also six U.S.-based 48C recipients with operations in China, Mexico, Malaysia and the Philippines.

In total, the U.S. has awarded $458 million in advanced energy tax credits to 23 companies that are also investing money and creating jobs in low-wage nations.

One might argue that companies have to produce abroad in order to supply foreign markets, especially in a booming economy such as China. Yet I found that some of the 48C recipients have adopted a business model that relies heavily on low-wage production for serving global markets. Here are three examples:

Advanced Energy Industries Inc. (based in Colorado; received $1.2 million in 48C credits). In its most recent 10-K annual report, the company states: “The majority of our manufacturing is performed in Shenzhen, China, where we produce our high-volume products. The remainder of our manufacturing locations, in Fort Collins, Colorado; Hachioji, Japan; and Vancouver, Washington, perform low-volume manufacturing, service and support.”

First Solar Inc. (based in Arizona; received $16.3 million in 48C credits). In December 2009 the company announced plans for the addition of eight production lines for its solar module manufacturing operation in Kalim, Malaysia. The Malaysian operation was already more than ten times the size (in square footage) of First Solar’s original plant in Perrysburg, Ohio.

SunPower Corporation (based in California; received $10.8 million in 48C credits). Although 90 percent of SunPower’s sales come from the United States and Europe, it has been doing almost all of its manufacturing in Asia. It produces solar cells at two facilities in the Philippines and is developing a third solar cell manufacturing facility in Malaysia. Almost all of its solar cells are combined into solar panels at the company’s solar panel assembly facility in the Philippines. Other solar panels are manufactured for the company by a third-party subcontractor in China.

Given their preoccupation with offshoring, there is a significant risk that such firms will follow in the footsteps of Evergreen Solar, which is not on the 48C list but which received some $44 million in state subsidies for its plant in Devens, Massachusetts. In November 2009 the company announced that it would transfer its solar-panel assembly operations from Devens to a plant in China.

Using programs such as the Advanced Energy Manufacturing Tax Credit to try to encourage renewable-energy companies to invest in the United States is good policy. But does it make sense to include firms that have put their primary emphasis on offshoring and may be using their 48C projects as little more than fig leaves to obscure where they are putting the bulk of their money? Are U.S. taxpayers indirectly subsidizing those foreign operations?

At the very least, the Apollo Alliance/Good Jobs First report recommends, the federal government should employ a clawback mechanism so that any company that later shifts its 48C jobs offshore would have to reimburse the Treasury for the tax credit. We also need to explore other ways of making sure that workers in the United States and other developed countries are not denied a place in the clean-energy manufacturing sector of the future.

ARRA as a Corporate Rescue Plan

Thursday, February 18th, 2010

A war of words is raging over the impact of the Obama Administration’s $787 billion stimulus program, which is now one-year old. Conservative members of Congress are mounting a relentless assault on what they see as an abject failure, even as many of them unabashedly promote and at least implicitly take credit for individual American Recovery and Reinvestment Act (ARRA) projects in their home districts.

Meanwhile, the office of Vice President Joe Biden has issued a report insisting that ARRA has created or saved 2 million jobs and has brought many states back from the brink of fiscal disaster. The stimulus effort, Biden insists, “is going well.”

The debate boils down to an age-old disagreement between those opposed to allegedly wasteful social spending and those who believe government has to reinforce the social safety net during a time of economic distress.

Both sides are ignoring the fact that ARRA, to a significant degree, is a rescue plan not just for unemployed workers and struggling state governments, but also for parts of corporate America. This goes far beyond the roughly $50 billion in business tax breaks that Republicans last year insisted be part of the plan.

The Recovery Act represents a big step in the direction of what was once called industrial policy. Billions of ARRA dollars are being used by the federal government to encourage the development of new industries in areas such as renewable energy and health information technology that are seen as the foundation of future economic growth. Billions more are being spent on traditional procurement contracts to boost private-sector activity.

Here are some examples of larger injections of ARRA funds going directly to the corporate sector:

ADVANCED ENERGY MANUFACTURING TAX CREDITS

Hemlock Semiconductor, a joint venture of Dow Corning (itself a joint venture of Dow Chemical and Corning Inc.) and two Japanese companies: $141 million for the production in Michigan of polycrystalline silicon used in solar panels.

Wacker Polysilicon North America LLC, a subsidiary of the German chemical company Wacker Chemie: $128 million for a plant in Tennessee that will produce polysilicon for solar cells.

United Technologies Corporation, the big military contractor: $110 million for new equipment at its Pratt & Whitney plants to help produce more energy-efficient jet engines.

Alstom, the big French power and transportation equipment firm: $63 million for a Tennessee facility that will produce the world’s largest steam turbines for nuclear power plants.

GRANTS FOR DEVELOPMENT OF ADVANCED BATTERIES FOR ELECTRIC VEHICLES

Johnson Controls: $299 million for work on nickel-cobalt-metal battery cells

A123 Systems Inc.: $249 million for work on nano-iron phosphate cathode powder and electrode coatings.

General Motors: $105 million for production of high-volume battery packs for the GM Volt.

