Bloomberg News reports that the firm Evergreen Solar will file for bankruptcy and close its operation in Midland, Mich. The maker of solar cells cites over-capacity in the industry, competition from China and fewer government subsidies as contributing factors. According to Bloomberg, the firm has 133 employees worldwide.
Given a Michigan location and participation in a politically faddish industry, readers won’t be surprised that Evergreen was the beneficiary of special state subsidies and a local tax break. Specifically, three years ago Evergreen Solar was offered a $1.8 million “refundable” tax credit by the Michigan Economic Growth Authority. For firms with little or no tax liability, this amounts to an outright cash subsidy, contingent on attaining certain employment and investment milestones. Evergreen Solar’s specific tax liability is not public information.
The deal was based on crystal-ball projections from the Michigan Economic Development Corporation using a software program known as REMI, which predicted that an Evergreen deal would create exactly 596 direct and “spin-off” jobs by 2018, producing $18.5 million in new state tax revenue.
The city of Midland also granted property tax abatements worth $3.9 million over 12 years, according to Mlive.com. It’s not known how much, if any, of these subsidies and tax breaks were ever collected by the company.
This is not the first time the MEDC and its job forecasters have been wrong, and its not likely to be the last: History and empirical evidence (including two Mackinac Center analyses of MEGA, published in 1995 and 2009) repeatedly demonstrate that transferring capital-allocation decisions from investors in market systems to central planners in political ones is a recipe for wealth-destruction rather than job creation.