HILLSBORO, Ore. – A solar cell factory has sprouted in Oregon’s Silicon Forest amid the region’s old-growth semiconductor plants. And who is providing these well-paid, high-tech green jobs, investing in America rather than fleeing to Asia to set up shop? The Germans.
Bonn-based SolarWorld AG on Friday officially flips the switch on the United States’ largest solar cell plant. (See the Fortune video here.) The company, the world’s fifth largest solar cell manufacturer, has recycled a former Komatsu factory built to produce silicon wafers for the chip industry Last week, SolarWorld America president Boris Klebensberger gave Green Wombat a sneak peak at the new Hillsboro plant and talked about why a German company, whose domestic solar market is the planet’s largest, is pursuing a made-in-America strategy. (SolarWorld’s German rival Solon AG, meanwhile, on Friday opened a smaller solar module plant in Tucson, Ariz.)
“I know a lot of people will say, ‘You idiot, Boris. You can’t manufacture in the U.S.,’ ” says Klebensberger, 39, who sports a hoop earring and has a penchant for saying what’s on his mind.
That has been the conventional wisdom. While thin-film solar companies like First Solar (FSLR), Solyndra and Energy Conversion Devices (ENER) have built factories in the U.S., traditional silicon-based module makers such as SunPower (SPWRA) have outsourced production overseas.
But SolarWorld is counting on its expertise in manufacturing in high-cost Germany and its new American branding to give it a competitive advantage. “Made in America is a very big selling point,” says SolarWorld marketing director Anne Schneider. “Customers like that.”
Like other solar cell makers, SolarWorld is trying to build a brand around an increasingly commoditized product. “Even in a commodity business this is a brand,” says Klebensberger. “If you have to choose between two products that are technologically the same, you’ll probably choose the one made in the U.S.”
SolarWorld jumped into the U.S. market in 2006 when it acquired Royal Dutch Shell’s solar cell factory in Camarillo, Calif., and a silicon ingot plant in Vancouver, Wash. “This was an opportunity for SolarWorld to establish itself in the U.S. market very quickly and get an employee base,” says Klebensberger, who also serves as COO of SolarWorld’s global operations.
The company was founded in 1998 by, as Klebensberger puts it, “five crazy guys who people thought were on drugs” when they said they were going into the solar business. (Klebensberger was employee No. 7.) But Germany’s lucrative incentives for renewable energy quickly turned the nation into a solar powerhouse and SolarWorld went public in 1999. Revenues – $931 million last year – have been growing around 30%-40% annually and the company has a market cap of $3.1 billion.
SolarWorld saw a potentially huge opportunity in the U.S. but the Shell plant was relatively small – producing 80 megawatts of solar cells annually – so Klebensberger went shopping for a new factory. He ruled out California – too expensive – before settling on Hillsboro, 20 miles west of Portland.
The cost of living was reasonable – at least compared to California – and Oregon is on the forefront of promoting sustainability and the green economy. And just as importantly, Intel (INTC) and other chip companies had opened semiconductor factories, or fabs, in the area in the 1980s and ’90s. “A lot of our workforce came from established chip companies or those that closed their fabs,” says Klebensberger, sipping tea from a coffee cup emblazoned with “Got Silicon?”
“The manufacturing and product is different but the raw starting material is the same and there’s a lot of similarity in the equipment,” adds Gordon Bisner, vice president of operations and a chip industry veteran. “There’s a lot of the same skill sets from a maintenance and engineering standpoint and understanding the basic manufacturing principles and what it takes to manufacture a product successfully in the United States.”
Klebensberger’s team found an old Komatsu silicon wafer fab that had stood empty for years. They bought the 480,000-square foot building for $40 million last year and began retrofitting it. “We needed a quick ramp-up,” says Klebensberger. “This business is all about speed.”
The retrofit took about 15 months – though the minimalist gray industrial decor of the Komatsu era remains. When fully built out in a couple of years, the plant will produce 500 megawatts’ worth of solar cells annually and employ 1,400 workers. In the meantime, the target is 100 megawatts by the end of 2008, and 250 megawatts in 2009.
In one corner of the building, a room of steel vats cook up polysilicon, producing eight-foot-long silicon ingots in the shape of giant silver pencils. Those ingots are taken to another room where wiresaw machines slice them into wafers. The wafers then travel down a conveyor belt where robots wash them and scan for imperfections.
“What’s critical here is the equipment,” says Bisner over the hum of the machines. “Our competitive advantage is how we use the equipment, how can we get every little bit of photovoltaic cell out of the end of the line. It takes equipment, it takes technology and it takes people too.”
In an adjoining room, the wafers are imprinted with contacts and transformed into photovoltaic cells. Depending on customer demand, SolarWorld will sell both silicon wafers and finished cells. The company currently gets 10% to 15% of its revenues from the U.S.
SolarWorld isn’t the only solar company wanting a made-in-America label. Sanyo this week announced it will build a solar cell factory in Salem, south of Portland. And Chinese solar giant Suntech (STP) earlier this month acquired a California-based solar installer and announced a joint venture with San Francisco-based MMA Renewable Ventures (MMA) to build solar power plants. Suntech chief strategy officer Steven Chan told Green Wombat this week that Suntech will likely open factories in the U.S. within a couple years.
Says Klebensberger, “We provide green jobs. We’re not just talking about it, we’re doing it.”