January 12, 2011
Massachusetts
Massachusetts
Plant will shut after $58m in state aid; Evergreen Solar to cut 800 jobs as it tries to compete with China
By Todd Wallack, Globe Staff, The Boston Globe, www.boston.com 12 January 2011
By Todd Wallack, Globe Staff, The Boston Globe, www.boston.com 12 January 2011
Evergreen Solar Inc. will eliminate 800 jobs in Massachusetts and shut its new factory at the former military base in Devens, just two years after it opened the massive facility to great fanfare and with about $58 million in taxpayer subsidies.
The company announced yesterday that it will close the plant by the end of March, calling itself a victim of weak demand and competition from cheaper suppliers in China, where the government provides solar companies with generous subsidies.
Evergreen itself has a factory in Wuhan, China, built in collaboration with a Chinese company, Jiawei Solarchina Co. Ltd., and with money from a Chinese government investment fund. The company had previously said it would shift some production from Devens to the Wuhan plant but yesterday was the first time it said Devens would be closed.
“This is a grueling decision for any management team to make,’’ said Evergreen spokesman Michael W. McCarthy, who added that company officials struggled over the fate of the Devens plant “for a particularly long time.’’
The Devens closing is a major hit to Governor Deval Patrick’s efforts to make Massachusetts a hub of the emerging clean-energy industry. The administration persuaded Evergreen to build at Devens with a package of grants, land, loans, and other aid originally valued at $76 million. The company ended up taking about $58 million, one of the largest aid packages Massachusetts has provided to a private company, and the governor was the featured guest at Evergreen’s ribbon-cutting in July 2008.
“We are disappointed to learn about Evergreen Solar’s decision,’’ Greg Bialecki, Patrick’s secretary for housing and economic development, said in a written statement. “The company has worked hard to compete against heavily subsidized foreign competition and to live up to its commitments to the Commonwealth.’’
In the 2010 gubernatorial campaign, Patrick was heavily criticized by his rivals for providing so much public aid to a company during tight fiscal times. One mark of the sensitivity of the issue: Evergreen yesterday requested that the State Police provide four troopers for security at the Devens plant until it closes, two Massachusetts officials said.
The plant closing is also likely to revive the debate over the use of state funds to help private companies under economic development programs.
“I really hope the Legislature and the governor take a hard look at these tax-break strategies for big corporations,’’ said state Senator James B. Eldridge, a Democrat from Acton whose district includes Devens. Eldridge has pushed to give the state more authority to recover public funds from companies that fail to deliver jobs and live up to commitments they make.
In exchange for the state’s help, Evergreen initially agreed to employ 350 people at the Devens plant for seven years. It exceeded that goal – until now.
Massachusetts officials said not all the money is lost or wasted. For example, the state spent $13 million on roads and other improvements for Evergreen, but they could now encourage other businesses to locate or expand at the former base.
Some of the government incentives have so-called claw-back provisions that allow the state to recapture money if it determines Evergreen did not meet its commitments. The formula, however, is complicated, and there are legal caveats.
“It’s going to take computation and rereading legal documents,’’ said Janet Hookailo, a spokeswoman for the quasi-public Massachusetts Development Finance Agency, which administers Devens and provided much of the state aid.
Evergreen said yesterday that it expects that it will have to repay between $3 million and $4 million.
Hookailo said MassDevelopment will try to find other companies to fill the vacuum at Devens. But that will be difficult, given a sluggish economy that has produced a surplus of commercial real estate. Further complicating the future at Devens: Evergreen owns the plant and has a 30-year lease on the land.
The state’s aid package included nearly $21 million in grants and $22.6 million in tax incentives, as well as a $1-per-year lease for the 23 acres where Evergreen built the 450,000-square-foot plant.
In a news release, Evergreen’s chief executive, Michael El-Hillow, said production costs at Devens were too high compared to those in China, at a time when retail prices for solar panels continue to plummet – 10 percent in just the past few months.
“As industry selling prices continue their rapid declines into 2011, panel manufacturing in Devens, either fully or partially, is no longer economically feasible,’’ El-Hillow said.
Evergreen Solar will remain based in Marlborough. Some of the 800 laid-off employees work at the headquarters. The company will continue operating a plant in Michigan, which provided Evergreen with $5.7 million in tax incentives.
Closing the Devens plant will help Evergreen preserve its remaining cash. Burdened with debt, Evergreen reported losing $54 million through the first nine months of 2010 and since its founding in 1994 has run up a deficit of over $685 million.
In September, its longtime chief executive, Richard Feldt, left Evergreen.
Yet a Massachusetts Clean Energy Center survey found employment in the industry grew 59 percent over the past three years, to more than 10,000 – even after excluding Evergreen.
“Clean energy remains a great opportunity for Massachusetts,’’ said Robert Keough, spokesman for the Department of Energy and Environmental Affairs.