China's Suntech to build factories in the U.S.

November 2, 2007 10:27 AM PDT
Posted by Michael Kanellos

Update: Suntech Power Holdings, an aggressive, rising star in the solar world, said in a conference call yesterday that it hopes to build plants in the U.S. to help it break into the market here.

"We are currently in discussion with the governors of three different states who have been recruiting us to build factories," said Roger Efird, president of Suntech America, the company's U.S. subsidiary, according to a report on Greentech Media. Efird was speaking on a conference call for the Solar Energy Industries Association. More details will likely emerge on November 15 when Suntech reports earnings.

The factories could employ up to 1,000 people in the states in the next few years, Efird reportedly said.

Update: In a phone interview with News.com, chief strategy officer Steve Chan said that they company is in the decision making stage. "The question is how to get to the point where the costs make sense," he said. Suntech might not move to the stage where construction begins for one to two years. Although U.S. companies have been sending manufacturing jobs to countries with cheap labor like China for decades, clean tech is bringing some of these kind of jobs back to the states. Why? It's not the decline of the dollar, people. Things like solar panel and green roofing material weigh a lot, which means high shipping costs. And, unlike semiconductors, which would sell for thousands of dollars a pound if sold by weight, solar panels are ultimately commodities.

Earlier this week, green drywall maker Serious Materials raised $50 million to build factories in the U.S.

U.S. factories will also let Suntech compete in what many believe will be the largest solar market in the future. The company right now sells most of its products to Europe. Five years ago, Suntech was an asterisk. Now, it is the third largest producer of solar cells in the world and one of the fastest growing. It benefits from cheap Chinese labor, but also depth in research and development (the science behind its panels came out of the University of New South Wales), strong ties to equipment makers, and volume discounts on silicon. Executives in China make less too: there probably aren't 10 people in the company who make more than $200,000, said Chan earlier this year.

European and Japanese manufacturers have trouble competing on price, and Chinese manufacturers have trouble keeping up with their quality.

U.S. factories, though, will challenge the company's low cost position, as Chan noted. Suntech, though is testing out different strategies to get around this. One idea: Suntech is developing its own manufacturing equipment that could reduce costs.

Originally posted at Green Tech blog.