(1) Hearken to
this, the New York Times reporting on widespread failures of
Chinese-manufactured solar panels.
It was not an isolated incident.
Worldwide, testing labs, developers, financiers and insurers are reporting
similar problems and say the $77 billion solar industry is facing a quality
crisis just as solar panels are on the verge of widespread adoption.
No one is sure how pervasive the
problem is. There are no industrywide figures about defective solar panels. And
when defects are discovered, confidentiality agreements often keep the
manufacturer’s identity secret, making accountability in the industry all the
more difficult.
But at stake are billions of
dollars that have financed solar installations, from desert power plants to
suburban rooftops, on the premise that solar panels will more than pay for
themselves over a quarter century.
The quality concerns have emerged
just after a surge in solar construction. In the United States, the Solar
Energy Industries Association said that solar panel generating capacity
exploded from 83 megawatts in 2003 to 7,266 megawatts in 2012, enough to power
more than 1.2 million homes. Nearly half that capacity was installed in 2012
alone, meaning any significant problems may not become apparent for years.
“We need to face up to the fact
that corners are being cut,” said Conrad Burke, general manager for DuPont’s
billion-dollar photovoltaic division, which supplies materials to solar
manufacturers.
The solar developer Dissigno has
had significant solar panel failures at several of its projects, according to
Dave Williams, chief executive of the San Francisco-based company.
“I don’t want to be alarmist, but I
think quality poses a long-term threat,” he said. “The quality across the board
is harder to put your finger on now as materials in modules are changing every
day and manufacturers are reluctant to share that information.”
Most of the concerns over quality
center on China, home to the majority of the world’s solar panel manufacturing
capacity.
After incurring billions of dollars in debt to accelerate production
that has sent solar panel prices plunging since 2009, Chinese solar companies
are under extreme pressure to cut costs.
Chinese banks in March, for instance, forced Suntech into bankruptcy. Until 2012, the company had been the
world’s biggest solar manufacturer.
Executives at companies that
inspect Chinese factories on behalf of developers and financiers said that over the last 18 months they have found
that even the most reputable companies are substituting cheaper, untested
materials. Other brand-name manufacturers, they said, have shut down
production lines and subcontracted the assembly of modules to smaller makers.
“We have inspectors in a lot of
factories, and it’s not rare to see some big brands being produced in those
smaller workshops where they have no control over quality,”
Set aside any nitpicking specific to engineering issues of
solar energy: our quarry is
broader here. The essential
part has been boldfaced, and applies well beyond the details of
plastic-vs-glass coatings of panels or whatnot.
Follow closely.
The point is not to concatenate a miscellany of kvetches, but to limn a
causal narrative which links them, and which therefore possesses a certain
predictive power.
[Update 4 June 2013: The US isn’t the only country that has a sour taste
over Chinese solar panels:]
A quelques heures de la décision de
la Commission européenne, qui doit indiquer ce mercredi si elle va finalement
imposer des sanctions commerciales contre les industriels chinois du
photovoltaïque soupçonnés de dumping , le Premier ministre chinois, Li Keqiang,
vient de monter en première ligne pour menacer directement Bruxelles.
http://www.lesechos.fr/economie-politique/monde/actu/0202804926140-cette-nuit-en-asie-pekin-menace-bruxelles-sur-les-panneaux-solaires-572030.php?xtor=EPR-100-[NL_8h]-20130604-[s=461370_n=2_c=204_]-1664277@2
(2)
During the
March of the
Seven Dwarfs, otherwise known as the Republican Presidential
primaries, in a series of brow-wrinkling essays
I said various unkind things about the likes of Romney,
Trump, and Adelson.
My primary objection
was not that they are blood-sucking bosses -- there have always been
blood-sucking bosses, and the best of them helped build the railroads (or at
least, encouraged the sweating workingmen to do so).
The objection is that they mostly don’t really
make anything of use
-- they are gamblers, and largely with
Other People’s Money.
