Today I’d like to welcome a new contributor to the SolarQuotes blog – Ronald Brakels. Ronald is technically minded and has a lot of passion for the Australian renewable energy industry, and is not afraid to put his opinion forth. I’m not always going agree with every opinion Ronald holds – but I always enjoy how he articulates those opinions. I think you will too. Over to you Ronald:
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Tindo Solar is Australia’s only solar panel manufacturer and its Adelaide facility employs a total of 25 people. They produce high quality solar panels specially designed for the harsh Australian environment. Finn tells me he has 24 of them on his roof and they are working great. They are panels that I highly recommend.
Or at least, I used to be able to recommend them. I’m not sure I can do that with a clear conscience any more. Why? Because Tindo Solar has embarked on a course of action that I believe may well harm both Australia’s solar industry and the world’s environment.
Tindo have asked the Australian Anti-Dumping Commission to investigate whether imported Chinese solar panels have been sold here at below cost. If the Commission rules that dumping has taken place it will impose punitive tariffs on Chinese panels that will increase the cost of solar for Australians, reducing installation rates and increasing our greenhouse gas emissions.
Now, whether or not Chinese panels have been dumped in Australia is an open question. That is, one of those questions to which the answer is both yes and no. Let me explain.
Yes because pretty much everything Australia imports from China is subsidised by low cost loans to industry, funded by the state stealing from the savings of Chinese citizens via interest rates on deposits that are considerably lower than the inflation rate.
No because this is not regarded as dumping by the Commission. Instead they will be looking to see if solar panels have been sold in Australia (taking into account the cost of transport) at a lower price than they were sold in China.
However, some Chinese manufacturers have sold panels in Australia at an introductory low price just to get their foot in the door and build some brand recognition in a competitive market. And some Chinese panels that were meant for Europe and the US were probably sold at a discount in Australia once those areas introduced punitive tariffs to protect their own, considerably more than 25, solar panel manufacturing employees. The Commission is not supposed to class business practices commonly used in a rapidly growing sector, or temporary market events caused by changing conditions, as dumping. However, there is plenty of scope to claim evidence of so-called dumping if political influence was brought to bear in favour of such a finding. Of course such a thing could never happen in Australia! It would be as unlikely as putting a known climate change denier in charge of reviewing Australia’s Renewable Energy Target.
Would punitive tariffs on Chinese solar panels be such a bad thing?
That is a reasonable question to ask. And the answer is:
“Yes! It would be!”
There are several reasons why.
Firstly, when a country spends its own money to make the goods it is selling you cheaper, the correct response is to write them a polite thank you note. This is because they are basically giving you stuff for free. Now, this doesn’t mean a country should let its own people working in that area suffer, but if a country has no people working in an industry and rejects subsidised goods then that’s a damn fine definition of the word stupid. Australia has next to no people working in solar panel manufacturing. The total is 25 and that includes management and sales positions. The benefit, to the nation, of receiving subsidised panels would far outweigh the cost.
Secondly, punitive tariffs could potentially be quite high and this will harm Australia’s solar installation industry which employs thousands. For every solar panel manufacturing job that gets helped, about 700 solar installation jobs would be harmed. While we can sympathise with Tindo Solar, punitive tariffs are clearly unfair to the solar industry as a whole. In addition, the increased cost of installation that would result would be a blow to Australian business which is now starting to rely on solar power to control costs, and it would harm average Australians by increasing the cost of household rooftop solar.
Thirdly and most importantly, by raising costs, punitive tariffs will reduce the amount of solar capacity that is installed and result in more greenhouse gases being emitted than without the tariffs. This puts everyone in the world at greater risk of economic or direct physical harm from the effects of climate change, with a great deal of the burden falling upon the world’s poorest people. Tindo Solar’s actions have, to at least some extent, put human lives at greater risk. I suppose it is possible that everyone at Tindo Solar is a climate denialist and so don’t think they’re putting anyone in harm’s way, but I kind of doubt that. Normally people who seek out careers in renewable energy do so out of a desire save the world and its inhabitants from harm and these people have always been my heroes. Up until now.
If the Anti-Dumping Commission found that dumping had occurred and put a punitive tariff in place that was high enough to cover the cost of finding work for the 25 people involved in solar panel manufacturing in Australia if they should lose their jobs, I would be totally down with that. It could pay for income support while they search for new work, or train or study, or they could receive some sort of payout if they instead preferred to retire or take an extended vacation. The important thing is, this tariff would be tiny, a fraction of a cent per dollar’s worth of Chinese solar panel imported. However, punitive tariffs don’t work like that and if introduced they would almost certainly be much larger and so considerably increase the cost of installing solar with negative consequences for the Australian solar industry and the environment.
