Introduction
An ad from the conservative Americans for Prosperity distorts the truth about stimulus money for “green jobs” going overseas. The ad, titled “Wasteful Spending,” introduces some new wrinkles to this well-used line of attack.
According to the ad, the stimulus included:
- “$1.2 billion to a solar company that’s building a plant in Mexico.” Actually, the loans were to finance a solar ranch built and operated in California. It’s true that the company that got the loans also recently opened a solar-panel manufacturing plant in Mexico, but a company spokeswoman says most of the panels for the stimulus-financed project will be built in its nearby plant in California.
- “Half a billion to an electric car company that created hundreds of jobs in Finland.” Actually, the first round of government loans to Fisker Automotive went toward design, engineering, sales and marketing work done in the U.S. It’s true that the cars it has built so far were made in Finland, but a second round of funding has gone for development of a second, less-costly line of cars that the company plans to build in a shuttered GM facility in Delaware.
- “And tens of millions of dollars to build traffic lights in China.” Actually, the traffic lights were assembled in the U.S. It’s true that for a time they were put together using LED lights made mostly in Asia, under a waiver the Department of Energy issued in February 2010 — and then rescinded 10 months later after a foreign company expanded its LED traffic light manufacturing facilities in the U.S.
Some other claims in this ad we’ve heard before, such as the absurd allegation that the stimulus did not create any American jobs (when the Congressional Budget Office’s economists state that it created or saved between 1.2 million and and 3.3 million jobs) and the overreaching claim that President Obama has “wasted” $34 billion on investments like Solyndra (when in fact only 2 percent of such loans have gone bad).
The ad begins, “Washington promised to create American jobs if we passed their stimulus. But that’s not what happened. Fact: Billions of taxpayers dollars spent on green energy went to jobs in foreign countries. The Obama administration admitted the truth, that $2.3 billion of tax credits went overseas, while millions of Americans can’t find a job.”
We’ve looked at the claim that “$2.3 billion of tax credits went overseas” a couple of times in the past, most recently in an ad from the American Future Fund. Both the American Future Fund and Americans for Prosperity ads cite a Sept. 9, 2010, story in the Washington Times, which reported that “as much as 80 percent of some green programs, including $2.3 billion of manufacturing tax credits, went to foreign firms that employed workers primarily in countries including China, South Korea and Spain, rather than in the United States.” That story referenced the reporting of Russ Choma, an investigative reporter then working at American University’s Investigative Reporting Workshop, who wrote that companies based overseas were receiving stimulus money to build wind farms in the U.S.
On Sept. 27, 2010, Choma wrote that about $2.38 billion in stimulus money went to foreign developers. But that doesn’t necessarily mean the money did not create jobs in the U.S.
Choma, Sept. 27, 2010: Some of those foreign-owned turbine manufacturers have factories in the United States and some American-owned turbine manufacturers have factories overseas. We simply don’t know where all of the parts were made. We found several specific examples of major wind farms where we know none of the parts were made in the United States.
So while it’s fair to say that the stimulus money likely created some jobs overseas, it’s not fair to say that all of that money went to foreign jobs. That ignores the realities of our global economy, in which some American companies manufacture overseas, and vice versa. The three examples cited in the ad illustrate that point.
Mexican Plant
The ad claims the stimulus included “$1.2 billion to a solar company that’s building a plant in Mexico.” This strings together two largely unrelated facts to create a misleading impression. Here are the facts: SunPower Corp., a company based in San Jose, Calif., applied for a $1.237 billion loan guarantee from the Department of Energy to build a massive solar generating facility in San Luis Obisbo, Calif. SunPower later sold the project to NRG Solar, but SunPower company will still help to construct the 250 MW alternating current PV solar generating facility, called the California Valley Solar Ranch, for NRG.
Last August, SunPower announced that it was opening a solar-panel fabrication plant in Mexicali, Mexico. But it’s a big leap from that to claiming that $1.2 billion of American taxpayer money is being used to fund jobs in Mexico, as the ad implies.
It’s true that some of the solar panels installed in the new California Valley Solar Ranch will come from the new SunPower facility in Mexico, as well as from other SunPower plants in Asia, company spokeswoman Natalie Wymer told us. But the overwhelming majority of solar panels will come from SunPower’s nearby plant in Milpitas, Calif.
Moreover, the solar facility is being built in California, employing some 350 American construction workers for several years, Wymer said. The facility will employ 15 people permanently once the facility begins operations in September.
“The loan guarantee, issued to NRG, does not finance SunPower’s manufacturing facilities or other operations in Silicon Valley, where we manufacture today, Mexicali or anywhere else,” Wymer said. “The SunPower Mexicali facility was a shift from ongoing manufacturing with a partner to our own plant.”
