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In Solar Trade Dispute, Will Proposed Tariffs Cost Industry Jobs?

Mark Holohan, solar division manager at Wilson Electric, stands in his company's warehouse outside Phoenix, Ariz. Solar installers say a proposed tariff could sink their business model, while several solar manufacturers say they need shelter from an oversupply of cheap panels made overseas.
Will Stone
/
KJZZ News
Mark Holohan, solar division manager at Wilson Electric, stands in his company's warehouse outside Phoenix, Ariz. Solar installers say a proposed tariff could sink their business model, while several solar manufacturers say they need shelter from an oversupply of cheap panels made overseas.

Before a solar project, Mark Holohan usually gives his customers plenty of time to mull over the cost. But lately, installers are scooping up panels so quickly that Holohan has trouble guaranteeing a price for too long.

"We have a sort of panic buying mode in the marketplace right now. Inventories have fallen. Availability has decreased. Prices have risen," Holohan, the solar division manager at Wilson Electric, said over the clatter of machines and workers in the company's warehouse outside Phoenix, Ariz.

Across the country installers are stocking up on inventory as they brace for what could be a major turning point for the booming U.S. solar industry: a possible trade barrier.

"There's a threat of a very large price hike looming if the total request on the trade case is granted and so that makes life very difficult for us," he said.

Others have been less measured when describing the possible fallout of a new trade case in front of the U. S. International Trade Commission (ITC). The Solar Energy Industries Association (SEIA), an industry trade group, is calling the matter an "existential threat" that could almost immediately result in the loss of a third of all solar jobs.

"If the full trade request is granted, our solar business will drop to an unacceptable level," Holohan said.

Like many installers, he's relied on a cheap, plentiful supply of solar panels made overseas, mostly in China and Southeast Asia. Those low prices have helped solar compete with fossil fuels and increase its workforce to nearly a quarter of a million jobs, according to the SEIA. Last year, the U.S. installed nearly twice as much solar as in the year before, the association also reported. Southwest states like Arizona and Nevada are some of the top markets.

But some domestic makers of solar panels believe that boom has come at their expense.

The trade dispute revolves around two U.S. based manufacturers of panels, Suniva and SolarWorld. The companies argue the flood of inexpensive imports, specifically crystalline silicon photovoltaic (PV) cells and modules, has dealt "serious injury" to the domestic manufacturing industry. They've petitioned the ITC to impose steep tariffs on all foreign imports of that equipment.

Attorney Tim Brightbill of law firm Wiley Rein, which is representing SolarWorld, argued the country's solar panel manufacturing sector can rebuild and support a thriving solar industry.

"But unfortunately it can't compete with foreign governments, foreign dumping and subsidies and a global surge of imports, and they shouldn't have to," Brightbill said.

In fact, SolarWorld successfully pushed for tariffs on Chinese imports in 2012, but Brightbill said those safeguards have not solved the problem. That's why Suniva and SolarWorld have turned to Section 201of the Trade Act of 1974. It's a provision designed to give temporary relief to an industry that has suffered because of increased imports.

The decision would not, however, apply to just a few countries, but rather all panels made anywhere in the world.

"If you lose the manufacturing, then all the innovation, all the know-how, all the investment will go overseas," Brightbill said.

He cited a study conducted by Mayer Brown — the firm representing Suniva — that said a tariff could actually result in an increase of more than 140,000 jobs, many of those in manufacturing.

The case kicked off on Aug. 15 with an all-day hearing that pitted much of the solar industry against the two manufacturing companies. Next month, the ITC will decide whether to let the case go forward. If it does, the final decision will be in the hands of President Donald Trump.

"I think this case aligns very closely with the administration's goals of increasing U.S. manufacturing," Brightbill said.

Aaron Fellmeth, professor of international law at Arizona State University's Sandra Day O'Connor College of Law, agreed.

"I don't see any incentive for him based on his past positions to oppose a safeguard measure," Fellmeth said.

He cited Trump's criticism of NAFTA, support for U.S. manufacturing and fossil fuels. But he predicts that move may backfire: "There is no example in history of an industry that has prospered in the long run thanks to a safeguard measures."

He said consumers will pay more for solar and the ultimate impacts of a blanket tariff won't be confined to the solar industry either. Countries will try to recoup their losses by imposing duties on other U.S. exports, he said.

"You pluck one strand from the web and it may weaken the entire web," Fellmeth said. "It's classic bad politics. It's a short term fix that ignores the long-term problem."

Other sectors of solar manufacturing will suffer too, said Jeff Spies, head of policy at Quick Mount PV, which is based in California and makes equipment to mount solar panels.

"If the intention is to defend U.S. manufacturing, the decision is clear: dismiss this case with no penalties," Spies said.

The solar supply chain already had tens of thousands of existing manufacturing jobs, but Spies said those are at risk if the U.S. puts in place the proposed tariffs.

"I can't even think of anything that comes close to the threat that we see with this particular trade case," Spies said. "Ninety-thousand jobs lost in any other industry would have a lot of politicians freaking out."

That appears to be happening. A bipartisan coalition of senators from states like California and Kansas recently sent a letter opposing the trade protections. A number of conservative free market groups like the Heritage Foundation and the American Legislative Exchange Council (ALEC) also came out in opposition to the move.

What makes this trade case especially infuriating to many in the solar industry?

The two companies asking for the tariffs aren't "all American."

SolarWorld is the subsidiary of a German company, which recently declared insolvency. Founded in Georgia, Suniva declared bankruptcy earlier this year and is majority owned by a Chinese firm.

"While they have manufacturing here, they aren't even headquartered here," Holohan of Wilson Electric said, shaking his head. "It's definitely a world market we are dealing with."

Copyright 2017 KJZZ

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Will Stone is a former reporter at KUNR Public Radio.