Solyndra Plant Had Whistling Robots, Spa Showers
The glass-and-metal building that Solyndra LLC began erecting alongside Interstate 880 in Fremont, California, in September 2009 was something the Silicon Valley area hadn’t seen in years: a new factory.
It wasn’t just any factory. When it was completed at an estimated cost of $733 million, including proceeds from a $535 million U.S. loan guarantee, it covered 300,000 square feet, the equivalent of five football fields. It had robots that whistled Disney tunes, spa-like showers with liquid-crystal displays of the water temperature, and glass-walled conference rooms.
“The new building is like the Taj Mahal,” John Pierce, 54, a San Jose resident who worked as a facilities manager at Solyndra, said in an interview.
The building, designed to make far more solar panels than Solyndra got orders for, is now shuttered, and U.S. taxpayers may be stuck with it. Solyndra filed for bankruptcy protection on Sept. 6, leaving in its wake investigations by Congress and the Federal Bureau of Investigation and a Republican-fueled political embarrassment for the Obama administration, which issued the loan guarantee. About 1,100 workers lost their jobs.
Amid the still-unfolding postmortems, the factory stands as emblematic of money misspent and the Field of Dreams ethos that seemed to drive the venture, said Ramesh Misra, a solar-industry analyst in Los Angeles for Brigantine Advisors.
“When you don’t have the demand, you can’t go into something with the attitude, ‘Build it and they will come,’” Misra said. “You have to make sure the customers are already there when you build it.”
He is skeptical of the company’s statement, in a press release on the groundbreaking for the plant, that it had a backlog of $2 billion in orders for its cylindrical solar modules for commercial rooftops, which it touted as cheaper to install and more efficient than competing flat panels. “Backlog” is a term sometimes used loosely in the industry and may not represent firm orders at all, he said.
David Miller, a Solyndra spokesman, didn’t respond to a phone call and e-mail seeking comment.
Solyndra was the dream of founder Chris Gronet, who received a Ph.D. in semiconductor processing at Stanford University and had spent 11 years as an executive at Applied Materials Inc. (AMAT) He adopted as the company’s motto, “What we do here will someday change the world.” Gronet didn’t return a phone call seeking comment.
U.S. Energy Secretary Steven Chu and then-California Governor Arnold Schwarzenegger attended the 2009 groundbreaking for the plant. At the event, Chu said the U.S. solar-energy industry was losing out to countries like China and the loan guarantee, the first awarded by the department under President Barack Obama’s 2009 economic stimulus plan, would ensure the company’s orders would be filled by U.S. workers.
Even as Chu, Gronet and Schwarzenegger were thrusting their shovels into the dirt, market forces were working against Solyndra. The price of polysilicon, the main ingredient in competing traditional solar panels, had plunged. By the time the plant opened last January, the price would be down about 40 percent from when Solyndra got the loan guarantee. Chinese companies were ramping up production of their ever-cheaper competing flat panels.
Solyndra executives rushed construction in a race to fill orders, putting some work on a 24-hour, seven-day schedule. The factory was up and ready for equipment installation in 10 months. The project employed more than 3,000 union construction workers, according to a Solyndra background sheet.
“They were anticipating large production,” Juancho Suntay, 51, a former Solyndra equipment maintenance technician, said in an interview. “That’s why they wanted to have a state- of-the-art factory.”
The plant features 19 loading docks, four electric car charging stations in the parking lot and landscaping of wild grass and a rock garden. An automated rail system moved parts through the assembly process.
Robots that resembled “a big freezer with wheels” maneuvered around the factory transporting panels from one machine to another, said George Garma, 49, a former Solyndra equipment maintenance technician from Fremont. The Disney tunes alerted workers to the robots’ presence.
“It was first class,” David Chan, 51, who was an information-technology contractor for Solyndra, said in an interview. “I’ve been in the business for 25 years and have seen some elaborate buildings. I’ve never seen a facility like it.”
Costly Real Estate
The plant caught the attention of competitors. “Everybody I know in the solar industry would remark on it and say ‘Boy, that’s a really, really big factory,’” said Barry Cinnamon, chief executive officer at Westinghouse Solar Inc., a Campbell, California-based solar-panel company that manufactures in China.
“That’s a lot of money that went into that factory,” Cinnamon said in an interview. “It’s one of those neck-snapping things every time you drove down the highway.”
Commercial real-estate agents in the region wondered why a new factory was being built in the Silicon Valley region, the epicenter of some of the priciest real estate in the country, where most new construction consists of office space.
“There hasn’t been a factory or warehouse building built in Silicon Valley in well over 10 years,” Jeff Fredericks, managing partner at Colliers International in San Jose, said in an e-mail.
The asking rate for industrial properties in Silicon Valley is the fourth-most expensive in the U.S., according to Jack DePuy, Bay Area research manager at CB Richard Ellis in Foster City, California.
About 11.4 percent, or 950,801 square feet, of industrial space was vacant in Fremont in September 2009, according to data from Colliers.
“There was available space that we talked about with them,” Bob Wasserman, Fremont’s mayor, said in an interview. “It was their decision that they needed a new building. Was that a good decision? It didn’t turn out to be.”
John Olenchalk, senior vice president at Kidder Mathews, a commercial real-estate firm in Redwood City, said Solyndra executives considered existing space, including a former Sun Microsystems Inc. facility in nearby Newark that had 218,000 square feet of production space. The company wanted more space and to be near its existing operations, he said.
Solyndra used the new plant for the first phase of panel production. An older facility nearby finished and assembled the panels, former employees said. Problems developed at the old plant, when machinery wouldn’t work properly and needed constant repair, workers said.
“Everybody was talking about it,” said Edward Santos, 44, a former warehouse worker in Solyndra’s logistics department.
“A significant percentage of the product we built went into a dumpster because it was defective,” said Craig Ewing, 55, a former maintenance technician. “It seemed like the company accepted that,” he said.
Even if the old plant hadn’t had problems, by the time the company opened the new facility it was clear that Solyndra had lost whatever cost advantage it might have had, said Michael Butler, chairman and CEO of Cascadia Capital LLC, a Seattle- based investment-banking firm that advises renewable-energy companies.
“I’m sure there was a lot of panic at that point, because I’m sure that everyone saw the writing on the wall,” Butler said.
Workers noticed inventory piling up. “The drivers would tell us that the warehouses are getting full,” Santos said. “Sometimes, they’d stay there one or two days before the material was unloaded.”
About two weeks before the company closed, Solyndra CEO Brian Harrison gave an upbeat speech at the new factory, said Romie Sumera, 58, a former equipment-maintenance technician.
Solyndra was getting leads on new orders from companies including Wal-Mart Stores Inc., Harrison told them.
Bloomberg moderates all comments. Comments that are abusive or off-topic will not be posted to the site. Excessively long comments may be moderated as well. Bloomberg cannot facilitate requests to remove comments or explain individual moderation decisions.