There are reasons to be hopeful about the 1366 Technologies plant in Genesee County. The company has survived when some solar companies have failed. It has a facility in Massachusetts where it says it found a way to make low-cost solar wafers, which is key to being competitive with China.
Two years ago, 1366 Technologies said it would not accept taxpayer dollars until it was sure these wafers could be scaled to a large manufacturing plant. The Boston Globe reported:
…executives said they won’t tap taxpayer money until they prove the company’s technology and products can succeed in a fiercely competitive industry increasingly dominated by low-cost Chinese manufacturers.
“Once everything works optimally, we want to scale to a larger facility,” chief executive Frank van Mierlo said. “That’s when we’ll take the [federal] money. It protects the taxpayer.”
It’s not clear what protects the taxpayer in this Genesee County deal. Taxpayers are in deeper than the private sector. 1366 Technologies is a privately-held company, which makes it hard to gauge what’s going on with its finances. But this report says the company has $69.5 million in private equity. The state is putting in $97 million. The federal government guaranteed a $150 million loan for this plant.
The state announced 1366 Technologies will eventually invest $700 million into the plant, but there’s no indication this company has this kind of money, at least not yet. The company promised to create at least 600 jobs of the promised 1,000.
(Think this is troubling? Check out the state’s investment in Buffalo’s Solar City.)
These tax dollars don’t include the cost of the Genesee County land, known as STAMP. The county IDA has been spending tax dollars to buy up farmland – without ever knowing if anyone would locate a company there. The county also committed to putting in the infrastructure. In 2013, I reported that the cost to build STAMP could be $350 million over 10 to 15 years. (STAMP is a great example of industrial sprawl, by the way. We don’t have a lot of empty buildings in Rochester? We don’t have the infrastructure already existing here? And while I’m at it, this plant will be 50 miles away from Rochester. Is this really a win for us?)
There’s no guarantee this company’s full-scale manufacturing plant will be successful.
“If you’re so convinced, why do you need our money, why don’t you go to Wall Street?” asked George Conboy of Brighton Securities. “Whenever you go to public funding like this, you don’t have the market disciplines. When you have market discipline, someone’s putting up their money. In this case, someone is putting up someone else’s money – taxpayers’ money.”