April 17, 2009 Volume 110 Number 8
SolarWorld gets tax breaks while dumping union workforceBy
DON McINTOSH, Associate Editor
Two dozen union workers were laid off last month from a SolarWorld
silicon ingot factory in Vancouver, Washington. Next Friday, 27
more will be let go. But it wasn’t the recession or foreign
competition that killed their jobs. Rather, SolarWorld is progressively
downsizing its union workforce while aggressively ramping up employment
at a new nonunion facility in Hillsboro, Oregon — for which
the company is getting nearly $43 million in tax breaks and other
public subsidies.
German-headquartered SolarWorld, one of the world’s largest
solar energy companies, acquired the Vancouver plant and another
in Camarillo, California, when it bought Royal Dutch Shell’s
solar division in 2006. The Vancouver workers had been represented
by Machinists Local 1432 since the 1980s. SolarWorld promised there’d
be no job cuts for a year.
Then in March 2007, SolarWorld bought a 480,000-square-foot silicon
chip factory in Hillsboro from the Komatsu Group. SolarWorld paid
$40 million for a factory that had cost Komatsu $472 million to
build, and announced it would spend $400 million to turn it into
the largest solar wafer manufacturing facility in North America.
The company employed mostly union building trades subcontractors
on the changeover, and the Hillsboro plant opened on schedule in
October 2008.
Would the company’s own workers be union as well? When Machinists
District Lodge 24 Business Representative Scott Lucy met with SolarWorld
last summer to negotiate a new contract, he hoped the company would
agree to remain neutral toward any future efforts by its new Hillsboro
workers to unionize. SolarWorld rejected that proposal.
It also demanded concessions, including elimination of the severance
benefits that workers would get if laid off. Members voted Nov.
2, 2008, to authorize a strike, for the first time ever. But at
length they agreed to a cut in severance pay — from three
weeks pay for every year of service to one week.
On Jan. 27, SolarWorld announced 52 permanent workers and 11 temps
in Vancouver would be laid off in March and April 2009. A skeleton
crew of about eight would remain to recycle scrap silicon.
Workers were told they could apply for jobs at the Hillsboro site
— 32 miles away. But those would be non-union, at-will jobs,
with lower pay and benefits and none of the union job protections;
work shifts would rotate every other week between 12-hour-long graveyard
and 12-hour-long day shifts; and if they took jobs in Hillsboro,
they would lose their severance pay. Only a half-dozen accepted
jobs at the new plant, Lucy said.
SolarWorld spokesperson Anne Schneider wouldn’t tell the
Labor Press what Hillsboro production workers are paid, other than
to say it’s “competitive.” But Vancouver workers
say they were told to expect $11 to $13 an hour. That compares to
$12.24 to $26.27 an hour under the union contract, depending on
skill and experience. Most of the Vancouver workers made between
$14 to $19 an hour.
If $11 to $13 an hour is the norm at SolarWorld Hillsboro, that
wouldn’t meet the conditions of its enterprise zone tax break.
Under a state program, companies locating in designated “enterprise
zones” pay no property taxes for up to five years on new equipment
they install. For SolarWorld, that’s an estimated tax savings
totaling about $11.5 million. The State of Oregon asks almost
nothing in return for that, but local governments can put extra
conditions on zones in their jurisdictions, and Hillsboro requires
that at least 75 percent of the jobs pay at least double the Oregon
minimum wage, which is currently $8.40.
However, in satisfying that requirement, the company can count
managers, and can choose not to count temps. The temp agency Kelly
Services has been recruiting workers for SolarWorld since at least
last summer — and even set up a branch office at the plant.
Schneider wouldn’t say how many temps the company is employing.
SolarWorld has to submit wage data to get the tax break, but the
information won’t be available to the public, Hillsboro city
officials said.
Are these the much-talked-about “green jobs of the future”
that politicians at every level are eager to attach themselves to?
Oregon Gov. Ted Kulongoski was there with a prepared statement
when SolarWorld opened in Hillsboro: “Oregon must remain aggressive
in developing economic opportunities in industries that will create
high-wage jobs and be in high demand for the long-term — industries
like renewable energy,” he said.
