Evergreen Solar announced this month that it would shutter its solar wafer and cell production plant in Devens, Massachusetts despite the generous $58 million it received in subsidies from the state. Eight hundred workers will lose their jobs by the end of March this year. The company is moving its manufacturing operations to China, where it will enjoy higher levels of government subsidies in the form of low-interest loans and factory wages averaging less than $300 a month.
When you compare a $300 monthly salary with an average Massachusetts factory worker salary of $5,400 a month, it’s little wonder that the subsidy awarded by Massachusetts makes little difference in the company’s long term business strategy – especially given the fact that Evergreen will be able to take most of the money and run. Of the $58 million award, $13 million was provided through an infrastructure subsidy, $21 million in the form of direct grants, and the remainder was provided in tax credits. Massachusetts officials stated that the state stands to recoup only $3 million of its $21 million grant, even though Evergreen constructed its factory just two years ago.
In its rush to bag a green trophy business, Massachusetts neglected to attach job creation requirements to the majority of the subsidy. Only $20 million of the total award contractually required that jobs be created at all. (For more on green job quality and job creation, including the Evergreen Solar deal, see Good Jobs First’s 2009 publication “High Road or Low Road: Job Quality in the New Green Economy.”)
It’s never fun to say “I told you so” when the subject is economic development subsidies because it is so often the case that workers will be losing their jobs, so we’ll focus instead on the takeaways:
- Job creation subsidies provided to companies that have a history of outsourcing manufacturing jobs are a dangerous bet.
- When a company can retain nearly 90 percent of its development subsidy after operating for just two years, it’s time for stricter clawback requirements.
- Attempts to combat global market forces and federal trade policy with state tax subsidies are ineffective and wasteful.