Remaining committed to the U.S. market: An interview with Canadian Solar General Manager Alan King on the impact of pending DOC tariffs

Alan King
Alan King

As General Manager of Canadian Solar USA, Alan King is spearheading the company’s commitment to one of the fastest-growing solar markets in the world.

Prior to joining Canadian Solar, Mr. King worked for almost a decade with Evergreen Solar, Inc. as the Americas Sales Director managing OEM and development and sales for distributors, dealers and the utility market. He was responsible for managing more than a billion dollars’ worth of long-term contracts with both domestic and international integrators and distributors. He also developed a channel marketing strategy leading to more than $100 million in sales.

Mr. King is actively involved as a member of the Solar Alliance and the Solar Energy Industries Association (SEIA). He was also a board member of the Solar Energy Business Association of New England (SEBANE).

 

Solar Server: As Canadian Solar makes extensive use of manufacturing in China, what was your company's initial reaction to the U.S. DOC preliminary anti-dumping duty ruling? Was it what you expected?

Alan King: We were disappointed by the preliminary ruling that was issued May 17th. The 31% tariff was frankly a little higher than we expected, but we really have to stress that this was a preliminary decision that is subject to further review and that there are still a great many issues left to be addressed, and that resolution of those issues could result in a significantly lower tariff.

I want to add that regardless of the outcome, Canadian Solar would rather see positive methods employed to address and to encourage mutual trade between China and the U.S., rather than the implementation of punitive tariffs, designed to limit trade between our two countries.

 

Solar Server: What is Canadian Solar's long-term strategy in terms of ongoing participation in the U.S. market if the proposed tariff levels are implemented?

Alan King: As part of our vertical integration strategy that Canadian Solar has adopted a few years ago, we have long-standing relationships with cell manufacturers, as well as module producers, outside of China. We have been using non-Chinese cells in our products in Canada and the United States for several years.

So we feel that as a result of this planning, and the relationships that we have established over the course of the last several years, we don't think that the recent events will significantly inhibit our ability to produce and deliver product to the United States.

We plan to continue to grow our business in the United States, and have looked at a variety of different methods. As you know we have a 200+ MW manufacturing facility in Ontario, that could easily be used to manufacture product for the U.S. marketplace, we have recently acquired SpectraWatt's assets, which is a 60 MW cell line that is currently in storage in Poughkeepsie, New York, and we have global relationships with cell manufacturers from all over the world.

So we're not terribly concerned, we don't think that the recent events with the tariff, whether it is permanent or even temporary, will inhibit our ability to service this marketplace.

 

Solar Server: Can you comment on the real cost difference between manufacturing in China and the U.S. or Canada? What are the biggest factors behind those differences in cost - government support, economies of scale, labor costs, or other cost differences?

Alan King: I can broadly comment on it; our specific numbers are not really for publication. We have historically been a leader in cost reduction in manufacturing as well as in raw material costs, again through the utilization of our vertical integration policy that we have implemented in the United States.

It is pretty easy to see that the major difference in costs between China and the United States, and in Canada, are the labor costs.

Our labor costs are much lower in China than they are in the United States. That is partially able to be made up for by automation, by automating the plants, and enabling us to produce much more with a smaller footprint, but labor is a major cost, as well as the cost of land.

We don't believe that subsidies in the United States nor in China are a significant factor, they haven't been for our growth. Much of our growth has been funded organically, we are more concerned with putting facilities in markets where the growth is such and the support for solar is such that it warrants having either local content or producing locally into the marketplace.

 

Solar Server: With Ontario's domestic content requirements, European feed-in tariff adders for locally produced modules, and now this ruling, do you feel that protectionist policies are on the rise regarding solar production?

Alan King: I think if you read what the reports are, if you look at the punitive tariffs that were implemented, even if temporarily implemented in the United States, if you look at  the potential for a trade case being filed by SolarWorld in Europe, and if you look at India, the same kind of thing with India, Ontario requiring local content, I think it's fairly evident that we are seeing a rise in protectionism, and a rise in requirements for local content, yes.

 

Solar Server: How do you think that this will impact the industry overall?

Alan King: I think we can't lose sight of what is most important and that is that this is a global industry, and really the most significant factor is deploying solar. We feel that the majority of the jobs that are creating by solar, whether it is in the United States or Europe, are downstream jobs. These are high-paying, good white-, blue-, green-collar jobs, in marketing, sales, installation, engineering, finance, logistics.

So we feel that by requiring local content, you run the risk of doing damage to the very engine that's created a significant number of jobs in the United States, and in particular over the course of the last several years. We have to be careful what we wish for. In trying to protect some manufacturing jobs in the United States, for instance, we run the risk of losing thousands of downstream installation jobs.

As I said earlier, the vast majority of jobs in the solar industry are downstream jobs, they are not manufacturing jobs. There are items, whether it is balance of system items, like racking systems, that might be better produced locally. Because you are shipping a lot of aluminum, you are shipping a lot of rail, you are shipping a lot of air across the world. So those might be better off sourced locally, as well as raw materials for modules being manufactured.

I think we have to be careful and don't go too far with requiring local content, and cause a situation where you have a significant increase in the price of product, which would defeat the purpose of low-cost solar being installed in thousands of homes and businesses across the world.

 

Solar Server: To return to Canadian Solar, what can we expect from Canadian Solar in the near future in terms of market and/or technological developments?

Alan King: First of all, let's address market. We are committed to the United States market. We are committed to growing our business in that marketplace.

We are also looking at a number of new markets. We will be entering into Latin America, we will be opening an office in either Chile or Brazil in the near future. We are looking at several good-sized projects in South Africa. Of course, our Chinese business continues to grow, as does the Chinese marketplace.

We are putting a significant effort into Japan, where we have had success in years gone by, we will be putting additional effort there, and also into Southeast Asia. We are kind of the home team in Canada, and have a significant project pipeline there as well. So our feeling is, as Germany and Italy begin to level off, and the boom that was there begins to slow down, we are actively looking at other marketplaces, we are actively looking at other areas of the world, where we can grow our business.

As well as in the United States. We tripled our business in the United States last year, and we are well on our way to double our business in the United States in 2012.

As far as new products are concerned, we are looking at a variety of things, we are looking at new types of cells that will increase the efficiency of our existing product without increasing the cost. Back-contact cells, we launched a product at Intersolar last year, our ELPS product, which is a back-contact cell, which takes our current mono up a full 1.5% in efficiency, and takes our poly up a 1% even further.

We are also launching our second-generation poly, which is a kind of a quasi-mono, it is kind of a combination of mono and poly, which give you, again, poly pricing, and I won't say quite mono efficiency, but a more efficient poly product.

We are also looking at the inclusion of power electronics into our solar panels. Whether it be a residential or a commercial AC product, we are looking at the inclusion of that. We launched a commercial AC product last year, and we are getting ready to launch a residential AC product this year, in the marketplace.

And there are a number of other items that are being looked at right now, that will enable us to either increase efficiency, lower our production cost, add value, or help us continue our strategy of virtual vertical integration, creative financing methods for both the residential and commercial marketplace, or things along those lines.

So we've got a very full plate of products and services that we intend to launch into the world marketplace, but I am particularly partial to the U.S. marketplace, and those products will be launched here shortly.

 

Interview conducted May 30th, 2012, by Solar Server International Correspondent Christian Roselund