SOLAR:

'Shocked and puzzled' businessman gets caught in crossfire of trade battle

The owner of a solar equipment store in Hilo, Hawaii, says he was trying to expand options for his customers when he placed that January order for $54,432 from a panel manufacturer in Wuxi, China.

But Marco Mangelsdorf got more than he bargained for.

The owner of ProVision Solar now finds himself caught in a widening renewable energy trade dispute whose ripple effects have now spread to three continents.

As a result, Mangelsdorf was forced to fork over an extra $140,000 to cover the tariffs the U.S. government placed on the panels he bought. And while that might seem like a drop in the bucket for a player in an expanding solar market, it is real money for the president of a 20-employee design and installation company that has been in business for 14 years.

Most painful to Mangelsdorf is the fact that the tariffs were applied retroactively. Mangelsdorf got his panel shipment from Wuxi weeks before the Commerce Department issued its ruling that China was violating trade rules.

Mangelsdorf is so enraged that he has made plans to visit Washington, D.C., this fall in one last attempt to plead his case to federal trade officials who are reviewing the Commerce decision.

The international dispute that has ensnared Mangelsdorf's small company began last October when SolarWorld Industries America -- the largest solar manufacturer in the United States -- joined a half-dozen smaller U.S. module makers to file a complaint with Commerce and the U.S. International Trade Commission.

The Coalition for American Solar Manufacturing (CASM) charged in its complaint that the Chinese government was improperly subsidizing its domestic crystalline silicon photovoltaic makers and that those companies were illegally dumping their product on the U.S. market at a price below their value. CASM accused Beijing and the makers of working together to drive prices down to levels that would drive American solar manufacturers out of the market.

But CASM's efforts are not universally supported in the American solar industry. A coalition of U.S. and Chinese manufacturers and U.S. installers has sought to rally opposition to SolarWorld's efforts. The Coalition for Affordable Solar Energy (CASE) argues that a trade war with China would boost solar global prices and kill future projects and jobs.

In recent months, the dispute has spilled into Europe as the German-based parent company of SolarWorld has acknowledged gathering support for a similar case in the European Union (E&ENews PM, May 23). A filing is said to be imminent (see related story).

Meanwhile, just last week, China's Ministry of Commerce responded by initiating its own probe of U.S. polysilicon exports (Greenwire, July 20).

But the global trade picture wasn't on Mangelsdorf's mind when he decided to pick up his Chinese panels.

"I made this decision to get these Chinese modules because I wanted to offer my customers a range of ... different module types to choose from," he said in a telephone interview last week.

'Cheap solar'

If customers come into ProVision looking for a top-of-the-line product, Mangelsdorf will point them to his American-made panels from SunPower Corp.

They are for "people willing to pay a premium price for a premium product."

For customers looking for something slightly more affordable, Mangelsdorf also has panels by Schott Solar (which announced last month that it was leaving the crystalline photovoltaic business due to cheap competition from Asia).

But Mangelsdorf said he also wanted a product for people who "wanted cheap solar without really caring what kind of solar is on their roof."

He found that product being sold by Ori Solar in Wuxi.

Mangelsdorf placed his order for Ori Solar in January, about a month after the U.S. International Trade Commission (U.S. ITC) gave the Commerce Department the green light to move forward with its antidumping and countervailing duties investigation.

By early March, Mangelsdorf had picked up the last of the Ori panels.

Then, on March 20, Commerce issued a preliminary ruling in favor of CASM on the illegal subsidy charge. That opened the door for U.S. Customs and Border Protection to begin collecting a tariff of 2.9 to 4.7 percent on Chinese solar panel imports (E&ENews PM, March 20).

In May, Commerce officials took a much more drastic step when they issued a separate determination that Chinese manufacturers were dumping their products on the U.S. market. That decision came with a tariff rate ranging from about 30 percent to a whopping 250 percent (Greenwire, May 17).

