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Another of Obama’s Cargo Cult Companies Fails

Yesterday the Danish wind turbine manufacturer, Vestas, announced it had laid off 800 US workers and as many as 1600 might be laid off by the end of the year.

Danish wind turbine maker Vestas said the impending expiry of a U.S. tax credit had exacerbated a fall in orders for next year, forcing it to make more than 800 job cuts in the United States and Canada so far this year.

With the Production Tax Credit (PTC) on renewable energy set to expire at the end of the year, Vestas Wind Systems A/S had previously said it could be forced to lay off a total of 1,600 employees in North America if the scheme is not renewed.

Vestas, which is battling the effects of government austerity measures in various countries, said the 800 staff cuts so far this year represented 20 percent of its North American workforce.

This is an emerging trend in companies whose business model is based on rent-seeking under Obama’s “green energy” boondoggle, not producing a product anyone really wants.

So far this year, companies in Arkansas, Colorado, Florida, Iowa, Kansas, North Dakota, Ohio, and Pennsylvania have all cancelled projects or laid off workers. In the last month alone, more than 1,334 manufacturing workers have lost their jobs. That tally comes from individual announcements made by companies since late August.

The world’s largest wind manufacturer, Vestas Wind, says it may lay off 1,600 American workersin the next year if the production tax credit is not extended. That temporary credit offers owners of wind farms 2.2 cents for every kilowatt-hour of wind generated. The American Wind Energy Association says the credit has helped raise $20 billion in private investment over the last five years, supporting 75,000 jobs.

However, according to analysis from a prominent consulting firm, the wind industry could shed up to 37,000 jobs if the wind tax credit is not extended past 2012.

But wind energy isn’t unique in the stupendously bad “investments” (that’s what venture Marxists call squandering you tax money). The “investments” made by this regime are nothing short of disastrous. From the National Center for Policy Analysis’s Environment Blog:

 Bankrupt Green Energy Companies that received substantial federal and/or state subsidies:

  • Beacon Power Corp: Received $43 million in federal loan guaranteed in 2009 and also received $29 million in PA grants – Bankrupt in October 2011
  • Ener1 (parent company of EnerDel)Received $118.5 million in federal loan guarantees — Bankrupt in January 2012 – has since exited bankruptcy
  • Evergreen SolarReceived $58 million in MA loan guarantees (an undisclosed portion sourced from federal ARRA block grant) — Bankrupt in August 2011 with $485.6 million in debt
  • Solyndra:  Received $535 million in federal loan guarantees in 2009 and $25.1 million in CA tax credit — Bankrupt in August 2011
  • SpectraWatt:  Received $500,000 in federal loan guarantees in 2009 — Bankrupt in August 2011
  • Babcock and BrownReceived $178 million in federal grants in December 2009 (4 months after it went bust) – Bankrupt in early 2009
  • Mountain Plaza Inc.Received $424,000 in federal grants through TN Department of Transportation in 2009 — Bankrupt      in 2003 and again in June 2010
  • Solar Trust of America (parent company: Solar Millennium)Received $2.1  billion loan guarantee in April 2011 – Bankrupt in April 2012

Other Subsidized Green Energy Companies in decline:

  • A123Received $300 million in federal grants and $135 million in MI grants —Declining orders and have forced multiple layoffs
  • Amonix, Inc.Received $5.9 million in federal tax credits in 2009 through  ARRA —Laid off 2/3 of work force
  • First SolarReceived $3 billion in federal loan guarantees — Biggest S&P loser in 2011, CEO fired
  • Fisker Automotive$529 million in federal loan guarantees — Multiple 2012 sales prediction downgrades for first car release, delivery and cash flow troubles;Assembling cars in Finland
  • Johnson ControlsReceived $299 million in federal grants in 2009 — Low demand caused cancellation of a new factory, operating at half capacity
  • Nevada GeothermalReceived $98.5 million in federal loan guarantees in 2009 —Defaulting on long-term debt obligations, 85% drop in stock value
  • Sun PowerReceived $1.2 billion in federal loan guarantees — Debt exceeds assetsFrench oil company took over last fall
  • Abound SolarReceived $400 million in federal loans in 2012 — ½ work force laid off
  • BrightSource Energy$1.6 billion federal loan approved in April 2012 – loan obtained through political connections with the administration; absent the loan, Brightsource’s solar power purchase would have fallen through.

We can even update this list today as one of the companies listed as being “in decline” on the above list, A123, a company that makes lithium batteries for the cars no one buys, declared bankruptcy:

 A123 Systems Inc. (AONE), the electric car battery maker that received a $249 million federal grant, filed for bankruptcy protection after failing to make a debt payment that was due yesterday.

The filing may fuel further political debate over government financing of alternative-energy and transportation businesses. Federal grants and loans to companies including A123, Fisker Automotive Inc. and Tesla Motors Inc. have drawn scrutiny from congressional Republicans following the September 2011 bankruptcy filing of solar-panel maker Solyndra LLC two years after it received a $535 million loan guarantee from the U.S. Energy Department.

President Barack Obama called A123 Chief Executive Officer David Vieau and then-Michigan Governor Jennifer Granholm during a September 2010 event celebrating the opening of the plant in Livonia, Michigan, that the company received the U.S. grant to help build.

“This is about the birth of an entire new industry in America — an industry that’s going to be central to the next generation of cars,” Obama said in the phone call, according to a transcript provided by the White House. “When folks lift up their hoods on the cars of the future, I want them to see engines and batteries that are stamped: Made in America.”

While the regime has been throwing away our national treasure on these bogus and ephemeral efforts it has set about destroying real jobs in mining, energy, and petrochemicals.

This is just another step in the Obama regimes showing its affinity for cargo cult economics over real economic growth (here | here | here | here | here). The jobs that are being lost via these layoffs are nothing more or less than a modern day Works Progress Administration that created bogus jobs, sapping productivity and dragging out the Great Depression, in the mistaken belief that spending tax dollars on things that no one wants to buy creates a middle class.

This will be a huge test for the Congress if Mitt Romney is elected. Will they extend this boondoggle tax credit or will it stop the distortion of market forces and the drain on the public treasury by pulling the plug.

 

 

 

 

 

 

 

 

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