Just to be clear, I don’t want Tindo’s 25 workers to lose their jobs if their company can’t hack the competition, whether that competition is fair or otherwise. I don’t even want them to feel stressed over the possibility of losing their jobs. Unfortunately, I don’t have any magic permanent employment pixie dust I can sprinkle on them. However, I could ask people working in Australia’s solar installation industry to offer jobs to these people if they need them. While there are some significant differences between solar manufacturing and solar installation, having a job available if you need it is certainly better than not having one, and I encourage Australia’s solar industry to offer these people employment if Tindo Solar closes as a result of low cost imports.
Of course it’s easy to ask other people to do things. Perhaps I should think of something I could do myself. If Tindo Solar can’t compete against imports in its current form, rather than shut down and have its equipment shipped off to say China, perhaps it could continue to manufacture panels in Australia if it was reorganised as a non-profit. Successive Australian governments have pushed the creation of a huge volunteer sector in the economy and as more service jobs become automated this trend is likely to continue, so there could be some support for this, and I’d be willing to contribute labour and some capital towards making this happen.
The other option that I think Tindo could consider is to simply position themselves as making Aussie made, high end, high performance, and – yes, slightly more expensive – solar panels for the end of the market that doesn’t mind spending a bit more on a top-of-the-range product manufactured locally to exacting standards.
Instigating this dastardly dumping investigation certainly seems like a risky move for Tindo. They risk alienating lots of their brethren in the solar industry, the very people that they need to be out there promoting them and putting their panels on people’s roofs who I’m sure would otherwise be more than happy to support a boutique Aussie panel manufacturer. They risk tarnishing their brand with memories of the harm Tindo attempted to bring upon the Australian solar industry by inviting the bureaucrats in to poke around accusingly inside Australian solar panel importers at a time when they need to be focussed on simply surviving the stacked RET review which threatens to decimate Australian solar without Tindo’s help.
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We will cross Tindo off our list if this succeeds. No interest in supporting a company which has zero interest in reducing emissions, sorry. You want our business? Create 400W panels at a reasonable cost… and we’ll buy Australian-made.
Ronald is somewhat naive in his analysis of the the Chinese approach to export markets. He suggests that when they dump into a foreign market (i.e. us) ‘they are basically giving you stuff for free’. I’m afraid not Ronald. Believe it or not the Chinese Government are not subsidising their manufacturing industry and the industry is not passing on subsidised prices to Australian consumers just because they they like us and want to do us a favour. That would be irrational and unprofitable in the long run and the Chinese are not the former and they have no intention of being the latter. Their strategy is entirely rational and very profitable. They subsidise industries to create massive economies of scale that allow them to manufacture with a cost base that no one else can match. (Especially countries that pay high wages and have overheads like the carbon tax imposed on them.) They then move to a position of market dominance that is simply unassailable because no one else has these sorts of volumes and the competition from other manufacturing countries withers and dies. (Numerous US industries have suffered this fate.) From then on they are a price maker rather than a price taker. There is a cost to this in the short term but this is more than compensated for in the long term because there is little effective competition left. The price goes down rather pleasingly due to advances in manufacturing and technology (have you bought a power drill lately?) but the margins are in fact very healthy and the profits are stupendous. (Have you been to China lately?)
This is why the European Commission and the United States International Trade Commission have imposed tariffs to counter the effect of dumping. In the long term, prices are lower if you have more competition and the only way to preserve competition is to counter these sorts of dumping tactics. Therefore Ronald’s first point is incorrect, dumping is not a long term benefit to the consumers of the goods being dumped. The Chinese are not dumping so that we end up paying less, they’re dumping so that we end up paying more. Panels, like all manufactured goods will still keep getting cheaper but not as much is if there were more competition, especially competition from non-Chinese manufacturers. (Not that I’m suggesting that Chinese manufacturers and exporters would ever collude on price.)
Similarly, the logic behind Ronald’s second and third points is also flawed. The solar installation industry is a price taker because it is a small part of a world market for PV panels. As a price taker, it cannot be assisted by having less competition. The more suppliers from the more countries, the better it will be for them. Also the idea that stopping dumping of PV panels will destroy the planet as we’ll all stop installing solar panels is illogical. Nothing will stop us installing PV panels but the number we install will be inversely proportional to the price. That’s how markets work. Chinese manufacturers don’t want to sell us panels for the lowest profit they can, they want to sell them for the highest profit. If they succeed in killing off the competition, there’ll be much more scope for that.