But the crucial decision for Mangelsdorf was Commerce's determination that "critical circumstances" existed when it came to both the countervailing duty and dumping charges.

Those rulings allowed the government to collect duties back 90 days on Chinese panel imports.

CASM had argued during the investigation that the critical circumstances determination was warranted because Chinese companies had dramatically increased exports of solar panels and modules last fall ahead of any tariff decisions.

So Mangelsdorf suddenly owed U.S. Customs and Boarder Protection a check for 253 percent of his $54,432 shipment. The bill came to a little less than $140,000.

'We tried to warn people'

Mangelsdorf considers himself lucky he was able to absorb the hit without having to let go of any ProVision employees. But he thinks the retroactive nature of the duties is unfair. And he hopes to be able to argue the point in October during a public hearing on the case before the U.S. ITC ahead of the government's final determination on the matter.

"The number one thing we are going after is to overturn that whole atrocious critical circumstances finding," he said.

While the target on the trade action is supposed to be Chinese solar companies, Mangelsdorf said small businesses like his are paying the heaviest price.

"I would find it very hard to believe that anybody was caught with their pants down after" the March ruling, he said.

But before that ruling, Mangelsdorf argues, it was the large Chinese solar producers and major traders that had the time and legal resources to craft contingency plans that allowed them to avoid the potential tariffs.

"They started putting plans in motion immediately [after the case was filed] to try to get their products immune," he said.

Timothy Brightbill, SolarWorld's lawyer in the trade case, argued in an interview that the critical circumstances ruling was crucial because there is clear evidence that subsidized Chinese panel imports peaked in December and January.

"The intent is not to harm other customers or installers in the industry, but [U.S. manufacturers] have been harmed by Chinese imports, which is why we had to take this action in the first place," Brightbill said.

In the last two years, he said, at least 13 U.S. solar panel producers have had to shut down, declare bankruptcy or undertake significant layoffs because of the actions of the Chinese government and Chinese solar manufacturers.

Brightbill said he is sympathetic to the plight of companies like ProVison, but he also said that not knowing about the case is not a legitimate defense.

"We tried to warn people so they wouldn't get caught in this situation," Brightbill said. "We understand that some purchasers and importers don't have full knowledge of the trade laws, but at the same time, they were buying dumped and subsidized Chinese product that are continuing to harm the U.S. industry."

He also pointed out that ProVision and other importers have plenty of options for where they shop for panels.

"This case only covers China and China's unfair trade practices," Brightbill said. "There are many domestic suppliers that would love to have that business, and there are many producers worldwide that are not covered by this case."

'Getting stung'

Mangelsdorf has found a more receptive audience for his grievances at CASE, the group formed to push back against Solarworld's trade complaint.

While not a member of CASE, Mangelsdorf said he knows the group's president, Jigar Shah, and is sympathetic to the group's efforts.

Last week, Shah said that ProVision is one of many companies that have become collateral damage in SolarWorld's trade action.

"We're finding a number of small businesses now who accidentally bought their solar panels from China and are now faced with paying a 250 percent tariff, and it's literally going to bankrupt some of these companies," Shah said. "They just made a mistake; they didn't know what was going on. ... We tried to educate people. But they are getting caught in the mix."

Mangelsdorf said he believes that if more of those companies come forward and tell their stories, perhaps some momentum can be built to scale back the extent of the damage before it is too late.

"I'm really rather shocked and puzzled as to why there haven't been more people willing to talk on the record about their personal experience about getting stung by this," he said. "I'm not sure if it's a sense of shame or embarrassment or wanting to keep information like that completely private."

But, he said, the more he considered the issue, the more he believed the only way to solve the problem was to share his story.

"Maybe it will serve as an encouragement to others to come forward and say ... 'It really hurts, and this isn't right,'" he said.

In the meantime, Mangelsdorf will continue to work on another problem at his warehouse that has served as a daily reminder of the infuriating tariff.

Since March, he has yet to sell a single Ori panel.

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