US manufacturing sector employment peaked in the late 1970’s at more than 19 million jobs. Since then, the decline in employment has fallen to a projected low of less than 12 million jobs, according to figures from the US Bureau of Labor Statistics.
Hopes by the Obama administration that alternative energy manufacturing would help turn that around were always more firmly grounded in hope than reality. The jobs that have been lost since around 2000, when manufacturing employment stood at more than 17 million jobs, will not be coming back, and even the new jobs in alternative energy are fading away. As a manufacturing powerhouse, the lights are slowly being turned out in the US.
The loss of 800 jobs at Evergreen Solar, Inc. (NASDAQ: ESLR; ESLRD) in Massachusetts underscores the difficulty that US solar makers have in competing for manufacturing jobs. The company is moving all its manufacturing to China, where wages average about $300 a month for a factory worker compared with more than $5,400 a month in Massachusetts.
According to The New York Times, Evergreen lowered its production costs at its Devens, Massachusetts, plant to $2/watt at the end of 2010, but that Chinese manufacturers like JA Solar Holdings Co., Ltd. (NASDAQ: JASO), Trina Solar Ltd. (NYSE: TSL), and LDK Solar Co. LTD (NYSE: LDK), now manufacture solar PV panels for $1.35/watt or less.
China’s support for its solar makers is well known. The government has offered more than $25 billion in loans to its solar panel makers, bringing complaints from the United Steelworkers union to the US Trade Representative alleging that China is violating WTO policies. The USTR has agreed to investigate the complaint, likely to start after the visit of China’s president to the US which begins today.
Evergreen’s CEO doesn’t point to low wages as much as he does to the availability of cheap loans both to Chinese companies and to foreign companies who build facilities in China.
China’s determination to lead the world in providing alternative energy products has pushed it past the US in wind turbine building as well as in making solar panels. What remains are installation jobs, by definition a local service that can not be easily outsourced to a foreign company.
But installation jobs, especially for wind turbines, are temporary. And while utility-scale solar projects have been a target of US makers like First Solar Inc. (NASDAQ: FSLR), Sunpower Corp. (NASDAQ: SPWRA), and MEMC Electronic Materials, Inc. (NYSE: WFR), China’s LDK Solar has just purchased a controlling stake in a US installer.
Having lost so many manufacturing jobs in the last 10 years makes it hard to believe that manufacturing can once again be the force that it was decades ago. Whether or not those jobs can be replaced with something similar, like installing alternative energy products, isn’t entirely clear either, but it’s difficult to see how the US can replace about 5 million lost manufacturing jobs with jobs installing solar panels and windmills.