Son of migrant workers, now solar CEO: Don't put tariffs on Chinese solar panels
The US government is considering special tariffs on solar panels that are imported from China. These tariffs could result in higher costs for solar energy components, endangering the vibrant US solar industry and derailing America's progress toward job creation and energy security.
Growing up in a family of migrant farm workers, I learned early on that, in order to succeed, you have to work harder and smarter than others, and you have to stand on your own two feet. Now I’m the CEO of GT Advanced Technologies, a leading global provider of advanced production equipment and technology for manufacturers in the solar energy and LED industries.
Heading up a company that competes successfully in the global economy, I’m guided by the lessons I learned long ago: Getting ahead means you have to better than your competition. You can’t succeed in business over the long haul unless you can do so without government handouts and other artificial advantages.
That’s why I’m so concerned that the US government is considering special tariffs on solar panels that are imported from China.
With more than 500 employees in the United States and 700 employees worldwide, we have annual revenues of almost $1 billion, pay more than $75 million in federal taxes, don’t get any federal government subsidies, and sell 90 percent of our products overseas. Faced with stiff competition in the global market in which we all compete, SolarWorld – a German-owned company with a facility in Oregon – has petitioned the US Commerce Department to impose special charges that, in some cases, could be up to 250 percent on some imported solar panels.
[Editor's Note: The original version of this piece misstated the number of GT Advanced Technologies employees in the US.]
The major trade issues between China and the US affect every export-oriented industry, not just solar panels. This issue should be addressed by bilateral negotiations between the two countries. The answer is not imposing a special tariff – really a tax – on solar panels. That “tax” would be built into the costs of solar energy systems, making solar power much more expensive for electric utilities and commercial and residential consumers.
Because of our manufacturing model, such tariffs would not directly impact our company, but I am still deeply concerned about the tariffs being considered. International competition has driven the availability of lower cost Chinese products and has been a key factor in reducing costs throughout the US solar industry.
My concern is that the tariffs being considered will likely result in higher costs for solar energy components and a trade war with China. These developments would seriously endanger the vibrant US solar industry and derail our country’s progress toward creating good jobs, attaining energy security, achieving a cleaner environment by substituting renewable fuels for fossil fuels, and lowering our dependence on imported oil.
More specifically, far from benefitting the US solar sector, the huge price increase that SolarWorld seeks on some imported solar panels would have a devastating impact because the affordability of solar electricity will be diminished and the growth in investments and jobs that has occurred in the last several years could come to a stop. Higher prices could in fact jeopardize billions of dollars of renewable energy contracts, including $11 billion for projects placed in 2012, placing thousands of jobs at risk.
Yes, China’s government supports its solar industry, as governments in the US, Germany, Japan, and several other technologically advanced countries do for their industries. In the US, this support includes a patchwork of programs, including research grants, tax credits, and Renewable Portfolio Standards (required increases in energy produced from renewable sources) in 29 states. In spite of these programs, the US still needs a clearer commitment to transition away from fossil fuels to renewable energy, such as solar and wind power. But a trade war with China would make progress even more difficult.
After years of private investment, successful innovation, and, yes, some government support, our industry can finally coming into its own. At current energy prices, utilities, businesses, and homeowners across the country are increasingly turning to solar power as a safe and reliable source of energy. The solar industry is a bright spot in a cloudy economy, with almost 5,000 companies and an annual growth rate of 6.8 percent.
The solar workforce has doubled since 2009, with more than 100,000 high-skilled, high-wage jobs similar to those at my company GT, including research, engineering, designing, installing, and selling. The sector is expected to add another 24,000 jobs this year.
In industry after industry, tariffs have had harmful results. For instance, as The Wall Street Journal recently reported, a US tariff on Chinese tires did not create new jobs at American tire-makers but simply raised prices for American consumers.
Instead of a trade war, the US solar industry needs to continue competing and winning in the global marketplace. Without protectionist policies, the US solar industry has a $2 billion trade surplus with the entire world. Targeting Chinese imports with special tariffs would likely result in retaliation by China, and the only winners in the ensuing trade war would be other solar powerhouses, such as Germany, not US industry.
Ultimately, protectionism fosters dependence, not innovation, and high-cost business models, rather than the lean and nimble approaches that are most successful in global competition. Now is the time for the US solar industry to move forward with creating American jobs and enhancing our energy security, not to step backward and lose the progress we have worked so hard to achieve.
As GT and many other US based companies that face fierce Asian competition every day have demonstrated, the American solar industry can win. We just have to be better than our competitors.
Tom Gutierrez is CEO of GT Advanced Technologies, a leading global provider of advanced production equipment and technology in the solar and LED industries, headquartered in Merrimack, N.H.