"It profits me but little that a vigilant authority always protects the tranquillity of my pleasures and constantly averts all dangers from my path, without my care or concern, if this same authority is the absolute master of my liberty and my life."

--Alexis de Tocqueville, Democracy in America

Thursday, September 15, 2011

Solyndra, Solyndra, Solyndra

Let's call this movie "Scenes from a Business Model Built to Fail":

In a July 13 letter to the Energy and Commerce Committee's Subcommittee on Oversight and Investigations obtained by this newspaper, Harrison [Solyndra's CEO] wrote that he wanted to "ensure" that the subcommittee had "the most accurate and up-to-date information regarding Solyndra." Harrison then wrote: "Solyndra's revenues grew from $6 million in 2008 to $100 million in 2009 to $140 million in 2010. For 2011, revenues are projected to nearly double again."

Now wait a minute.   You had a total of $240 million in revenue from actual business sales in 2009 and 2010, years in which you borrowed $535 million from taxpayers?   Meanwhile, you had 1,100 employees.   There is literally no way any business could pay 1,100 employees salaries and benefits off revenues of $120 million a year, and still pay for its building, utilities, equipment, taxes, marketing, legal compliance costs, etc.   Can't be done.  So this is a business model that, on its face, isn't working.   It's a Potemkin Village of activity by employees, but not a profit-making enterprise.


One former employee, Mohammed Walahi, who began working as a process technician for Solyndra in 2005... lashed out at his former employer, saying Solyndra manufactured solar panels that often contained imperfections that had to be thrown away.

"At least $100,000 a day was thrown away," Walahi said. "If they are wasting $100,000 a day, how much is that a month or a year? Of course that's going to lead to bankruptcy."

Now, I'm no math major, but $100,000 a day for a year would be something on the order of $30 million right there in losses tied to quality control.    On only $120 million in sales.   That's extraordinarily bad for any manufacturing plant.   Again, this is a business model that isn't working.   How come no one seemed to notice?

This is a scandal on a lot of levels.   There's the direct corruption, where a company connected to Obama donors got special treatment.   There's the stench of good money thrown after bad in a "green technology" delusion that in turn flowed from the "global warming" delusion of our elites.  

But perhaps the most important and obvious lesson to be drawn from the scandal is simply how poorly the federal government does at "investing" our money.   The people doing the "investing" are, at the highest levels, professional politicians (Obama), not business people.   And yet we've created a "business model" for America, Inc. that permits politicians with no business experience to invest hundreds of billions of dollars using really just their own whimsical sense of what might be a "cool" investment.   So we get "green technology" start-ups with no viable business plan financed with our money.  

The real scandal is that we never learn.

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