BEIJING — Aided by at least $43 million
in assistance from the government of Massachusetts
and an innovative solar energy technology, Evergreen
Solar emerged in the last three years as the third-largest
maker of solar panels in the United States.
But now the company is closing its main American
factory, laying off the 800 workers by the end of
March and shifting production to a joint venture
with a Chinese company in central China. Evergreen
cited the much higher government support available
The factory closing in Devens, Mass., which Evergreen
announced earlier this week, has set off political
recriminations and finger-pointing in Massachusetts.
And it comes just as President Hu Jintao of China
is scheduled for a state visit next week to Washington,
where the agenda is likely to include tensions
between the United States and China over trade
and energy policy.
Michael El-Hillow, chief executive of Evergreen,
said falling prices for panels led to the closing.
The Obama administration has been investigating
whether China has violated the free trade rules
of the World Trade Organization with its extensive
subsidies to the manufacturers of solar panels
and other clean energy products.
While a few types of government subsidies are
permitted under international trade agreements,
they are not supposed to give special advantages
to exports — something that China’s
critics accuse it of doing. The Chinese government
has strongly denied that any of its clean energy
policies have violated W.T.O. rules.
Although solar energy still accounts for only
a tiny fraction of American power production, declining
prices and concerns about global warming give solar
power a prominent place in United States plans
for a clean energy future — even if critics
say the federal government is still not doing enough
to foster its adoption.
Beyond the issues of trade and jobs, solar power
experts see broader implications. They say that
after many years of relying on unstable governments
in the Middle East for oil, the United States now
looks likely to rely on China to tap energy from
Evergreen, in announcing its move to China, was
unusually candid about its motives. Michael El-Hillow,
the chief executive, said in a statement that his
company had decided to close the Massachusetts
factory in response to plunging prices for solar
panels. World prices have fallen as much as two-thirds
in the last three years — including a drop
of 10 percent during last year’s fourth quarter
Chinese manufacturers, Mr. El-Hillow said in the
statement, have been able to push prices down sharply
because they receive considerable help from the
Chinese government and state-owned banks, and because
manufacturing costs are generally lower in China.
“While the United States and other Western
industrial economies are beneficiaries of rapidly
declining installation costs of solar energy, we
expect the United States will continue to be at
a disadvantage from a manufacturing standpoint,” he
Even though Evergreen opened its Devens plant,
with all new equipment, only in 2008, it began
talks with Chinese companies in early 2009. In
September 2010, the company opened its factory
in Wuhan, China, and will now rely on that operation.
An Evergreen spokesman said Mr. El-Hillow was
not available to comment for this article.
Other solar panel manufacturers are also struggling
in the United States. Solyndra, a Silicon Valley
business, received a visit from President Obama
in May and a $535 million federal loan guarantee,
only to say in November that it was shutting one
of its two American plants and would delay expansion
of the other.
First Solar, an American company, is one of the
world’s largest solar power vendors. But
most of its products are made overseas.
Chinese solar panel manufacturers accounted for
slightly over half the world’s production
last year. Their share of the American market has
grown nearly sixfold in the last two years, to
23 percent in 2010 and is still rising fast, according
to GTM Research, a renewable energy market analysis
firm in Cambridge, Mass.
In addition to solar energy, China just passed
the United States as the world’s largest
builder and installer of wind turbines.
The closing of the Evergreen factory has prompted
finger-pointing in Massachusetts.
Ian A. Bowles, the former energy and environment
chief for Gov. Deval L. Patrick, a Democrat who
pushed for the solar panel factory to be located
in Massachusetts, said the federal government had
not helped the American industry enough or done
enough to challenge Chinese government subsidies
for its industry. Evergreen has received no federal
“The federal government has brought a knife
to a gun fight,” Mr. Bowles said. “Its
support is completely out of proportion to the
support displayed by China — and even to
that in Europe.”
Stephanie Mueller, the Energy Department press
secretary, said the department was committed to
supporting renewable energy. “Through our
Loan Program Office we have offered conditional
commitments for loan guarantees to 16 clean energy
projects totaling nearly $16.5 billion,” she
said. “We have finalized and closed half
of those loan guarantees, and the program has ramped
up significantly over the last year to move projects
through the process quickly and efficiently while
protecting taxpayer interests.”
