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13 January 2011
Posted in
Editors Blogs
In April of 2008, Massachusetts Governor Deval Patrick announced that Evergreen Solar had agreed to establish their manufacturing facility at a former military base in Devens, Massachusetts. He said the state made the commitment “to show that there are ways in which state government, in working together with private industry and with the utility companies, could begin to create a different kind of environment, a different kind of business climate here, to grow that sector.” He said then that “it is happening.” And it was.
Evergreen had planned to hire 700, and at the time of closing was employing 800. They spent $340 million setting up the plant. Its product was installed in a very public display at the New England Patriots’ Stadium in Foxboro (pictured). See "Solar on New England Football Complex." But the business was stumbling. It opened a manufacturing facility in China, claimed they’d still keep manufacturing in Massachusetts, but were unable to keep it going.
Massachusetts taxpayers are irate over having invested $21 million in grants, $22.6 million in tax incentives, a $1-per-year lease for 23 acres, and $13 million for infrastructure improvements in Devens. Mad is understandable, but this is not the first time this has happened in Massachusetts (or elsewhere). In the 1990s, Massachusetts tax subsidies were granted to several companies that didn’t live up to their end of the agreement. Raytheon, for example, got a tax break and then closed several of its Massachusetts plants, laying off thousands.
While Massachusetts gave the Evergreen aid with “clawback” provisions, it’s unclear how much Evergreen has to return; Evergreen says just $4 million, but Housing and Economic Development Secretary Greg Bialecki said it will be “significantly more than that.”
While Evergreen and state officials go back and forth on who owes what, several separate issues have been raised. Some question why state government would get involved with private industry. In this case, the state of Massachusetts got involved with Evergreen because it wanted to bring in jobs, promote renewable energy, and to promote business in Massachusetts. It wanted to promote energy not just because “green” is the thing to do, but because energy is a public resource.
Evergreen is manufacturing in China because as they say, it costs half what it costs in Massachusetts. Ironically it costs less in China because government subsidizes the manufacturers. They also devalue their currency, but that’s a whole other issue.
The Evergreen debacle has thrown some mud in the face of the Deval administration and its green jobs agenda, but the good news is the lessons to be learned. The Evergreen debacle tells us not to stop supporting renewable energy, but to rethink how government subsidies work, strengthen clawback rules for corporate aid, and to work with the World Trade Organization to ensure that China (and others) sell goods for real prices.
