The CEO of America’s No. 2 commercial solar power company may have the roadmap for how companies can navigate President Trump’s protectionist trade environment.
Tom Werner announced last month that his company, SunPower, intends to buy SolarWorld, one of two financially ailing U.S. solar manufacturers that petitioned the Trump administration to put tariffs on imported solar panels, in response to cheap imports from Asia, mostly China.
SunPower is struggling to afford the tariffs on its unique higher-priced panels, which it produces at lower cost in Malaysia and the Philippines, paying as much as $2 million a week for the levies.
The company, like dozens of others, is seeking an exemption to the tariffs, and he figured he could make a play at Trump’s heart.
“We made a bet,” Werner, who runs his business from Trump’s enemy territory, California, told the Washington Examiner in a recent interview in Washington, where he was lobbying Trump administration officials for the tariff exemption. “We wanted to make a very unambiguous commitment to American solar manufacturing by buying ironically the company that created the tariff. It is us swimming with the current so to speak. This was a bold move to say we are in alignment here with the Trump administration.”
Werner argues that by buying SolarWorld, a foreign-owned company that produces solar panels in Oregon, he could save — and create — American jobs, expanding the combined business in the U.S. and avoiding paying tariffs by being in Trump’s good graces.
“I am going to be very transparent, maybe too transparent,” Werner said. “We wouldn’t have bought SolarWorld without the tariffs.”
In making that bet, Werner risked irking the broader solar industry, which, outside of the two petitioners, campaigned aggressively against the tariffs, arguing the penalties could harm solar’s progress by increasing costs and forcing companies to raise prices for consumers.
The U.S. has 50 gigawatts of solar capacity, enough to power nearly 10 million homes, representing a 5,000 percent jump in a decade. Solar was the fastest-growing generating source in 2016.
SunPower serves residential, utility-scale, and commercial markets, with customers such as Target, Macy’s, and Bed Bath & Beyond using the company’s solar panels.
SunPower was one of the most outspoken critics of the 30 percent tariffs that Trump imposed in January, the first of the president’s trade moves that have left U.S. companies begging for exemptions, worried about paying more for overseas components.
Now, Werner is finding common cause with them.
“I am still not convinced tariffs is the way to go, but it can work,” Werner said. “We have tariffs, so we need to somehow do what it takes to succeed in this environment.”
In the run-up to Trump’s tariff decision, Abigail Ross Hopper, Solar Energy Industries Association’s president and CEO, frequently derided SolarWorld and fellow petitioner Suniva as “foreign-owned” companies whose bad balance sheets could not be saved.
Hopper, in a statement to the Washington Examiner, took a more diplomatic approach, applauding SunPower for committing to U.S. manufacturing jobs, while predicting potential gains won’t compensate for lost jobs, and growth, in other parts of the U.S. solar supply chain.
“SunPower’s announcement that it is acquiring SolarWorld Americas is a positive outcome for American manufacturing, and for solar markets,” Hopper said. “However, this capacity will not meet all, or even a substantial amount, of the demand for solar panels and cells needed to meet the industry’s skyrocketing growth. Our companies have told us that the tariffs are curbing solar growth. Because of the tariffs, many projects that could have been built this or next year do not pencil out.”
SEIA said the 30 percent tariffs could cost as many as 23,000 U.S. jobs this year.
MJ Shiao, who studies the solar industry for GTM Research, said the industry will continue adding installations, but expects growth to be about 11 percent lower over the next five years than before the tariffs.
Yet there have been some positive signs on the manufacturing side, Shiao says.
JinkoSolar, a Chinese company, announced this year that it would open a manufacturing facility in Jacksonville, Fla., and create about 200 jobs. About 65 percent of all solar modules are made in China, and seven of the top 10 module manufacturers are Chinese.
“From a certain angle you could say the tariffs are working in the short term,” Shiao told the Washington Examiner. “Our concerns are beyond the initial interest, have we built a manufacturing environment in which U.S. manufacturing can compete long term with foreign manufacturing?”
Werner says if U.S. and German regulators approve the SolarWorld acquisition, he plans to upgrade SolarWorld’s Hillsboro, Ore., facility to produce SunPower’s high-efficiency solar panel that it now makes overseas. SunPower also plans to continue producing SolarWorld’s product, taking over its 286-employee operation.
But Werner says he can’t make those commitments without earning an exemption from Trump’s tariffs.
“If we have to continue to pay tariffs I am not going to create more jobs,” Werner said. “We will have to pay for tariffs somehow and there will probably be less jobs.”
The Office of the U.S. Trade Representative and the Energy and Commerce departments are reviewing the requests from SunPower and other companies for exemptions. There is no time frame for a decision.
To be excluded, the companies must show that they have a unique technology or product offering.
Despite the uncertainty, Werner said SunPower is committed to purchasing SolarWorld.
“This isn’t a halfway measure,” Werner said. “Once you are in, you are in. We are in it to win. That’s the very clear message.”
