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Abound failure raises questions anew about Obama policies

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The failure of a second solar manufacturer that received loan guarantees from the U.S. Energy Department adds to pressure on President Barack Obama to justify incentives for the clean-energy industry that’s being undercut by Chinese competition.

Abound Solar Inc., a U.S. solar manufacturer that was awarded a $400 million loan guarantee in 2010, said Thursday it will suspend operations and file for bankruptcy next week. Colorado-based Abound had been planning to open a plant north of Indianapolis, in Tipton, that would employ up to 1,200 people by 2013, but those plans never got off the drawing board.

Abound said its thin-film panels couldn’t compete against Chinese products, the same reason cited by Solyndra LLC, which closed its doors in August after receiving a $535 million guarantee from the same program. Half of the four solar manufacturers that received loan guarantees have failed, supporting the argument that backing clean-energy is a mistake, according to Rep. Cliff Stearns.

“We know why they went bankrupt. We warned them they would go bankrupt,” Stearns, a Florida Republican, told reporters. “The larger question is why the administration was pursuing a green-energy policy in which companies are going bankrupt and wasting taxpayer money.”

Stearns is chairman of the House Energy and Commerce Committee’s oversight panel that has held hearings on the Energy Department’s loan guarantee program.

Rep. Jim Jordan, an Ohio Republican and chairman of the House Oversight and Government Reform Committee’s stimulus oversight panel that has investigated loan guarantees to solar companies, said Abound’s failure is further proof the Energy Department program was a mistake.

“It just adds to the weight of how ridiculous this was,” Jordan told reporters.

Abound plans to file for bankruptcy in Wilmington, Del., next week and will fire about 125 employees, according to a statement yesterday.

The company, based in Loveland, Colo., borrowed about $70 million against its guarantee. U.S. taxpayers may lose $40 million to $60 million on the loan after Abound’s assets are sold and the bankruptcy proceeding closes, Damien LaVera, an Energy Department spokesman, said in a prepared statement.

“When the floor fell out on the price of solar panels, Abound’s product was no longer cost competitive,” LaVera said.

Abound stopped production in February to focus on reducing costs after a global oversupply and increasing competition from China drove down the price of solar panels by half last year.

“Aggressive pricing actions from Chinese solar-panel companies have made it very difficult for an early-stage startup company like Abound to scale in current market conditions,” the company said in the statement.

Abound was awarded the loan guarantee to build two factories to make thin-film panels using cadmium telluride. It completed one plant, in Longmont, Colo., and never began construction on the second, which was planned for Tipton in the massive unused Getrag transmission plant. The company last received money from the Energy Department in August, before Solyndra’s collapse.

Rep. Dan Burton, an Indiana Republican, said he supported Abound because he thought the company would boost his state’s economy.

“We had a terrible economic problem. Plants were closing there in that area,” Burton told reporters Thursday. “We thought this would be a great way to create jobs. If I had known that Abound, or Solyndra, had been in the fiscal situation it was in, I certainly would have never supported it.”

“This is not surprising at all,” said Anthony Kim, an analyst at Bloomberg New Energy Finance in New York. “They were trying to sell to a competitive, over- supplied market with limited production. That keeps costs high.”

The Energy Department has provided almost $35 billion in loans, loan guarantees and conditional commitments to renewable-energy companies. About 35 percent of that is for solar- generating projects, which benefit from falling panel prices, compared with less than 4 percent for solar manufacturers, according to LaVera.

Besides Abound and Solyndra, two other solar manufacturers received loan guarantees. 1366 Technologies Inc. won approval to borrow as much as $150 million to produce polysilicon for solar panels and SoloPower Inc. was awarded a $197 million guarantee to make rolls of flexible solar panels using a copper-indium-gallium-selenide composite.

Neither 1366 nor SoloPower have drawn funding under the Energy Department program, LaVera said.
 

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  1. I took Bruce's comments to highlight a glaring issue when it comes to a state's image, and therefore its overall branding. An example is Michigan vs. Indiana. Michigan has done an excellent job of following through on its branding strategy around "Pure Michigan", even down to the detail of the rest stops. Since a state's branding is often targeted to visitors, it makes sense that rest stops, being that point of first impression, should be significant. It is clear that Indiana doesn't care as much about the impression it gives visitors even though our branding as the Crossroads of America does place importance on travel. Bruce's point is quite logical and accurate.

  2. I appreciated the article. I guess I have become so accustomed to making my "pit stops" at places where I can ALSO get gasoline and something hot to eat, that I hardly even notice public rest stops anymore. That said, I do concur with the rationale that our rest stops (if we are to have them at all) can and should be both fiscally-responsible AND designed to make a positive impression about our state.

  3. I don't know about the rest of you but I only stop at these places for one reason, and it's not to picnic. I move trucks for dealers and have been to rest areas in most all 48 lower states. Some of ours need upgrading no doubt. Many states rest areas are much worse than ours. In the rest area on I-70 just past Richmond truckers have to hike about a quarter of a mile. When I stop I;m generally in a bit of a hurry. Convenience,not beauty, is a primary concern.

  4. Community Hospital is the only system to not have layoffs? That is not true. Because I was one of the people who was laid off from East. And all of the LPN's have been laid off. Just because their layoffs were not announced or done all together does not mean people did not lose their jobs. They cherry-picked people from departments one by one. But you add them all up and it's several hundred. And East has had a dramatic drop I in patient beds from 800 to around 125. I know because I worked there for 30 years.

  5. I have obtained my 6 gallon badge for my donation of A Positive blood. I'm sorry to hear that my donation was nothing but a profit center for the Indiana Blood Center.

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