Archive for June 11th, 2009

Michigan Greening

Thursday, June 11th, 2009

With Michigan’s unemployment rate growing right alongside the constricting U.S. auto industry, the state is looking to reinvent its economy in industries other than auto manufacturing. The state is wooing Hollywood film crews and venturing into wind and solar energy manufacturing. In fact, a new report from the Pew Charitable Trusts finds that Michigan gained 23,000 jobs in clean energy between 1998 and 2007.

Smeal’s Gerald Susman, associate dean for research and director of Center for the Management of Technological and Organizational Change, studies the economic impact of the clean energy industry and says that Michigan is well suited to excel in the green economy:

Michigan already has some very good alternative energy companies that are growing rapidly. One is Hemlock Semiconductor Corp. (HSC), a Dow Corning joint venture that makes polysilicon for use by solar cell manufacturers. Also, Dow Corning Corp. is building a facility to manufacture monosilane gas next to HSC. This specialty gas is used in making thin-film solar cells. Another company is United Solar Ovonic, which manufactures solar cells. These examples suggest that Michigan has a good base upon which the solar industry can grow. Growth may not be dramatic, however, as a typical expansion creates 500 to 600 permanent jobs (excluding construction jobs) and Michigan’s unemployment rate is the highest in the nation.

Another area that could result in job growth is solar energy installation. Although more service than manufacturing, the solar installation business is labor intensive and market entry into it is easy. Job growth prospects may be higher here than in manufacturing. 

Additionally, Michigan is well placed to transfer existing technology and skills in metal fabrication from the auto industry to the wind industry. Gear boxes and generators used in wind turbines are similar to those used to make auto transmissions, for example. 

One problem is that most of the major turbine manufacturers are foreign owned (mostly European) and have developed their supply chain relationships with European suppliers, especially for high-value added components. Currently, they would rather source from Europe, even with high transportation costs, than develop new relationships with American suppliers. The exceptions are for low-value added items like engine mounts or nacelles. These products contain little intellectual property and low risk of IP leakage to new and untested vendors. Also, towers and blades are too large and bulky to import so they tend to be manufactured close to where they will be installed.

One prominent study estimates that every 1,000 MW of additional installed capacity would create 3,000 manufacturing jobs, 700 installation jobs, and 600 operations and maintenance jobs. More than 8,500 MW of wind capacity was added last year, which should have created about 36,500 new jobs. Before 2008, this rate of job growth would have been considered highly optimistic. However, recent data from the American Wind Energy Association suggest that such projections are becoming realistic. A recently released study by the Pew Charitable Trusts indicates that California, Texas, Pennsylvania, Ohio, New York, and Florida (in that order) created the highest number of green jobs from all renewable energy sources in 2007. Michigan should look to those states as examples of how to grow its green energy sector.

Tags: Auto Industry, Susman, Sustainability, Unemployment
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