New York Shows Off Its Expertise In Central Planning: The Buffalo Billion

Manhattan Contrarian ^ | 15 Apr, 2024 | Francis Menton

[MtnClimber]

Let’s face it: Central planning of the economy hasn’t worked out so well in many places where it has been tried (e.g., Soviet Union, Cuba, North Korea, etc.). But then, here in New York, we are so much smarter than the dolts who fell on their faces in those backwaters. With utter confidence in our genius, we have embarked upon the total centrally-directed transformation of the economy into “net zero” utopia, via the Climate Leadership and Community Protection Act of 2019.

But that project is barely getting under way. It will be a few years before we have enough feedback to judge it a success or failure.

Meanwhile, is there any other significant central planning initiative here in New York that has gotten far enough so that we can judge whether it is succeeding? Yes! — It’s the “Buffalo Billion,” a massive state-subsidized industrial development project in the long-declining Great Lakes port in far Western New York. Let’s get an update.

The summary is, it’s hard to believe how badly wrong this has gone.

The Buffalo Billion started off as a signature economic development plan of then-new-Governor Andrew Cuomo back in 2012. From the website of Empire State Development:

In extraordinary recognition of the region’s potential and bolstered by his confidence in the WNY Regional Economic Development Council’s (REDC) Strategic Plan, A Strategy for Prosperity, in January 2012, Governor Andrew Cuomo made a historic commitment to strategically invest one billion dollars in the Buffalo area economy (Buffalo Billion) to create new jobs and spur large-scale private investment and increased economic activity.

Note please that this was not just money to be wasted, but rather, according to ESD, was a commitment to “strategically invest,” within a “strategic framework,” and a “strategic plan,” and with a “Strategy for Prosperity.”

In the next step, the ultimate Svengali of the government-subsidized investment, Elon Musk, sniffed out a pile of loot ready for the skimming. Musk convinced the credulous New York functionaries to devote some $750 million of the available billion to just one facility — a brand new, (supposedly) state-of-the-art factory to make the trendiest of possible solar panels and solar roof tiles. The panels and tiles would be manufactured by the Musk-affiliated company SolarCity. The state then agreed to a highly unusual deal structure: Rather than invest in the company itself, or provide a loan guarantee, the state would just build and equip the factory at full taxpayer expense, and lease it essentially for free ($2 per year). The lessee would be a company called Silevo, which in turn leased the facility to SolarCity. In return for getting a free three-quarters-of-a-billion-dollar factory, Silevo made a number of commitments to the state, including promising to employ some 4900 people at the site, and to invest a further $5 billion of its own money. Note that these commitments were made by Silevo, a no- to low-asset company, and not by SolarCity or, for that matter, Tesla or Musk himself.

In June 2017 I had a post on the situation at that time. With the factory essentially completed and ready to go, and with the state’s money spent, in December 2016 Tesla and SolarCity had bailed on the deal. They executed a series of agreements with Panasonic for Panasonic to take over running the plant and manufacturing the panels. However, Panasonic did not take on the obligations of employing the 4900 people, nor of investing the additional $5 billion. Then-Governor Cuomo attempted to spin the situation as best he could:

[T]his agreement further cements Western New York’s position as a national leader in clean power technology and cutting-edge innovation.

Another way of looking at it was the way my June 2017 post concluded:

[W]here we are now is that the New York taxpayers are completely out $750 million, and we have a completely speculative upside that maybe Panasonic will hire some people or make some investment.

Well, it has now been almost seven more years since that post. And it turns out that the Buffalo Billion project is back in the news just in the past few months, with an article in the Buffalo News in February, and a further article in the Niagara Gazette just today.

The good news, I suppose, is that the factory is not just completely shuttered. It is actually operating as a Tesla facility. Here is a partial picture from the Buffalo News piece:

The lights are on, and there are some cars in the parking lot. But what are they doing there? From the Niagara Gazette:

Tesla sells both commercial and residential panels, as well as a Solar Roof, composed of individual, power-generating shingles. Its panels reportedly are manufactured by a Korean firm. . . . Both module manufacturing and assembly of the Solar Roof once happened in Buffalo, but today all three products rely on solar modules made by other firms. Assembly of Solar Roof tiles still occurs in South Buffalo. . . . Tesla struggled to produce the Solar Roof at scale, eventually prompting Panasonic to move its 400 Buffalo jobs to Malaysia.

So, on the manufacturing side, what they do there is assemble this “Solar Roof” product out of components made abroad. And how many of these systems have they sold? From the Niagara Gazette:

As of last spring, only 3,000 Solar Roofs were installed, the energy trade group Wood Mackenzie found, far fewer than Tesla’s projections for the product.

Tesla disputed the numbers in the Wood Mackenzie report, but declined to provide any figures of its own. Assembling three thousand Solar Roof systems in seven years is not remotely going to support the cost of this huge building and its equipment, let alone any significant number of employees.