So now the prospect is, becoming maidservants of Chinese blood-sucking gamblers. Since America has long been
putting itself in hock to China, it is difficult to say no. (Confer the role of Chinese creditor-banks in the case of Suntech, supra.)
~
~ Posthumous Endorsement ~
"If I were alive
today, and in the mood for a mystery,
this is what I'd be
reading: "
(My name is Daniel
DeLeon, and I approved this message.)
~
~
~
Distinct from these considerations, though related, is
another secular trend tending to
undermine incentives for business to aim for long-term health (let alone the
public good): the long-standing
and oft-remarked upon widening divorce between ownership of enterprises and
their management.
Back in the days of “Someday, son, this will all be yours”
(familiar to us all through New Yorker cartoons, though no longer by
direct experience) the Chief had
an incentive to insure that the business was a sound and going concern for the
long term, even after his own personal demise. He might sweat his
workers, but he must not work them literally to death, since they would
continue to be needed. Moreover,
the business could not be founded upon gimmick, fad, or false advertising,
since with these, before long, the jig is up.
Whereas nowadays, it is objectively in the managers’
self-interest to boost their own salaries and (especially) bonuses by means of whatever bookcooking
flimflam lies to hand: for by the time the firm goes belly-up, they’ll be long
gone, cruising around the Mediterranean on yachts bought
with their winnings.
Nor will the shareholders and creditors necessarily call out
the management on such practices, since, so long as their own share price does
well during the thus-inflated bubble, they can cash in the short term, whatever
train-wreck may later ensue. (BTW
-- None of this is really political or polemical; it’s simple arithmetic. If you have a problem with any of it, your real beef is with
the Peano Postulates.)
(3) The
solar-panel fiasco is relevant to an issue now very much on the table -- top
story of the day, in fact, as it would represent the largest Chinese investment in US
industry to far: the threatened takeover of Smithfield Foods by China’s
Shuanghui.
(4) Also very
much in the headlines these days:
Chinese cyberattacks against the US.
Basically, whatever they can steal over the insecure
Internet (such as detailed blueprints to advanced military aircraft), they
steal, thus saving the cost of Research & Development. But it is (so far) still hard to
electronically purloin a sausage.
So they snap up a (fully functional) US firm (possibly using the same
money that we have long been sending over there to buy their trinkets).
High-level meetings on the subject are taking place. But -- Where can the US find any
leverage to make China cease & desist from their thievery?
Well, for starters, by nixing the Smithfield deal.
(5) The above
is fairly straightforward connect-the-dots. And now a less linear, more ‘recursive’ argument.
(a) It is a matter of merest logic that the entities (companies
or organizations) most strenuously opposed to government regulation, are those
that intend to infringe such strictures.
(b) Once the corner-cutters and dice-rollers have their way (be
it S&L’s or meatpackers), entities initially more inclined to prudence and honesty are under objective economic pressure
to do likewise. Again, this is
almost a tautology.
(c) Suppose now that a population (be it of businesses or
creatures) has evolved to relative equilibrium in either of two separated (economic/biological) ecosystems,
reaching phenotypes respectively A
& B. Now connect
them with an isthmus (globalization/ecotone). Now A & B compete directly, head to head. If, in particular, A consists largely of “doves” and B of “hawks”
(in the terminology made familiar by John Maynard Smith and by Richard Dawkins),
then some percentage of the dove population needs to mutate into hawks if they
are to survive.
Thus, the logical skeleton; in the philosopher’s sense, it is virtually analytic. The schema thus applies
widely. For the particular
cases at hand -- say, a potentially sinified Smithfield -- fill in the
contingent details from your own extensive reading in the press. Our own home-grown capitalists
are no angels: given the right
environmental pressures, they too will sink even farther towards the bottom. Thus deals like Smithfield/ Shuanghui have implications for companies and
consumers well beyond those whose dietary favorites run to fatty, chemicalized,
or diseased meats.
*
* * *
~ Commercial break ~
Relief for
beleaguered Nook lovers!
We now return you to
your regularly scheduled essay.
