Don’t go chasing subsidies, I always say. It’s not a good business model. Siemens, the German corporation that’s very close to Barack Obama, seems to be the latest case in point.
How close were Obama and Siemens? Obama subsidized a Siemens plant in North Carolina in the run-up to the 2012 convention. Siemens hired David McIntosh from Obama’s EPA to be the company’s VP for Federal Lobbying, and McIntosh contributed to Obama’s reelection. Obama mentioned Siemens in his State of the Union Address.
Now Siemens is struggling. From Bloomberg:
A key element of Loescher’s growth strategy was the 2009 announcement that he would transform Siemens into a “green infrastructure giant”, heralding a drive into solar technology to promote Siemens as a partner for companies and governments keen to use more renewable energies.
That year he paid $418 million to buy Israel’s Solel Solar Systems and increased the stake in Italian solar thermal specialist Archimede Solar Energy to 45 percent. At the 2010 annual general meeting, the Harvard Business School MBA graduate, who at his first press conference said that Siemens needed to improve its marketing efforts, wore a green tie and called for a “green revolution.”
Yet by this June, with Chinese companies undercutting prices in the solar market and the European sovereign debt crisis stunting infrastructure investment, the company announced it would shutter the solar unit. It had racked up losses of more than 1 billion euros….
Loescher’s renewable energy push helped to win market share, with the wind power division being responsible for 83 percent of all European offshore wind installations. At the same time, the power transmissions unit has been burdened by charges totaling 682 million euros since 2011 for delays in transmitting wind power to the grid.
The company will probably be hit by another 100 million-euro charge for faulty land-based wind turbines, according to people familiar with the matter.