On the other hand, maybe I’m being unduly cynical about the motives of the Chinese. Maybe Ronald is right and the bad guys in all this are Tindo Solar in their little Adelaide factory with their 25 employees. Maybe as Ronald suggests they have gone over to the dark side and are trying to destroy the planet with their anti-dumping complaint. Unfortunately I suspect Ronald will get his wish and Tindo won’t withstand the onslaught of the Chinese solar industry. But at least they’re not going down without a fight. I know who I’m barracking for.
David Lewis, thanks for your well written reply to the article. I read it with interest. One thing I would like to ask you is, are you of the opinion that new solar cell production lines won’t have a lower marginal cost than current ones from this point on?
My guess is that PV panel manufacturing will be like most other manufacturing. In real terms the cost of very high volume manufactured goods almost always drops over time due to advances in technology and productivity as well as commoditisation which squeezes margins as patent and know how barriers drop. A power drill that would have cost a tradie a week’s wages a generation ago now costs about the same as lunch. You can replace the wide screen TV you bought two years ago with a better one for a way lower price, You feel you’re getting a great deal and you are but, here’s the thing, how much of the benefit of advances in technology, productivity, etc. are going to you and how much to the manufacturer and exporter? The answer is that the more competition there is between manufacturers and countries that manufacture, the smaller slice of the pie that goes to the sellers and the bigger the slice that goes to the buyers. With PV panels, I suspect this battle has pretty much been won by the Chinese and lost by the rest of the world. Fourteen years ago their market share was virtually zero. Now combined PRC and Taiwan (they’re not merged politically but they now effectively a pan-China economy) is around 2/3 of the world market. The Europeans and Americans get to fight over the crumbs. Who is there left to challenge this? My money is on India – like China they have low input costs, a good labour pool and a domestic market that can supercharge this sort of manufacturing. Where does this leave a small Australian manufacturer? Well I hope they’ve got something which genuinely and materially differentiates their product from the behemoths’ products because they won’t survive without it. Either way, I wouldn’t worry about them jacking up the prices of PV panels much or for long.
Firstly, I’d like to appologise for spelling your first name incorrectly in my previous comment, Davyd. Secondly, if:
1. China is currently subsidising PV now to eliminate competition so it can make large profits later, and
2. New production lines have a marginal cost advantage over older production lines.
Then wouldn’t China have to keep subsidising PV until it became a mature technology and new production lines had no significant advantage over previous ones? Otherwise wouldn’t the latest production line have a unit cost advantage where ever it happened to be built?
I’ve only just seen this thread but here’s my opinion.
Firstly your argument cuts its own legs off. Why would you build a new , slightly cheaper,production line that costs $xyz when Australia has shown it does nothing to stop illegal dumping and your profit margins gone.
Secondly if your so pro environment why aren’t you looking at the total environmental cost?
Production in China is normally 30-50% worse carbon wise than in a first world western economy, secondly the environmental damage by transport costs on fossil fuel burning ships that are responsible for almost 10% of global emissions! Third the shorter life of cheaper Chinese products requiring more emissions from replacement at far sooner intervals.
Finally the long term price when they control the market, your being naive if you don’t think China will make a profit in the long term, which will also reduce sales.
We haven’t learnt from past experience, I work in another industry suffering dumping and to give you a perfect example, we used to make stainless and tinplate in Oz for local consumption, dumping occurred , govt did little to slow, we stopped those sections, within 18 months prices where 30% over what we used to sell at, in Australia. But if you moved the entire operation to China the tinplate for cans where magically far cheaper.
http://www.q-cells.com/en/press/article/PHOTON-Module-Yield-Measurements-2013-QPRO-is-the-Best-Polycrystalline-Solar-Module-in-the-Test.html
400 WATT PANELS? about time and it would also be nice to see plug in MH4 solar panel connector junction boxes available from anywhere to connect 2,4,6,8 panels together in user configurable voltages that are CEC compliant re uv and weather but I suppose pmt rules apply as usual
Somebody has to put a counter argument to this:
1. Anti dumping laws are there for a reason – it’s to stop international companies artificially putting local companies out of business and then raising the price when there is no competition;
2. If the Chinese are really dumping then let the courts decide this.
3. The main issue about why China is so competitive compared to the rest of the world is that they artificially hold down the value of the Yuan, whereas ours is a floating currency which has devastated our manufacturing sector. This advantage won’t be taken into consideration in anti-dumping court case as it will also make the panels cheaper in China too.
4. Even without dumping the Chinese are likely to put Tindo Solar out of business because the Chinese are cheaper because of the reasons above (and we always buy cheapest right!!!)
5. I hope we all have a good answer when China revalues its currency and all of a sudden everything is very expensive to us and we have no local products to buy.
6. I hope no-one has children that want a job in Australian manufacturing.
Regards
Robert Baird
P.S. Oh just to add credibility, I am an electrical engineer too!