“CLEAN” COAL POWER INITIATIVE

American Electric Power Company: $334 million for the development of a chilled ammonia process to capture CO2 at a power plant in West Virginia.

Southern Company Services: $295 million for the retrofitting of a CO2 capture installation at a coal-fired power plant in Alabama.

BROADBAND EXPANSION

ION HoldCo LLC, a partnership led by Sovernet Communications: a $39 million grant to expand fiber-optic broadband in rural areas of upstate New York.

Biddeford Internet Corp. (dba GWI): a $25 million grant to extend a fiber-optic network to rural and disadvantaged parts of Maine.

ENERGY LOAN GUARANTEES

Solyndra Inc.: a $535 million loan guarantee to support the construction of a commercial-scale manufacturing facility for cylindrical solar photovoltaic panels.

PROCUREMENT CONTRACTS

Lockheed Martin: $165 million to work on the crew vehicle for NASA’s Project Orion.

Clark Construction Group: $152 million to design and build a new headquarters for the U.S. Coast Guard in Washington, DC.

General Motors: $104 million to supply light trucks, station wagons and alternative fuel vehicles to the General Services Administration.

GlaxoSmithKline: $62 million from the Department of Health and Human Services to do research on the H1N1 flu vaccine.

To this list can be added the thousands of contracts that states have awarded to private companies to carry out ARRA-funded activities such as highway repair, school construction and environmental remediation.

It is surprising that there has been so little debate on the relative merits of all these projects and programs – as well as on the wisdom of providing direct subsidies to profit-making entities. Are these grants, contracts, tax credits and loan guarantees a smart investment in the future or nothing more than business boondoggles?

With a significant portion of the Recovery Act going to aid corporations, we also have a right to ask why they are not creating more jobs with the taxpayer funds they have received. It would also be helpful to know – though the limitations of ARRA data collection make this difficult – how good are the jobs that have been created (in terms of wages and benefits) and whether those jobs are being equitably distributed among different portions of the population.

If we are ever going to reach any meaningful conclusions about the whole stimulus endeavor, we’ve got to go beyond tired debates about Big Government versus the Free Market. Like the bailout of the banks and the auto companies, ARRA is changing the relationship between the public and private sectors. Now we need to know whether the new arrangement is working and who is reaping the benefits.

Can the Redlining of U.S. Workers Be Stopped?

Friday, November 20th, 2009

wind turbineWe’re meant to believe that corporations make their investment decisions based on carefully considered financial and competitive considerations. Yet a recent announcement by a Chinese manufacturer of turbines for wind energy shows how political pressure can quickly change business priorities.

In late October the company, A-Power Energy Generation Systems, announced that it had been chosen to supply some 240 turbines for a large wind farm planned for Texas. That would have been just another in a long series of manufacturing-goes-to-China stories, but for reports that the group launching the $1.5 billion project—a joint venture of China’s Shenyang Power, Texas-based Cielo Wind Power and private equity firm U.S. Renewable Energy Group—was intending to take advantage of U.S. government funding through the Recovery Act.

New York Senator Chuck Schumer raised a stink about this in an open letter to Energy Secretary Steven Chu, highlighting reports that while the Texas wind farm would create a modest number of local jobs, the much bigger employment impact—2,000 to 3,000 jobs—would be felt at A-Power’s factories in China.

The ensuing uproar—with protests coming from figures as divergent as Steelworkers union president Leo Gerard and rightwing Missouri Senator Kit Bond—got the joint venture’s attention. While not abandoning the plan to import turbines for the Texas wind farm, A-Power and U.S. Renewable Energy Group announced on November 17 that they would construct a new wind turbine factory in the United States with a workforce of about 1,000.

That’s good news for the job-starved American economy, but all the attention given to A-Power has obscured a set of larger problems concerning the U.S. renewable energy industry.

The first is that the operation of facilities such as wind farms does not generate much employment—once built, they basically run themselves. The real employment potential is in manufacturing the turbines and other components used to generate wind and solar energy.

The disturbing fact is that, with the exception of General Electric, large U.S. companies have shown little interest in domestic production of these components. This has created an opening for foreign firms such as Gamesa (from Spain), Vestas (Denmark), Siemens (Germany) and Sanyo (Japan) to capture a large share of U.S. production of wind and solar components. Over the past few years they have invested hundreds of millions of dollars in plants from Pennsylvania to Oregon—and have often received lavish state and local economic development subsidies for doing so.

Unfortunately, the economic crisis has taken its toll on this sector, and expansion plans are being curtailed or postponed. For example, wind turbine maker Vestas, which has invested heavily in Colorado and planned to boost its workforce in that state to 2,500, recently said it would slow its pace of hiring.

To make matters worse, some of the newer U.S.-based wind and solar manufacturing companies that claim to be interested in domestic production have been lured by the siren call of cheap overseas labor. Evergreen Solar, for instance, recently revealed that it plans to shift assembly of solar panels from its heavily subsidized plant in Devens, Massachusetts to Wuhan, China. It would follow in the footsteps of U.S. firms such as First Solar, which already does most of its manufacturing in Malaysia, and TPI Composites, which produces wind turbine blades in Mexico and China.

