Now that the FIRE economy has proved a bust for the majority of Americans, we need to find ways to revitalize our manufacturing base. Means to accomplish this national priority include replacing our aging electric grid, retrofiting existing buildings and homes to increase energy efficiency, moving away from the exclusive use of the internal combustion engine for transportation, and manufacturing alternative energy generation systems. So why is the Wall Street Journal bellowing about China building wind turbines in Texas? Believe US Person, the deal is nothing to be proud of, but is symptomatic of our deteriorating economic competitiveness. Countries that do not manufacture most of their goods at home end up at the bottom of the heap. Russia experienced this painful condition when the Soviet system collapsed. Importing almost all of its consumer goods led to devaluation of the ruble and default on international loans. The effects of the default were felt even in the bastion of capitalism, Wall Street, with the collapse of Long Term Capital Management. A-Power Energy Generation Systems, Ltd. will supply 240 2.5 megawatt wind turbines for a 36,000 acre wind farm in West Texas. The Export-Import Bank of China is also providing $1.5 billion in financing, not Goldman Sachs, Citigroup or JP Morgan Chase. The sad fact is that the United States lost its lead in wind turbine manufacturing in the 1980s when government subsidies for alternative energy development trickled out. Despite renewal of a production tax credit which has stimulated development recently, in the three quarters of 2009 there were 33% fewer announced expansions of U.S. turbine factories compared to 2008. The U.S. managing partner of the Texas wind farm development will nevertheless seek tax credits and aid from the federal stimulus package.
Wind power is gaining traction in the US. Total installation capacity is rated at 31,000 megawatts, worth about 10 nuclear power plants of power. Of the 51 farms currently under construction that have announced their turbine contractor GE is supplying 21. The industry's lobby group says a firm national commitment to renewable energy is still needed from Washington. A spokesperson for the American Alliance for Manufacturing wrote in a letter to 44 that he was "deeply shocked" that efforts to revitalize our industrial base were being "unseated by subsidized imports seeking to capitalize on demand for clean energy products". China is also exporting an increasing number of photovoltaic panels at lower prices than domestically produced panels. Robert Kennedy Jr., addressing the Solar Power 09 Conference in Anaheim, CA last week said that America is in an "arms race with China" to make inexpensive and efficient solar panels. Giving manufacturing business to our biggest foreign creditor is not the way to give a green light to clean energy independence, but it is one way to keep them from dumping the dollar. The President may have to explain this situation to the voters in Newton, Iowa*.
[photo credit: Iowa wind farm, AP.]
*Iowa ranks second behind Texas in total installed wind power capacity followed by California, Minnesota and Oregon. Newton hosts a structural tower manufacturer whose products are used in the wind power industry. The Maytag plant closed several years ago.