Obama Pet Project Files for Bankruptcy Protection

September 3rd, 2011
in econ_news

solyndra Econintersect:  In a 2010 visit to the Freemont, California factory of Solyndra, a solar company, President Obama praised the effort as an example of what was needed to get the economy moving again.  Wednesday (August 31, 2011) Solyndra announced that it was filing for relief under Chapter 11 bankruptcy code.  The closing will cost 1,100 jobs.  The press release by the company said it requested the relief while it evaluates options, including a sale of the business and licensing of its advanced CIGS technology and manufacturing expertise.

Follow up:

Solyndra LLC is was an American manufacturer of innovative cylindrical solar systems for commercial rooftops.  The company summarized its situation as follows:

Despite strong growth in the first half of 2011 and traction in North America with a number of orders for very large commercial rooftops, Solyndra could not achieve full-scale operations rapidly enough to compete in the near term with the resources of larger foreign manufacturers. This competitive challenge was exacerbated by a global oversupply of solar panels and a severe compression of prices that in part resulted from uncertainty in governmental incentive programs in Europe and the decline in credit markets that finance solar systems.

We are incredibly proud of our employees, and we would like to thank our investors, channel partners, customers and suppliers, for the years of support that allowed us to bring our innovative technology to market.  Distributed rooftop solar power makes sense, and our customers clearly recognize the advantages of Solyndra systems,” said Solyndra’s president and CEO, Brian Harrison.  “Regulatory and policy uncertainties in recent months created significant near-term excess supply and price erosion.  Raising incremental capital in this environment was not possible.  This was an unexpected outcome and is most unfortunate.

The problem for President Obama stems from the visit he made to Solyndra in May of 2010.  From NBC Bay Area News:

During a visit to the Fremont facility in spring of 2010, the President said the factory "is just a testament to American ingenuity and dynamism and the fact that we continue to have the best universities in the world, the best technology in the world, and most importantly the best workers in the world. "

Solyndra canceled plans for a public stock offering earlier this year shortly after it opened a new $700 million facility.  At that time the company warned it would be in significant trouble if federal loan guarantees did not go through.

What has transpired will give opponents the opportunity to claim it is proof that the president is lacking in business acumen.

Source:  NBC Bay Area News

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