Jobs in Finland
The ad claims the stimulus also included “half a billion to an electric car company that created hundreds of jobs in Finland.” The car company in question is Fisker Automotive, which was awarded more than a half billion dollars worth of loans to make fuel-efficient electric cars. And all of the electric cars built by Fisker so far were manufactured in Finland. That forms the basis of the ad’s claim.
But there’s more to this story.
The Fisker loans came in two parts. The first part, according to a statement from Dan Leistikow, a spokesman for the Department of Energy, was a $169 million loan guarantee to support the development of Fisker’s first luxury electric car, called the Karma. The company has made about 1,400 of them so far (and sold 800 for about $97,000 apiece), all of them assembled in Finland. But the Department of Energy and Fisker insist the government loan money was spent exclusively in the United States “to support the engineers who developed the tools, equipment and manufacturing processes for Fisker’s first vehicle, the Fisker Karma.” According to Fisker officials, that work was done in Fisker’s U.S. facilities, including its headquarters in Irvine, Calif.,”which has 700 employees and plans to continue hiring.”
Fisker has raised over $1 billion in private equity, Fisker spokesman Roger Ormisher told us. That private money was used to finance the manufacture the cars in Finland, he said, while the DOE loan was used exclusively in the U.S. for engineering, design and marketing, and sales. That supported more than 600 jobs in the U.S., he said.
“All of the DOE loan money that we got for the Karma project had to be spent in America,” Ormisher said.
It’s possible that DOE money used to fund operations in the U.S. allowed private investment to concentrate on overseas manufacturing. But it would be simply inaccurate to claim that all of that $169 million funded jobs overseas. Moreover, a number of American suppliers were used to make parts that were assembled in Finland, Ormisher said, creating about 1,500 jobs. Last year, Fisker officials estimated more than 45 percent of the components of the Karma were manufactured by about 40 U.S. suppliers.
In addition to the $169 million, the DOE approved a much larger, $359 million loan to help Fisker develop a lower-priced version of its car, called the Nina. The plan is to build those cars at a shuttered General Motors factory in Delaware. That project has hit some snags. In February, amid delays to the project, Fisker let go 26 employees from the Delaware factory.
However, Fisker still plans to move forward with the car, and the “first option” is still to build them at the factory in Delaware, Ormisher said. If it moves forward, the plant could employ up to 2,500 workers. A prototype of the car, renamed the Atlantic, was unveiled recently, but a launch date was not announced.
To date, Fisker has drawn down $193 million of the $529 million in government loan guarantees, Ormisher said. Fisker has been negotiating with DOE since last May regarding the future of this second part of the funding.
Traffic lights in China
Last, the ad claims the stimulus included “tens of millions of dollars to build traffic lights in China.” The Department of Energy did spend tens of millions through the stimulus to build and install energy efficient traffic lights around the U.S. Back in February 2010, the department granted a waiver to the stimulus’ Buy American requirement with regard to the LED lights that go inside traffic signals after the assistant secretary for Energy Efficiency and Renewable Energy (EERE) determined there was insufficient availability in the U.S. to meet demand. A Pittsburgh Tribune Review investigation found most of those components were being purchased from Asia.
However, that waiver was withdrawn on Dec. 1, 2010, after the EERE learned that at least one manufacturer of LED traffic signals relocated some of its manufacturing from Mexico to the U.S., and that the plant had the capability to satisfy the demand from stimulus fund recipients. In November 2010, the Department of Energy reported that Dialight Corp., an LED lighting manufacturer with U.S. corporate offices in Farmingdale, N.J., and a parent company based in the U.K., invested nearly $3 million to renovate its production facility in Roxboro, N.C. The Roxboro plant hired 100 people to engineering, management and direct labor positions.
‘Wasted’?
The ad concludes that “President Obama wasted $34 billion on risky investments.” In the background is a banner for Solyndra.
As we reported recently, the Energy Department has committed $34.7 billion to nearly 40 green projects under low-interest loan programs, according to information published on its website. Two of them — Solyndra ($535 million) and Beacon Power Co. ($43 million) — have filed for bankruptcy, according to a March 12 report by the Government Accountability Office. What, if anything, the U.S. government gets back from the Solyndra deal is up to the bankruptcy court. It looks as if DOE may get back as much as 70 percent of its loans to Beacon. Still, worst-case senario, the government is out a total of $578 million on those two deals. That’s less than 2 percent of the total program, so it’s a stretch to claim the entire $34 billion has been “wasted.”
Americans for Prosperity announced it is spending $6.1 million to air the ad in eight battleground states: Colorado, Florida, Iowa, Michigan, Nevada, New Mexico, Ohio and Virginia.
– Robert Farley
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