Wednesday, April 29, 2009
The recently passed stimulus package contains $32.8 billion in incentives for renewable energy, heavily skewed to photovoltaic solar power. It is primarily in the form of tax incentives to manufacturers to ramp up production of solar cells and loan guarantees to folks who want to install them. The goal is to dramatically increase the US market share of PV arrays from the 10% we now hold. Yet within 6 weeks of the signing of the stimulus package BP Solar announced it will lay off 140 employees at its Frederick Maryland plant and outsource module assembly to Europe to save 25% in production costs. Even with all the incentives in the offing, they simply couldn’t compete. I have always been amazed by Democrats’ lack of grasp of market economics. Their assumption is if a product is made in the US, consumers will line up to buy it. The reality is there must be demand for the product, it must be made and sold at a competitive price and it must live up to acceptable quality levels to succeed. One only wonders what will happen when Obama starts running GM and Chrysler. With his motivation to produce not what the public wants, but what he thinks they should have and then having the UAW as co-owners and decision makers with their reputation for producing shoddy products, it should make for challenging times. Very challenging! It won’t help either, that nearly half voted against Obama and are terrified with the direction of the country. Losing half your market isn’t a great way to start. The success of Obama Motors will definitely be an up hill battle.