* * *
(6) Pork
particularities
In their piece this morning on the Smithfield deal, NPR was
marveling that China might well keep on some of its American managers, for
their expertise, for a while anyway.
“Do you mean” gurgled the interviewer “that China wishes to learn from us?” (Visions of a starry-eyed admiring
youngster, arms clasped around his knees, seated at the feet of the Wise One.) “Exactly!” crowed the ‘expert’,
reveling in his fifteen seconds of fame.
Umm… China certainly does want to ‘learn’ from us, though
mostly they do it via
espionnage (see (4) above).
Kept on for a time -- on a short if gilded leash -- these
rent-a-managers (Kelly boys, let us call them) one day will disappear, no-one
knows where; and the sausages
temporarily will taste a little
spicier.
Indeed, this business is a natural match: a match made in Purgatory, you might
say. Whenever China has a surplus
of dead dogs, placentas, aborted or sewer-piped fetuses, the gleaming
glistening sausage machine stands ready at attention. And in this way, the Chinese can earn the coveted
green “Recycled” symbol. Bon
appetit!
(7) The
prospects
The most important danger is not the comparatively visible
and high-profile one of shoddy, defective, and toxic Chinese products. As we import their products and their
management, we shall -- barely noticing it -- import their human values. For a glance at these, click
here:
The exported cultural effluvium will, to be sure, be
modified by the local ecosystem it washes up on, with somewhat unpredictable
results. So to get a glimpse of the future, we
should examine the present, at
that beachhead of Chinese commercial practices, that early Sino-American
biotonic isthmus: Wal-Mart. This entity deserves our
focus, not simply because it’s
familiar to consumers, but because it has a real heft in our economy: Wal-Mart
is the nation’s largest private employer.
The first Sinitic influence upon Wal-Mart was the challenge of accommodating a
high-capacity/how-cost/low-quality Asian supplier. Wal-Mart’s response was to emphasize volume and price -- qualities
by no means out of keeping with modern American business practice, but pursued
with a systematic single-mindedness that was unusual. As it happens, I was afforded a glimpse into their business
ethic, roughly a quarter of a century ago, from the side of the supplier,
rather than the more widely known consumer side. …. [TBC, if reader interest warrants.]
More in the public eye of late, and quite disturbing, has
been Wal-Mart’s effect upon labor relations. As, this from
today’s Los Angeles Times:
For years, politicians and labor
unions have pilloried Wal-Mart and other large employers for paying workers so
little that many qualify for government health insurance at taxpayers' expense.
Now critics fear the public will
get stuck with an even bigger tab as California and other states expand
Medicaid as part of the federal healthcare law. That has California lawmakers
taking aim at the world's largest retailer and other big firms.
Legislators, backed by unions,
consumer groups and doctors, are calling for fines that could reach about
$6,000 per full-time employee who ends up on Medi-Cal, the state Medicaid
program for the poor and others. They say this would eliminate a loophole in
the Affordable Care Act that encourages large retailers and restaurant chains
to dump hourly workers onto the government dole because there's currently no
penalty for doing so.
The outcome of this California
battle could have national implications as other cash-strapped states search
for ways to shore up safety-net programs that are bound to be stretched by a
massive healthcare expansion.
"There are concerns that
employers will be gaming this new system and taking less and less
responsibility for their workers," said Sonya Schwartz, program director
at the National Academy for State Health Policy. "This may make employers
think twice."
The federal law imposes a separate penalty if large employers don't
offer health insurance to employees who work more than 30 hours a week on
average. In response, a growing number of
employers are cutting some workers' hours to keep them under that threshold
and avoid the expense of providing coverage.
Under the federal law, if those
workers qualify for subsidies and buy their own coverage in government-run
exchanges, the fines on employers can reach $3,000 per worker. But there's no
federal penalty if a company's workers become eligible for Medicaid.
[tbc...]
[Update 3 June 2013]
The Chinese Ministry of Food Industry has sharply protested the post
above, claiming that the People’s Republic takes just as good care of its workers
as it does of its livestock, as witness … mm, never mind.