It’s also not the case that foreign firms are always worse than domestic ones when it comes to respecting the rights of workers. Within the wind and solar sector there are U.S. companies that seek to weaken their unions (such as GE) or keep them out altogether (e.g., DMI Industries, which fought a Teamsters organizing drive). At the same time, there is Spain’s Gamesa, which accepted the desire of its workers in Pennsylvania to unionize and has developed a cooperative relationship with the Steelworkers.

From a labor perspective, the issue is not whether a company is foreign or domestic. What counts is whether it is redlining U.S. workers or giving them a chance to participate in producing the components of the economy of the future.

Green Jobs are Not Always Good Jobs

Tuesday, February 3rd, 2009

As the federal government prepares to spend billions of dollars promoting the creation of green jobs as part of the huge economy recovery bill, a new report warns that the jobs already being created in climate-friendly sectors of the economy do not always measure up in terms of wages and other terms of employment. The report, entitled High Road or Low Road: Job Quality in the New Green Economy, was produced by Good Jobs First (yours truly was the principal author). It was commissioned by the Change to Win labor federation, the Sierra Club, and the Teamsters and Laborers unions.

Many proponents of green development assume that the result will be good jobs. The report tested that assumption and found that it is not always valid. This is based on an examination of three sectors: manufacturing of components for wind and solar energy generation; green building; and recycling. In each sector, we found examples of employers that compensate their workers decently and treat them with respect. These include the Gamesa wind equipment manufacturing operations in Pennsylvania; developer Gerding Edlen’s commercial and residential construction projects centered in Portland, Oregon; and Norcal Waste Systems’ Recycle Central operation in San Francisco.

Yet we also found examples of purportedly green employers paying substandard wages and not treating their workers well. These include at least two wind energy manufacturing plants—one run by Clipper Windpower in Iowa and another run by DMI Industries in North Dakota—where workers initiated union organizing drives in response to issues such as poor safety conditions and then faced strong union-busting campaigns by management. Some U.S. wind and solar manufacturing firms are weakening the job security of their workers by opening parallel plants in foreign low-wage havens such as China, Mexico and Malaysia.

The report finds that many wind and solar manufacturing plants are receiving sizeable economic development subsidies from state and local governments. This use of taxpayer money provides an opportunity to raise wages and other working conditions. Many states and localities already apply job quality standards to companies receiving job subsidies or public contracts. In the report we urge wider and more aggressive use of such standards by federal as well as state and local agencies. The report offers other public policy options and urges the private U.S. Green Building Council to consider adding labor criteria to its widely used LEED standards for green construction.

The overall message is: green jobs are not automatically good jobs. We have to make them so.

Note: This item is crossposted on the Good Jobs First Clawback blog.

Chicago Sit-In and the Future of Green Jobs

Tuesday, December 9th, 2008

The sit-in at Chicago’s Republic Windows & Doors brings together a host of issues such as labor rights in a plant closing, the refusal of a major bank receiving billions in federal bailout funds to invest in a struggling company, and the fragility of blue-collar employment in the weakening economy. Let me add another to the mix: the fate of green jobs.

Coverage of the labor dispute tends to treat Republic as an old-line manufacturer desperately trying to survive in a new economy. On the contrary, Republic’s business - the production of replacement windows - is a key component of the clean energy revolution being so widely touted these days. Installing those windows lowers the amount of energy used by homes and commercial buildings, thereby reducing the need for new fossil-fuel-burning power plants. The Apollo Alliance is calling for a national energy efficiency commitment to reduce energy use in new and existing buildings at least 30 percent by 2025.

Before it fell on hard times, Republic was promoting green principles not just in terms of the uses of its windows but also in the way its products were made. In December 2003 the company issued a press release announcing that it was developing a “cradle to cradle” design system that would allow the materials in its windows to be fully recycled, thus avoiding the generation of waste. The project received funding from the Chicago Department of the Environment. In a follow-up interview with Industry Week, company executive Les Teichner said Republic was also looking into ways to expand the life span of window frames so they could remain in place longer while the company would replace and recycle window sashes more frequently.

It’s not clear to what extent Republic was able to follow through on its ambitious environmental plans and what role they played in the company’s competitive and financial circumstances. It is also not yet known whether the announced closing of the company last week was more the result of a shutoff of credit by Bank of America or a decision by the company’s owners to move the operations out of state.

In any event, the situation serves as a cautionary tale for proponents of green jobs. We cannot assume that the clean-energy revolution will happen spontaneously nor that the kinds of jobs it creates will necessarily meet the highest standards. Aggressive government enforcement of labor laws and strong union advocacy of the sort being demonstrated by the UE at Republic will be necessary to fulfill the promises of the green-collar economy.

Rank-and-file activism like that being employed by the Republic workers will also be a key part of the equation. The Republic sit-in harkens back to the labor militancy of the 1930s but it also looks forward to the coming struggle to create a future of secure, well-paying and environmentally-friendly jobs.