If there’s a take away from the Schott Solar situation, it is that, in the future, we must lay out all the benefits of doing business here and not give away the store to get the sale.
When any company closes its doors it creates victims, but the victims are not limited to the immediate workforce.
Plant closings have profound consequences for the communities in which the companies reside, the vendors that serve them, and the local and state governments’ tax bases.
Companies must be treated individually and as part of a larger collective. In the case of Schott Solar, it is not only an outstanding individual company but very much an integral part of a collective of foreign-owned, U.S.-based businesses that are part of the renewable energy industry community.
New Mexico will have to wrestle with the body blow dealt to its high-technology company recruitment strategy by the departure of a world-class company.
Collateral damage is still damage
Some people will want to compare the loss of Schott to the bankruptcy of Solyndra since both companies were working in the solar energy field.
That would be a big mistake. No two companies could be more different than these two.
Schott’s corporate history goes back to 1884 in Jena, Germany when it started out as a technical laboratory specializing in glass.
Today, the company produces a wide variety of innovative glass products for high-technology commercial applications.
Its entry into photovoltaics dates back to 1958. Solar panel work, which started in 2001, was a natural outgrowth of that early pioneering work with other glass applications.
Solyndra was a 2006 startup in search of a federal government life-support system it could use to free-ride to the front of the line, whereas Schott wasn’t even standing in line!
Solyndra got its wish when the Department of Energy opened its purse and gave the company $535 million of our taxpayer money – money that is now irrevocably lost, squandered away without any federal provision for pay-back.
To its credit, Schott Solar saw the handwriting on its wall and did not prolong the painful decision to dissolve its operations.
This stood in stark contrast to Solyndra, which knew it was doomed yet put off the inevitable, spent the Energy Department grant and then waited for another bite of the federal apple.
Schott’s decision to cut its losses and get out of the business of solar panel production must have been a difficult one for a proud 125-year old company because no company wants to give up the future, especially one in which it has made such a significant investment.
Soon Schott will close more factories in Europe and its solar headquarters in Germany, effectively putting itself out of the multi-crystalline photovoltaic business entirely.
Companies cannot pay today’s bills with tomorrow’s hopes
Schott’s strategic position was untenable, especially in the face of an onslaught of cheaply-made Chinese solar panels that were being dumped onto our market.
This strategy has gone on for three straight quarters and it has cost Chinese manufacturers hundreds of millions of dollars.
It is, however, a price they are readily prepared to pay for market domination (Chinese manufacturers are getting credits through their government banks, which are supporting their efforts).
In the face of this unfair competition, Schott did what any responsible company must do to stem the flow of red ink. It called it quits, globally.
Now I’m not suggesting that we should give them the keys to the city and a going-away party. I’m simply saying that we have to accept the inevitability of losing some companies from time to time. We must learn from the experience, adapt, and redouble our efforts.
While our neighbors may be cutting fancy deals to attract big companies to their states, New Mexico can simply not afford to give a blank check to anyone to locate here anymore.
If our infrastructure, workforce and other strengths aren’t good enough for prospective investors, we must improve them rather than use no-strings cash giveaways as the dealmaker.
I’d much rather leave the negotiating table with my shirt still on my back and my reputation intact than to gamble with taxpayer dollars.
Invest in technology or companies
Solyndra has become the poster child for a failed federal policy that has favored companies over technology.
It seems that the feds have adopted the Nancy Pelosi approach to government grant-giving: “We’ll have to pass the bill now so that we can find out what’s in it.” Translated, that means: Trust me. Give me your money, and we’ll deal with the outcome later.
Before we slam the door on Schott as it leaves, we ought to consider that the company has been a great corporate citizen.
It has probably paid out nearly $50 million in wages and benefits to its workers over the past three and half years, most of which has trickled down into our local economy.
It has taught a few hundred semi-skilled or unskilled workers a valuable trade, and it agreed to be used in our state’s effort to entice more companies to come to New Mexico.
I had the privilege of meeting many of Schott’s employees and its management team and I can honestly say that they are a class act and wish them well.
If there’s a take away here, it is that we must deal with prospective investor companies from a position of reasonableness in the future.
We must lay out all the benefits of doing business here and not give away the store to get the sale.
We should never be like the New York merchant who was selling his goods below cost, and who, when he was asked by his friend how he was able to do it said, “volume.”
Stephan Helgesen is a former diplomat and former Director of the State of NM Office of Science and Technology. He is now CEO of his own export consulting business and is the Honorary Consul for Germany in New Mexico. He can be reached at: firstname.lastname@example.org.