So the Buffalo News submitted a Freedom of Information request to New York to get the details on what Tesla is doing and how much it is costing the taxpayers. According to the Buffalo News, the number of people employed at the facility as of the end of 2023 was 1,808 — a far cry from the 4900 originally promised. And what do those people do? The single biggest piece consists of low-skill “data annotators” who support the programming for Tesla’s self-driving car initiative. From the Buffalo News:

[Tesla] has hired hundreds of people to work – 675, according to a company statement in February 2023 – on its autonomous driving programs for electric vehicles. Most of those positions are for data annotation work that only requires a high school diploma.

And the other big piece is production of electronic components for charging stations:

The company began making posts for its fourth-generation Superchargers in Buffalo over the past year. It also began making fully assembled prefabricated Supercharging units. . . .

The latter jobs are at least manufacturing jobs. But neither of those categories of production can make any use of the sophisticated manufacturing equipment that the taxpayers bought for the solar panel manufacturing effort. That’s several hundreds of millions of dollars completely down the drain.

The Buffalo News has the following summary of the finances of the facility from the taxpayer’s point of view:

[T]he latest report from the company, required by the state as part of its agreement to build and equip the factory and then lease it to Tesla at virtually no cost, indicates that Riverbend employment stood at 1,808 at the end of December. That works out to $525,400 in taxpayer subsidies for every job at the Buffalo plant.

$525,400 per job, most of which are clerical high-school-level jobs. No, ex-Governor Cuomo, this does not “cement New York’s position as a national leader in clean power technology and cutting edge innovation.”

And now for the icing on the cake. In today’s article at the Niagara Gazette, they report that Tesla is in the process of installing solar panels on the roof of the facility. The panels being installed are made in China:

Tesla has covered about one-third of the factory’s roof with panels manufactured by LONGi Green Energy Technology, a Chinese firm and one of the world’s largest manufacturers of solar modules. It plans to cover the rest by the end of the year.

It won’t even make these panels in this factory. And undoubtedly, Tesla is getting some huge new subsidy to install these panels, because otherwise they wouldn’t be doing it.

I can’t wait to see how our central planners do with the “net zero” energy transition.

[MtnClimber]

Because politicians are so much smarter than business people.

[MtnClimber]

Manhattan Contrarian ping

[RoosterRedux]

In a free market economy, businessmen direct the course of the economy.

In a communist economy, the politicians are in charge.

That's why the politicians can't stop the momentum of the Democrat Party toward a communist takeover.

[edwinland]

He is awesome.

[DeplorablePaul]

So the article says that Musk got the state to spend 750 million on the factory. What happened to the other 250 million? Probably spent on graft.

[CIB-173RDABN]

First man made climate change is a lie. Any policy based on that lie is also a fraud (and should be a crime).

It has been my experience in life when any government proposes a large amount of money to some nebulous project it may just be a way to create a slush fund for the politicians.

I doubt anyone in authority is interested in looking into the details on just where the money went (like who owned the land, and who were the contractors)?

Governments should be prohibited by law from ever doing stuff like this. If the project was worth while private enterprise would do it. Once the government gets involved i is almost always going to fail.

[Robert A Cook PE]

Now that Musk is actively opposing the massed democrat party, he is now eligible for attacks on his (previously-lauded) subsidies for (ultimately failing) solar projects.

/Solendra billions under Obama

[Liz]

.........when a Democrat-laden govt designates billions of tax dollars to a do-good
public project it’s just a way to create a slush fund for salivating politicians.................

---

Nails it.

[woodbutcher1963]

There are lots of US made solar panel companies.
This is a list I just pulled off the internet.

Here’s the full list, according to the DOE, as of November 2023:
Manufacturer

State

Annual Capacity
Auxin Solar California 150 MW
Crossroads Solar Indiana 50 MW
First Solar Ohio 6,300 MW
GAF Energy California 50 MW
Heliene Minnesota 600 MW
Hightec Solar Indiana 100 MW
Jinko Solar Florida 400 MW
Merlin Solar California 5 MW
Mission Solar Texas 300 MW
Qcells Georgia 5,100 MW
Silfab Solar Washington 400 MW
Solaria California 40 MW
SPI Energy / Solar4America California 700 MW
Sunspark USA / SolarMax Technology California 250 MW
SunTegra New York 10 MW
Toledo Solar Ohio 100 MW

The largest above is First Solar out of Ohio. They don’t make panels for residential applications. None of the above manufacturers are even close to the largest companies in China.

Here is a list of the biggest ones in the world:
Manufacturer

Country Of Origin

Capacity (2022)
LONGi China 45,000+ MW
Trina Solar China ~43,000 MW
Jinko Solar China 42,000+ MW
JA Solar China 39,750 MW
Canadian Solar Canada 21,100 MW

The largest US maker (First solar) makes 15% of the product LONGi makes.

The biggest issue with the Tesla Solar roof is that in addition to selling you the roof panels they alos want you to buy a Tesla battery panel. Which adds $12-20K onto the whole install.
Most people just want to put panels on their roof and get NET metering back from their utility. Most people do not want to be OFF Grid.

I looked into building a solar array at my house briefly. I would not have put one on my roof.
I got a quote from Mission Solar out of Texas that would have shipped the entire package to my house. I would have had to build a frame, dig the trench and run all the wires.
I would then hire my local electrician to hook it up.