Solar company that got federal loan shuts down

Solar company that got federal loan shuts down
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Wednesday, August 31, 2011 - 4:32pm

WASHINGTON (AP) — A California solar-panel manufacturer once touted by President Barack Obama as a beneficiary of his administration's economic policies — as well as a half-billion-dollar federal loan — is laying off 1,100 workers and filing for bankruptcy.

Solyndra LLC of Fremont, Calif., had become the poster child for government investment in green technology. The president visited the company in May 2010 and noted that Solyndra expected to hire 1,000 workers to manufacture solar panels. Other state and federal officials such as former Gov. Arnold Schwarzenegger and Energy Secretary Steven Chu also visited the company's facilities.

But hard times have hit the nation's solar industry. Solyndra is the third solar company to seek bankruptcy protection this month. Officials said Wednesday that the global economy as well as unfavorable conditions in the solar industry combined to force the company to suspend its manufacturing operations.

The price for solar panels has tanked largely because of heavy competition from Chinese companies, dropping by about 42 percent this year.

Republicans have been looking into the Solyndra loan for months. The House Energy and Commerce Committee subpoenaed documents relating to the loan from the White House Office of Management and Budget. GOP Reps. Fred Upton of Michigan and Cliff Stearns of Florida issued a joint statement on Wednesday saying it was clear that Solyndra was a dubious investment.

"We smelled a rat from the onset," the two lawmakers said.

It was clear shortly after the company's announcement that its bankruptcy would serve as further ammunition to criticize an economic stimulus bill that provided seed money for solar startups. Upton and Stearns said they would continue to seek documents that would provide more details about the Solyndra loan.

"Unfortunately, Solyndra is just the latest casualty of the Obama administration's failed stimulus, emblematic of an economic policy that has not worked and will not work. We hope this informs the president ahead of his address to Congress next week," the GOP lawmakers said.

When Obama, who is seeking to address Congress to unveil a new jobs plan, toured the company's facilities, he said the investment was important because more clean energy would benefit the environment, the economy and national security.

"The future is here," Obama said during his visit. "We're poised to transform the ways we power our homes and our cars and our businesses. ... And we are poised to generate countless new jobs, good-paying, middle-class jobs, right here in the United States of America."

In a blog posting, Energy Department spokesman Dan Leistikow said Solyndra was a once promising company that had increased sales revenue by 2,000 percent in the past three years. The $535 million loan guarantee was sought by both the Bush and Obama administrations, he said, and private investors put more than $1 billion into Solyndra.

"We have always recognized that not every one of the innovative companies supported by our loans and loan guarantees would succeed, but we can't stop investing in game-changing technologies that are key to America's leadership in the global economy," Leistikow said.

Brian Harrison, Solynda's president and CEO, said that raising capital became impossible.

"This was an unexpected outcome and is most unfortunate," Harrison said in a statement.

Another solar company, Spectrawatt Inc. of Hopewell Junction, N.Y., filed for Chapter 11 bankruptcy on Aug. 19. Its CEO said in the filing that it could not compete with solar manufacturers in China, which receive "considerable government and financial support."

Spectrawatt's filing came four days after Evergreen Solar Inc. of Marlboro, Mass., filed for Chapter 11 bankruptcy.

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