Evergreen did not try to go through the long, costly
process of obtaining a federal loan because of what
it described last summer as signals from the department
that its technology was too far along and not in
need of research and development assistance. The
Energy Department has a policy of not commenting
on companies that do not apply.
Evergreen was selling solar panels made in Devens
for $3.39 a watt at the end of 2008 and planned to
cut its costs to $2 a watt by the end of last year — a
target it met. But Evergreen found that by the end
of the fourth quarter, it could fetch only $1.90
a watt for its Devens-made solar panels. Chinese
manufacturers were selling them for as little as
$1.60 a watt after reducing their costs to as little
as $1.35 or less per watt.
Evergreen’s joint-venture factory in Wuhan
occupies a long, warehouselike concrete building
in an industrial park located in an inauspicious
neighborhood. A local employee said the municipal
police had used the site for mass executions into
When a reporter was given a rare tour inside the
building just before it began mass production in
September, the operation appeared as modern as
any in the world. Row after row of highly automated
equipment stretched toward the two-story-high ceiling
in an immaculate, brightly lighted white hall.
Chinese technicians closely watched the computer
screens monitoring each step in the production
In a telephone interview in August, Mr. El-Hillow
said that he was desperate to avoid layoffs at
the Devens factory. But he said Chinese state-owned
banks and municipal governments were offering unbeatable
assistance to Chinese solar panel companies.
Factory labor is cheap in China, where monthly
wages average less than $300. That compares to
a statewide average of more than $5,400 a month
for Massachusetts factory workers. But labor is
a tiny share of the cost of running a high-tech
solar panel factory, Mr. El-Hillow said. China’s
real advantage lies in the ability of solar panel
companies to form partnerships with local governments
and then obtain loans at very low interest rates
from state-owned banks.
Evergreen, with help from its partners — the
Wuhan municipal government and the Hubei provincial
government — borrowed two-thirds of the cost
of its Wuhan factory from two Chinese banks, at
an interest rate that under certain conditions
could go as low as 4.8 percent, Mr. El-Hillow said
in August. Best of all, no principal payments or
interest payments will be due until the end of
the loan in 2015.
By contrast, a $21 million grant from Massachusetts
covered 5 percent of the cost of the Devens factory,
and the company had to borrow the rest from banks,
Mr. El-Hillow said.
Banks in the United States were reluctant to provide
the rest of the money even at double-digit interest
rates, partly because of the financial crisis. “Therein
lies the hidden advantage of being in China,” Mr.
Devens, as the site of a former military base,
is a designated enterprise zone eligible for state
State Senator Jamie Eldridge, a Democrat whose
district includes Devens, said he was initially
excited for Evergreen to come to his district,
but even before the announced loss of 800 jobs,
he had come to oppose such large corporate assistance.
“I think there’s been a lot of hurt
feelings over these subsidies to companies, while
a lot of communities around the former base have
not seen development money,” he said.
Michael McCarthy, a spokesman for Evergreen, said
the company had already met 80 percent of the grant’s
job creation target by employing up to 800 factory
workers since 2008 and should owe little money
to the state. Evergreen also retains about 100
research and administrative jobs in Massachusetts.
The company also received about $22 million in
tax credits, and it will discuss those with Massachusetts,
Evergreen has had two unique problems that made
its Devens factory vulnerable to Chinese competition.
It specializes in an unusual kind of wafer, making
it hard to share research and development costs
with other companies. And it was hurt when Lehman
Brothers went bankrupt in 2008; Evergreen lost
one-seventh of its outstanding shares in a complex
transaction involving convertible notes. But many
other Western solar power companies are also running
into trouble, as competition from China coincides
with uncertainty about the prices at which Western
regulators will let solar farms sell electricity
to national grids.
According to Bloomberg New Energy Finance, shares
in solar companies fell an average of 26 percent
last year. Evergreen’s stock, which traded
above $100 in late 2007, closed Friday in New York