Well, this is an interesting thread, I would hope that if you are lucky enough to have a job in Australia, paying taxes and enjoying our enviable life, especially post mining boom, that you would support other Australians, also paying taxes, who have jobs, even if it costs a bit more. I would also like to think the general quality would be better. Solar panels are a big investment, and much of the technology in solar was pioneered by Australians. I have BP Solar panels that are 30 plus years old, still producing electricity, and I’m sure I’m not the only one. My concern with a lot of the imports is that in two, five , ten years time, that the panels fail. Meanwhile the factory overseas have been bulldozed to build a factory to make the latest fashionable product.
I hope Australians at all levels, INCLUDING THE GOVERNMENT get right behind anyone with the balls to have a go and actually produce something here.
I would like to see exports of this product to help the gross domestic product balance and I think this would be a good item to send to developing counties we support via overseas aid programs . Maybe I am thinking too simplistically
I am not an electrical engineer, merely just a dumb diesel fitter
Have a great day everyone
I am new to the Solar Panels subject. I like the sound of Tindo and AC. My question is what happens if I buy tindo panels and they go bust?? What happens to warranty etc??
I’m afraid that if a solar panel manufacturer goes bust their warranties become worthless. Large solar farms can get third party insurance to protect against this, but it’s not really practical for households.
The good news is you should be very unlikely to have a problem with Tindo panels, so even without a warranty you should be okay. And because I’m sure the cost of solar panels will continue to fall, if you do need to replace one in the future it shouldn’t cost that much.
Merry Christmas!
What we see on this matter leaves a great deal to be desired when some precious little Greenie with some academic qualifications and allegedly serious environmental concerns about the future of the planet gets involved in a discussion such as the one we see here, one wonders why?, because irrespective of what response you offer, you can not win.
If you live in Australia and are not prepared to protect Australian jobs against product dumping or any other scheme that cost hard working Australians their jobs, you should be ashamed of yourself and find somewhere else to live, Perhaps in a more comfortable dictatorship of a war torn country.
Have a forensic look at China now. the rich and middle class are getting richer, the poor underclass are getting poorer and are also loosing their jobs in manufacturing because China is starting to feel increased prices and wages demands. Their economy is moving quickly to being westernised.
The first significant industry to feel the pressure is the textile industries, they are huge there, many using Australian wool and cotton exclusively. Major huge textile manufacturers have shut up shop in China and have relocated to either Ethiopia or Bangladesh, where their factories pay workers the Australian equivalent of $25:00 a month, a pittance by our standards.
Have a look at the financial invasion by Chinese interests into Australia, ports, power grids, vehicle tunnels, resort hotels, gambling franchises, housing estates, cattle stations, meat processing plants, shipping, dairies and fishing fleets in Tasmania and clothing to name a few.
Bear this in mind. There is not one Chinese company on the planet that the Chinese Government does not hold a significant financial and administrative stake in. They demand the right to flex their muscles.
If you think for one moment that there is no ulterior motive behind China’s attempt to gain international dominance, you are in Disney Land.
Tindo is a great Australian family company who we should be supporting irrespective.
Tindo is exercising their democratic right to challenge a ‘product dumping’ issue of a product in an industry that they earn their living out of.
Is the dissenting Mr Brakels really implying that Tindo should not be legally entitled to do so? That is contrary to the Australian way.
Academics or so called professionals entering into discussions of this nature usually results in the end opinion being, ‘my way or the highway.’ They usually muddy the waters to genuine discussion and reasoning.
Future jobs for Australians will come from the application of new technologies combined with the knowledge and expertise gained within current manufacturing and primary production. Destroy any part of this complex arrangement and you ring bark the tree of economic development. I believe the Chinese authorities recognize this and have imported a lot of technical expertise from developed countries, just ask GMH how many senior production staff were trained up at Elizabeth to take back the knowledge of quality manufacture to China. The level playing field that is often spoken of simply does not exist where cost transfers and financing are being manipulated by business and all levels of Government. How can we protest against Chinese subsidization when we are currently proposing to do the same with coal exports from Queensland. If we do not develop however an effective process to protect, encourage and support Australian new industries to compete in our new world we are all lost.
so 5 and half years ago Ronald Brakels seemed sure about the demise of Tindo due to its anti dumping stance and numbers jumped onto that bandwagon..skip to now and Tindo are still going strong, export to Vietnam and have purchased land for expansion..meanwhile the woes of the cheap chinese panels are being felt and publicised..Oh yeah I have just purchased a 4.2Kw AC system from Tindo, installed by competant trades people. I am also passionate about supporting local business..cheers Chris
Wow. I am really bad at communicating.