Bite-Sized Solyndra: The Amonix Shutdown
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Amonix, a solar manufacturing company based in Seal Beach, California, has just shut its doors for the 214,000 square-foot facility in North Las Vegas, Nevada, a year after it opened. Amonix was heavily subsidized by the federal government, with more than $20 million in total federal tax credits and grants. Amonix was highly praised and extolled by several Republican and Democratic politicians, including Senator Harry Reid (D-NV), Nevada Governor Brian Sandoval (R), and U.S. Representative Shelley Berkley (D-NV), among others.
Solar stocks are expected to take a big hit from the news, including already troubled companies such as First Solar (NASDAQ: FSLR), LDK Solar (NYSE: LDK), Canadian Solar (NASDAQ: CSIQ) and Ecotality (NASDAQ: ECTY). First Solar and Ecotality have recently been dealing with accusations of wasting government funds, corruption, and speculation that they will soon declare bankruptcy.
These companies' woes go far beyond indictments of wasted funds. First Solar, a company that used to be prosperous on Wall Street, is now bleeding cash profusely. The company has reported substantial losses and not enough revenues to remain financially solvent. LDK has reported no positive cash flow at all for the past few years, and its shares are currently only trading at $2.04 a share. Canadian Solar has posted only losses since the fourth quarter of 2011 and has serious capital management difficulties. Ecotality is grappling with serious charges of insider trading and has had their financial and legal problems aired to the public.
Amonix was reeling from the tragic loss of its CEO Brian Robertson, who died in a plane crash last December. Harry Reid defended the company by citing the loss of Robertson as the reason why Amonix has gone down. He said that Amonix was unable to recover after Robertson's death.
While Robertson's death certainly has had an adverse affect on Amonix, this does not justify millions of our hard-earned, taxpayer dollars being thrown at non-solvent companies. We should not be giving government handouts to these companies. Senator Reid's reasoning is unfortunately faulty.
The stimulus funds for solar companies were given out by the Obama administration and these companies largely relied on Washington's payroll to stay afloat, not the free market. Had these companies freely competed, they most likely would have failed and been removed from competition with no cost to millions of taxpayers. Failure is an unfortunate thing, but it teaches us to be better and weeds out low performers. In the end, the real achievers and innovaters are rewarded in due time.
When will our government learn from its mistakes? When Uncle Sam steps in to the free market and picks winners and losers, the market process is significantly altered, and we are not as prosperous or free. “Crony capitalism” seeks to reward whom the government thinks is “a worthy investment,” but in the end, it serves as a roadblock to innovation, reform, and accountability. Amonix is just the latest example demonstrating the questionable federal government policy of subsidizing green energy, and it illustrates very well how big-government spending “stimulus” solutions are failing at a time when Americans can least afford it.
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