Those “Evil” Free Market Chinese- Part 1

Last month SolarWorld (a German company) and 6 un-named “Co-conspirators” filed a complaint in Congress alleging that China is “dumping” their solar panels in the US and that US manufacturers need to impose a tariff of 30% to 100% on all Chinese modules to “level the playing field.”

Apparently the free market is not good enough for these companies. They want something even better. They want their competitors (China specifically) to have to also make up for a 30-100% extra fee imposed arbitrarily on China (rather than Singapore or Thailand or the Philippines or Korea or …).

A few questions immediately jump to mind….

Who would end up paying these fees? (A: the American consumer- the end user. All of the middle men simply pass the fee down to the last one who pays).

Who would end up receiving these fees? (A: apparently they would be vacuumed up by the American government)

What would this do to prices of an installed solar system in the US? (A: It would increase the prices of an installed solar system for every American consumer. Without downward price competition there is no incentive to lower prices and they will not continue to decrease)

Would this help or hurt the US solar industry? (A: The industry as a whole would be hurt, as the current price decreases would not be able to continue).

Would this action actually help anybody? (A: It may in the short term help certain American manufacturers who now have a “corner” on the market).

Don’t domestic products already have an advantage by being here (or doesn’t it cost the Chinese something to ship the PV modules 14000 miles)? (A: Yes, locally made products already have a huge advantage in that they don’t need to be transported)

Why do we assume we should even make PV modules inside the US? (A: Good question. How many cell phones are made in American? NONE. )

From the questions above it becomes apparent that I do not believe for one second that putting a tariff on Chinese modules we would benefit the solar industry. We most certainly would not drive down the price of solar towards grid parity. I am not even sure that a tariff would in the long term help the companies that are requesting the “help”.

Think back to the American auto industry in the eighties. They complained about the Japanese car companies so much that there were tariff’s applied to the Japanese cars. Did that ultimately help the American car company? NO…. For a few years it helped the American auto industry compete, but eventually they had to compete on a level playing field and because they were used to having the advantage (without any tariffs) they could no longer compete. Look at Detroit and Flint today. They are poster children for how to wreck an industry.   Why would we want our Solar Industry to follow in those tragic footsteps?

Should the solar industry follow Detroit and Flint down the protectionist path. Absolutely not!! Not if we value inexpensive solar energy. Not if we are trying to actually reach grid parity. Not if we want to stay competitive.

On the other hand if we want to subsidize the inefficient at the expense of the efficient (and of the American consumer) then let’s slap them with those tariff’s.

Should Chinese athletes be required to run 30% further in the next Olympics? I think that would be a great way to really bring home the medals from the next Olympics. We would rack up. Of course we might also then need to make the athletes from many other countries run further as well. Then we would be assured of medals!

“Dumping” of panels is the complaint. Apparently that means selling panels at below cost in order to drive other companies out of business and gain market share.

Wait a minute… Aren’t all companies trying to gain market share? Wouldn’t ALL companies sell their products to the exclusion of all competitors until those competitors went out of business? That seems to me the very definition of a business. Competition makes everyone sharpen their pencils and give the very best price that they can.

Solar manufacturer’s should be aware that this is a tough market. The margins are thin and the Chinese (and the Tiwanesse, Phillipino, Korean, Japanese, etc…) are fierce and hungry competitors. This is no time for crawling to congress for “protection” from these low price competitors.

These low prices are what we in the industry have been working towards for years! We are approaching grid parity in many parts of the US. Don’t throw a wrench in that by starting a “trade war” with our competitors.

I know. You say they pay only a dollar an hour over in China, how can we compete? Well, if they have workers willing to compete at $1 per hour why should we try to compete with that? Let them make the modules. Just like they make the cell phones & TV’s. So what. It doesn’t bother me one iota that my cell phone is not made in America. It’s a great phone for a great price.

If the Chinese commit intellectual theft then solve the problem in civil court (like Westinghouse and Zep Solar are doing).

If the Chinese produce “junk” then the market will punish them.   Currently the PV modules coming out of China are of good quality- on par with (and sometimes above) the quality levels of American manufacturers.

But let’s be careful not to paint the whole country of China as nefarious evildoers for trying to deliver inexpensive PV panels. If we slap a tariff on all Chinese products we would be slitting our own throat. If we slap a tariff on all solar panels we would the slitting the throat of the solar industry.

At Simple EnergyWorks we sell complete PV kits using exclusively American made modules.   We like the quality of the Schott modules (made in Albuquerque, New Mexico).   But the reason that we are able to stay so competitive with pricing is because of Chinese manufacturers that are actively pushing down the price levels across the whole market!

 

This “complaint” has already started to throw a wrench in developers’s plans because they are now nervous that possibly the price of PV pannels will increase due to some misguided attempt by the politicians to appease these complainers. The whole complaint throws uncertainty into a fledgling solar market that needs all of the certainty that it can get!

Let me know what you think below!

Keep enjoying the Sun!

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