Wednesday, August 31, 2011

The Folly Of "Green Jobs" Spending

In March of 2009 Spanish economist Gabriel Calzada released a study that showed that  every “Green Job” created by the Spanish Government consumed enough resources to create 2.2 jobs in the private sector. Calzada concluded, 
"Green jobs were economic losers, destroyers of wealth and productivity.” 
Beyond that, he found that better than 70% percent were short-lived installation positions, rather than the long-term jobs that the Government promised. Currently, as much as 11% of Spain’s GDP is being “invested” (spent/wasted) on subsidies for renewable energy technologies. With Spain's unemployment in excess of 20% and rising and it’s economic health in serious question one cannot help but conclude that at best, the program isn’t working and given Calzada’s study it’s not a stretch to think it may be making things worse.

On our own shores we have some startling parallels available to us. The US Department of Energy has, over the last few years allocated in excess of $508M to 41 states in support of its “Better Buildings Neighborhood Program". 600 jobs (Nationwide) have been created at a cost of $846K each). Reports show that a number of cities participating in the program have had “trouble” finding success. Toledo, Kansas City & Phoenix are among the least effective at a combined 72 jobs at a cost, to you, of $65M. The Inspector General of the DOE reports that among the top 10 recipient cities the two most successful have met less than 2% of their planned goals.

It was widely reported this week that in Seattle, one of the Nations “Greenest” cities that the $20M Federal Grant to support weatherization of area homes had resulted in the creation of 14 jobs.

That wasn’t a typo, that’s 14 jobs at a cost of $20M…..that’s $1,428,571.00 per job. Area contractors who’ve attempted to participate in the program blame Federal regulation for the failure stating that the central planners require that employees be paid $21hr with full benefits including retirement funding when the prevailing wage for new employees in that industry is $12hr.

Further, the weatherization carries an average cost to the consumer of over $10,000 after Federal incentives and will take in excess of 30yrs to provide an ROI. The Government has wastefully spent our tax dollars in an effort to create a market for a product that consumers neither want nor would they be prudent to patronize.

Closer to home here in the Bay Area we have Solyndra. Solyndra, is a manufacturer (cough-not anymore-cough) of Photovoltaic Solar Panels and mounting systems for commercial buildings and is the darling of President Obama and his past “Green Jobs” Czar Van Jones. The company has received $475M in direct Federal funding and $535M in Federal Loan Guaranties.

In May of 2010 President Obama visited Solyndra in Fremont and touted the firm as, 
“leading the way toward a brighter and more prosperous future” 
...and cited it numerous times as a clear success story from the Government’s $787B economic stimulus package. Said the President during his visit,  
“Less than a year ago, we were standing on what was an empty lot.  But through the Recovery Act, this company received a loan to expand its operations; This new factory is the result of those loans.”

It’s somewhat ironic that the visit consumed 43,773 gallons of fuel split between Air Force One and the Presidents Marine Corps Air detachment. 43,773 gallons of fuel consumed in the name of “Green Jobs”


But back to Solyndra…an interesting thing I discovered while trying to map out a cycling route on Google maps is this:

That’s Solyndra’s Corporate HQ on Kato Rd in Fremont. Notice anything unusual about the roof? There’s a smattering of small PV panels mounted here and there, likely engineering test units. One would think that a company that specializes in Solar Panels and mounting systems for commercial buildings would have their entire roof covered with the things. Odd…but I digress. 

Back in June of last year Solyndra pulled their bid for IPO on the back of a FY that showed $58M in revenue against $108M in COGS. That’s not counting SG&A and CapEx. PV Solar is a low-margin business to begin with and losing $0.84 for every $1 in sales is not a recipe for success…but then, when have you seen a Government Investment go well?

Documents released by the Federal Financing Bank show that Solyndra was reciving their loans at ~1.5%. Not bad eh? Especially when others in the industry were getting theirs at ~3.2%-4.6%. So despite highly favorable financing terms and gobs & gobs of Federal Funding they were still losing money hand over fist.

One can only speculate as to why Solyndra was granted such “Golden Child” status, but the proximity of the recently closed Fremont NUMMI auto plant (union shop) and the Oakland based Van Jones certainly make you go “hmmm”. Further, one of Solyndra’s largest individual investors is Oklahoma Oil Billionaire, George Kaiser who as a “bundler” raised at least $50k for President Obama’s 2008 campaign. I don’t want to go too far down that road as the matter of Solyndra’s funding inconsistencies is already under investigation by Rep Darrell Issa and the Federal Office of Management and Deputy Budget Director….but where there’s smoke........

On August 19th Solyndra announced that their founder and former CEO, Dr. Chris Gronet was leaving and they wished him “success in his new endeavors” (…ouch.) with no mention of a replacement.

This morning, Solyndra’s 1100 Fremont employees were met at the front door by security personnel and told to go to their desks, collect their personal items and leave. Solyndra, just a few months after completion of their new, $700M manufacturing facility and ensuing Presidential boondoggle/slobberjob is going tits-up. They have suspended all manufacturing, purchasing and deliveries announced this morning that they will file Ch-11.

The sound you are hearing is that of your money, and lots of it, being flushed down the toilet.

Gabriel Calzada…was right.

1 comment:

  1. Very thoughtful and compelling article on the "green energy" fraud perpetrated on us by the Obama government. Well done sir..bookmarking your blog.