Business Beyond the Reef

GE turbine - No protection

Members of Congress and other politicians love to wax eloquent about American ingenuity, determination and inventiveness.  And yet they refuse to trust those very qualities when faced with competition from overseas.  Senator Charles Schumer (D – New York) may be the biggest unbeliever in the ability of American companies to make their own way in the world.  After all, in the Senator’s mind apparently, all foreign competition is somehow unfair and must be countered by legislation to protect us from nefarious outsiders.  Sounds like something the cadres in Beijing might come up with, doesn’t it?

Senator Schumer’s latest is to propose “Buy America” procurement requirements on all federally-financed programs to encourage investment in renewable energy.  The flash point, reported by Bloomberg last week, is a project in Texas.  Seems that a joint venture, involving Americans and Chinese, has the temerity to plan a $1.5 billion wind farm that would make use of Chinese turbines.  The organizers haven’t actually asked for Federal funding, though that is a possibility.  Even using Chinese-produced turbines, the 600 MW project still stands to create 1,000 new jobs in Texas.  But Schumer, not satisfied with 1,000 jobs in a state not his own, argues that he doesn’t want U.S. funding to subsidize “green” jobs anywhere else in the world (though one is tempted to wonder if he would object as mightily to turbines from, say, Denmark).  The Senator hasn’t glommed on to the idea that the Texas project is a U.S.-Chinese joint venture and that joint ventures generally mean that the benefits are shared among the partners – jointly.  In fact, the partners say that the Chinese are providing some of the financing and the turbines, while all the construction in Texas will be done by American workers and some 70% of the value of the project, including the huge towers and immense blades will be made in the United States from U.S. materials.  That apparently isn’t enough for Senator Schumer.

Is Schumer’s interest prompted by the proximity of Connecticut-based General Electric, the leading U.S. producer of renewable energy equipment?  Presumably there are GE employees who commute from neighboring New York.  But no.  General Electric is on record as opposing “Buy America” for renewable energy projects.  GE executives, and probably the rank and file, realize that such policies jeopardize GE’s own sales of turbines and other products outside the United States when other nations respond to Schumer’s folly.  GE is already the world’s #2 supplier of wind turbines, behind Denmark’s Vestas Wind Systems, and they are wise enough to know that you win some contracts and you lose others.  That does not mean they need protection.

Nor does the U.S. wind energy industry as a whole.  Current estimates are that the industry will create 20,000 new jobs in the United States over the next decade, which seems healthy enough.  Steve Bolze, who heads up GE’s power and water division, told Bloomberg: “What the U.S. needs, which Europe, China and other countries have, is stable, long-term policy.” We don’t have that, and troglodytes like Senator Schumer will ensure that we don’t.  No wonder GE is looking elsewhere for growth.

This entry was posted on Monday, April 19th, 2010 at 6:34 am and is filed under Business Opportunities, China, Trade Policy, Unintended Consequences. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.