Solyndra: Obama’s First Green Bail-Out
Solyndra Inc. wants more from you than the $535 million in federal loan guarantees it has already received. The solar panel maker has now filed for bankruptcy protection, after the White House touted it as a stellar example of its green jobs initiative.
The FBI has since raided its Fremont, Calif. offices.
And now Solyndra has applied for federal Trade Adjustment Assistance to help foot the bill for the 1,100 workers it laid-off, reports Investors Business Daily.
IBD notes that this $1.5 billion federal program is supposed to go toward "retraining" for workers who have lost their jobs due to "foreign trade, such as competition from the Chinese. But is that really the story behind Solyndra? Or is Solyndra twisting the truth in blaming the Chinese? Dont Solyndras financials tell the truth of this story?
Call this what it is: Solyndras abuse of federal taxpayer money is the Obama Administrations first bail-out of a green company. Begin first with the Department of Energys loan guarantee program, which backed Solyndras $535 million loan. This DOE loan guarantee program began under President George W. Bush. The DOE is not a financing agency, it is an oversight unit largely responsible for the safety of the countrys nuclear stockpile.
According to Solyndras financials, the company was troubled from the start. Its risk disclosures show the company opted to wade into a space dominated by China, which was making solar panels at about half the price of U.S. manufacturers, which are saddled by a bevy of taxes and rules that have ironically increased under the Obama Administration.
In fact, Solyndra was headed towards collapse anyway, before it got the federal money. Solyndras financials do have numerous risk disclosures that repeatedly note stiff foreign competition from China. But the company was running at a high cash-burn rate as it could not get a grip on its expenses. It only had sales of $100 million in 2010, and due to high costs and overhead, it ended up booking a net loss of $172 million that year.
It lost more than half a billion dollars total in the three years before it came with its tin cup to the DOE in 2009, seeing that the White House was now making headlines with its program of spending federal taxpayer money on green energy. With little attention paid to its losses, the federal government gave it money, despite the fact that Solyndra and other solar panel makers had already seen prices tumble beginning in 2008.
What was Solyndra doing? According to Joseph L. Chapman of Alhambra Investment Partners, Solyndra was at that point making tubes costing $4 per watt output, but was only able to charge $3.24.
Chapman adds: And yet, with the governments loan in hand, the company spent tens of millions building a new plant with a 500-million megawatt production capacity to add to its existing 110-megawatt facility, even though in 2010 total firm sales only came to 65 megawatts, just over 60% capacity for the smaller existing plant.
So, instead of funneling its money toward fixing its sales problems, Solyndra spent its cash, much of it coming from taxpayers, to build a splashy new factory from the ground up, even though plenty of empty office buildings were available.
Alhambras Chapman adds: Pardon our bluntness, but consider that breathtaking stupidity: a firm whose best sales year led to 65 megawatts of output in a 110-megawatt plant builds a new plant with 500-megawatts capacity to take the firm to 610 total. All this for 1,100 jobs, which are now gone in any case?
Solyndras chief backer was George Kaiser, an oilman who made billions of dollars and was a big donor and fundraiser for the Obama 2008 campaign, says Alhambra's Chapman.
EMac note: Information FBN obtained after this story went to press shows Kaiser himself was not an investor in Solyndra. Instead, the George Kaiser Family foundation he started and in which he has no involvement in--he is not an officer, worker, or trustee--invested in Solyndra. The foundation's investment unit holds the stake in Solyndra and was also part of the loan consortium.
Kaiser reportedly made more than a dozen trips to the White House starting in 2009. The Kaiser foundation along with another lender to Solyndra, the trust fund managing the Wal-Mart heirs money, lent a total of $75 million to Solyndra. They will get paid first before taxpayers get their $535 million back, as is the order of creditors in Solyndras bankruptcy proceeding.
This is wasteful, venture socialism, as Republican Senator Jim DeMint of South Carolina says. Chapman adds its likely that no Department of Energy employee will lose his or her job over this, as would happen in the private sector, where there is a cost to gross incompetence.
Chapman says: The broader philosophical point is that Solyndra-type deals are perfect examples of what F.A. Hayek called the fatal conceit of all socialist central planners: without the discipline of profit-and-loss calculation, without the benefit of being able to make use of the dispersed knowledge conveyed by open and competitive markets, it is only by accident that a government-backed enterprise will ever create economic value.