Thursday, March 21, 2013

Investing In Nothing... In Oregon

SoloPower - another solar panel disaster - is the latest Fed/State/Private Sector partnership to collapse.  This one, right here in Oregon.  The feds guaranteed $197Mil in loans but SoloPower never met the minimum requirements to cash in.  Narrow escape for us, right?  Well, no.

SoloPower (SP) opened last September.  Promised four production lines and "450 well-paid green jobs."  They eventually hired 60 employees but started laying them off in January.  

Now the CEO, chief tech officer and president have left.  SP is selling some of their equipment and trying to "restructure its $197 million federal loan guarantee."  Getting that Fed money, yessiree, that's the answer, according to new management. 

Could happen, the feds won't say what they need to do to get it back but it isn't out of the question.  Should be, but isn't.
"(T)he DOE would not say what the benchmarks are or if the feds will lower the bar in order to help the company survive."
But SoloPower isn't trudging this lonesome road alone.  Oh, no.  SoloPower is headquartered right here in my home state of Oregon.  Oregon is a big supporter of hopeless green ideas like Solopower.  Calls 'em "investments"... of your tax money.  No proof required.  All you have to do is convince some bureaucrats that your idea has legs and... free Mexican food.  In this case, free money.  Your money.  Oregon counties can't afford to staff their own jails but there's free state OreBux if you've got a good sales pitch.

What did SP need to do to get that state money?  They "had to employ 39 people and convince bureaucrats that it would still be in business in five years."  Like I said, a sales pitch.  "Just convince us and do some hiring and the money is yours."  

So they hired the first batch of hopeful employees and they promised to stay in business for five years.  The State of Oregon gave SP $20Mil in salable tax credits last December. 

That was way back, oh, three months ago.  Did SP need those credits?  Probably not so much since start-up companies in competitive industries rarely make any money for years.  Just ask Jeff Bezos.  So what did SP do?  They sold the credits... for $13.5Mil, cash. 

Think about it.  We're out $20Mil (someone's gonna use those credits to offset their tax liability or increase their refund) and the intended beneficiary only got $13.5Mil. 

And what about that 39 jobs part?  They did the hiring and they got the salable tax credits.  In December.  Last December.  90 days or so ago.

And when did they start their initial layoffs?  That was last January, the one that ended 80 days ago.  Got the money one month, fired their employees the next month and never so much as finished their first production line.  I'm not saying that was their business plan all along... OK, I am saying that.  

There's more:  Portland loaned SP another $8Mil cash and fronted some more tax credits, making the total state and local "investment" $58Mil. 

And still more:
"The former mayor of Portland seems to suggest the answer is more help from U.S. taxpayers.
'They survive by downscaling and being responsible with the resources they have,' said Sam Adams, 'by reducing costs and being able to wait out, hopefully, until Congress passes new energy tax credits.'
More tax money, that's the answer says SamA, widely loathed ex-mayor.  What could it hurt?  Except you, of course, and you can't be trusted. 

In the big picture, $58Mil or whatever isn't very much.  But if you steal it, it will be.  If the gummint pisses it away, well, it's just one of those things.  It's hard to get excited about sequester cuts in the increase in spending when the money gummint does get is squandered on stupid sales pitches like SP. 

SoloPower, Solyndra and hundreds of others.  Billions of YourBux.  You didn't earn that. 

Here's a useful rule that I shared with you on June 1, 2009, in GM and Chapter 11:
It's not an investment if you can't sell it.
 * * * * *

"The four most dangerous words in investing are: 'this time it's different.'"
-- Sir John Templeton

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