Kulongoski also directed the Strategic Reserve Fund to make a
$1 million grant to train SolarWorld employees.
All four solar manufacturers that set up shop in Oregon since
2007 are in enterprise zones, but the break on property tax is the
least of it. Oregon has massively increased tax subsidies and other
supports for renewable energy in the last two years. In 2007, the
Legislature approved a 50 percent income tax credit for renewable
energy investments of up to $20 million. Because Department of Energy
policy allows a 10 percent “cost overrun,” in practice
that meant wind farms, solar arrays and solar manufacturers get
up to $11 million tax reduction per project. In 2008, the Legislature
doubled the limit for solar manufacturers, which can now get up
to $22 million in tax breaks per project.
For its Hillsboro factory, SolarWorld was approved for an $11
million tax credit under the program. As the Portland Tribune reported
April 9, since SolarWorld doesn’t pay corporate income tax,
it sold the credit at a discount to WalMart. [Under the state’s
“pass through” rule, the tax break, known as Business
Energy Tax Credit, can be sold.] SolarWorld will also get $19.45
million of tax credits for its investment in a new 210,000-square-foot
logistics, distribution and production center next to its existing
Hillsboro factory.
About 150 to 200 union building trades workers will be employed
on the expansion, due for completion in November. But the Oregon
AFL-CIO is pushing lawmakers in Salem to tweak the Business Energy
Tax Credit and enterprise zone tax break to better ensure that tax-break-subsidized
jobs are good jobs.
The Oregon State Building and Construction Trades Council is pushing
a proposal to require that companies getting enterprise zone tax
breaks on large projects of more than $5 million be required to
pay area standard wages and benefits to the construction workers.
“If local residents are losing tax income off the property,
they ought to at least have prevailing wage requirements to protect
local workers,” said Clif Davis, business manager of International
Brotherhood of Electrical Workers Local 48.
When lawmakers expanded the Business Energy Tax Credit in 2007
and 2008, the state budget was in good shape. Now, a recession is
sapping state revenues, and with companies lining up to seek over
$100 million a year in business energy tax breaks, lawmakers are
taking a second look.
“[The Business Energy Tax Credit] is talked about as an
economic development tool,” said Oregon AFL-CIO Political
Director Duke Shepard at a Feb. 19 hearing, “but it has none
of the standards typically associated with an economic development
program. There aren’t wage standards. There’s no cost-per-job
standard.”
And it’s not at all clear that the credits are necessary
for some kinds of renewable energy investment to take place. Wind
farms, for instance, were given a guaranteed market in 2007 when
the Legislature required private utilities to massively increase
the amount of renewable power they buy — and pass on extra
costs to ratepayers.
Solar manufacturers have lots of other reasons to locate in Oregon’s
“silicon forest.” Solar cells and computer chips use
the same foundation —silicon wafers — and a similar
basic technology. Oregon is a good location for wafer making because
it has very pure water, relatively cheap electricity, and an experienced
silicon manufacturing workforce. Judging by employment ads, SolarWorld
isn’t even looking at applicants with less than two years
in silicon chip manufacturing.
If it’s not clear the credits are even causing the investment,
at least they ought to be ensuring decent wages, says labor ally
Chuck Sheketoff of the Oregon Center for Public Policy.
Lawmakers appear to be listening. The Oregon Legislature is considering
lowering the credit from its current $10 million to $5 million per
project for projects that generate energy like wind farms, solar
arrays, and methane digesters.
For solar manufacturers, the maximum credit would remain $20 million
— and that amount would be made available to electric vehicle
manufacturers as well, if any should choose to locate in Oregon.
Lawmakers are also considering requiring recipients stay in operation
for at least five years, and giving the Oregon Department of Energy
the authority to consider job creation, where the power will be
sold, and whether the credit is necessary for the project to go
forward — before credits are approved.
As State Sen. Ginny Burdick put it, “the money we spend
on this credit is money that’s not being spent on health care,
schools, and public safety.” © Oregon Labor Press Publishing Co. Inc.
|