No Way to Run a Business (or a Government)

by Andrew Stiles

If you run a company whose chief product is overly-expensive and inefficient to the point of being unprofitable, you can’t reasonably expect to be in business for very long. That didn’t stop Solyndra CEO Chris Gronet from boldly predicting in October 2009 that “we will be the largest U.S.-content solar manufacturer in the world very soon.” (Solyndra filed for bankruptcy in September 2011.)

Gronet’s “business model” began with a $535 million taxpayer guaranteed loan from the Department of Energy. But it didn’t end there:

Continued support from the federal government was always a fundamental aspect of Solyndra’s “business model.” On Dec. 18, 2009, three months after the Department of Energy (DOE) loan guarantee was formally awarded, Solyndra submitted a filing to the Securities and Exchange Commission for a planned initial public offering of company stock. In that filing, the company said that it planned to become profitable in part by “strategically aligning our products with key government programs that provide financial incentives, export credit and project finance.” Having someone like billionaire Obama fundraiser George Kaiser as a primary investor certainly couldn’t have hurt, either.

Of course, the only thing better than a government program designed to promote an otherwise undesirable product — expensive and inefficient solar panels — would be a law encouraging the purchase of those products. Which is why Solyndra’s backers were so eager to see Congress pass cap-and-trade legislation, which would have made other forms of electricity more expensive. One can quite reasonably suspect that this was a central focus of the company’s multi-million-dollar lobbying effort in Washington. But Solyndra’s bosses weren’t just rooting for cap-and-trade to pass; they had essentially baked it into their business strategy.

In a May 24, 2010, e-mail to a senior White House official, Department of Energy stimulus adviser Mike Rogers explained that the company’s executives “have been counting on an energy bill to pass.” As a result, Rogers warned, “if Europe goes south and we don’t see an energy bill here, [Solyndra] will face issues in the 18–24 month window.”

More on the homepage. It seems only natural that Solyndra’s executives would pursue, if not expect, the continued support of “the bank of Washington” (Gronet’s words) for a company the Obama administration considered “one of their prime poster children,” the mere thought of which apparently sent top White House advisers into an ‘orgasmic’ state. Fortunately, the “the bank of Washington” threw in the towel before even more taxpayer dollars were squandered.

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