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Idaho city burned by solar panel firm with Hawaii ties

By Kirk Johnson

New York Times

LAST UPDATED: 12:43 p.m. HST, Nov 11, 2013

Pocatello, Idaho, welcomed Hoku Corp. in 2007, banking on the company that was to produce materials for solar panels to boost employment and bring high-tech panache to the city. Now Hoku, majority-owned by a Chinese company, is in bankruptcy, its administration building for the shuttered plant abandoned.

POCATELLO, Idaho » With great fanfare, a polysilicon factory spearheaded by a Hawaii company broke ground on 67 acres here starting in 2007. Then, as the rest of the nation tumbled into recession, the plant rose up in shimmering promise, leaving this tough-edged railroad town — blue-collar and union in a sea of southeastern Idaho potato farms — feeling pretty good about the future.

So what if Hoku Corp. wanted breaks and concessions? The city's decision to buy the land and lease it almost free seemed like a bargain at $1.4 million, given the potential payoff.

Subcontractors and suppliers from around the nation and world were also arriving to build the $700 million plant and discovering — so residents and business leaders hoped — Poca­tello's small-city charm. And the hundreds of production jobs in the end would be a big step toward the dream of a high-technology future, picking up where railroad and manufacturing jobs had faded.

Now, 18 months after shutting completely, the factory, which was to produce materials used in solar panels, stands ghostly and silent. It never went into full operation, and in the global collapse of silica prices, it probably never will, solar industry experts said.

Wooden crates of equipment, some never opened, sit stacked where they were left, like time capsules from a lost world. Instead of being discovered by entrepreneurs and venture capitalists, Poca­tello's name — linked to a bankrupt company accused by its biggest U.S. creditor of fraud and racketeering in a federal lawsuit — has now rippled in all the wrong ways, residents said.

"It makes me sick thinking about the waste," said Brian C. Blad, mayor of this city of 54,000 people.

At the downtown federal courthouse where the bankruptcy of Hoku is unfolding, lawyers for unpaid creditors — looking to collect, not spend — have descended in force. Hoku, which in 2009 became majority-owned by Chinese-based Tian­wei New Energy Holdings Co., collapsed with about $1 billion in debt and a list of unpaid creditors in more than a half-dozen states and countries. They include big names like Oracle and KPMG, the accounting firm, and small contractors like Industrial Piping Inc. of Pineville, N.C., which has about 300 employees and a $13.6 million unpaid Hoku invoice.

"The debacle in Poca­tello was a very large hit," said T.J. Buc­holz, a spokes­man for Industrial Piping, which is mostly owned by an equity capital company in Grand Rapids, Mich. "We're not General Motors."

Booming areas within driving distance, such as the energy drilling areas in North Dakota and the strong economy of Salt Lake City, two hours to the south, have kept the local unemployment rate lower than the national average. But that only masks the trouble, residents said.

"It's one of Idaho's greatest failures," said Roger Chase, Poca­tello's former mayor, talking about jobs and low pay scales.

In addition to the local land deal, Hoku also got $2.2 million in federal grants for solar development, according to federal officials, and a promise of job-training money from the state.

Another economic rescue with Hoku's glamour and promise is not on the horizon. Blad said a big employer recently expressed interest in coming here, bringing perhaps 1,000 jobs. But the company, which he declined to name — a warehouse distributor that does most of its sales by the Internet — has said it will offer $10 an hour, only a few dollars above the minimum wage.

The company even had the audacity to ask for financial incentives, which the city has politely declined.

"We would welcome them and we would value them," Blad said. "But I can't justify taxpayer dollars for a $10-an-hour job."

The Hoku pain is not over yet. In August the former general contractor at the plant, JH Kelly, based in Longview, Wash., and owed $24 million, sued Tian­wei New Energy. The federal suit accuses the company of fraud and racketeering in promising that bills would be paid.

Lawyers representing Tian­wei did not respond to email and phone requests for comment.

Meanwhile, JH Kelly offered $5.27 million for the Hoku plant at an auction last month to beat another bid of $4.78 million. A federal trustee handling the Hoku bankruptcy case recommended the court accept the bid by JH Kelly. A decision is expected Tuesday, though other bidders can submit bids through that date.

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Grimbold wrote:
One thing is sure: As usually the lawyers are profiting nicely, and where is the inept CEO of Hoku? What was his ransom?
on November 11,2013 | 02:50AM
inverse wrote:
Where is Shindo and what is his responsibility in all of this?
on November 11,2013 | 03:57AM
Pocho wrote:
think he got bought out by the Chinese Company
on November 11,2013 | 04:56AM
1local wrote:
shindo is now CEO of a medical software company - Hoku / Shindo took advantage of Hawaii taxpayers and provided no / minimal jobs - shindo cashed out on stocks/ options made a profit...
on November 11,2013 | 02:49PM
gicnk wrote:
you can hate lawyers but need them when you are in trouble.
on November 11,2013 | 04:00AM
false wrote:
Product of China, then beware. Taking my box of it back to the Box Store. No eating Products of China. This is just a bigger example. Just like the babies' milk and the dog food. You never know what you are getting with "Product of China". Scary.
on November 11,2013 | 04:46AM
allie wrote:
true..the corruption in China is staggering
on November 11,2013 | 05:42AM
false wrote:
a lot of polluted junk,
on November 11,2013 | 01:27PM
mitt_grund wrote:
Sounds more like a Chinese version of Mitt Romney's vulture capitalism. Not clear on China's taxing of corporations, but $1 billion sounds like a lot of write-off. Guess if it works for Mitt, it will work for Sheung Mao (Panda). Yeah, but the lawyers always make out, on both sides.
on November 11,2013 | 05:09AM
allie wrote:
China will rip you to shreds. That country is as rapacious and dishonest as any in the world.
on November 11,2013 | 05:43AM
Mythman wrote:
State capitalism = the Communist Part of mainland China. Sun Yat Sen is turning over in his grave.
on November 11,2013 | 11:13AM
allie wrote:
on November 11,2013 | 02:12PM
HiNaihe808 wrote:
Taxpayers are screwed again!
on November 11,2013 | 07:42AM
GooglyMoogly wrote:
You're suggesting the lawyers work for free?
on November 11,2013 | 01:07PM
wizard417 wrote:
wondering if the people who are bidding for the plant could be the same people who originally built it.
on November 11,2013 | 04:08AM
yhls wrote:
When this company first came out in Honolulu they were touted as the greatest thing since. Friends, family and locals invested. I wonder how they feel about all this?
on November 11,2013 | 04:57AM
allie wrote:
agree...it was a bust from the start but it got hyped.
on November 11,2013 | 05:43AM
NanakuliBoss wrote:
If you got in early, you made bucks. American make bucks selling to Chinese. Chinese fail.
on November 11,2013 | 08:00AM
Rapanui00 wrote:
The attorneys are the vultures picking over the bones of this failed company. I am more disgusted with attorneys who ALWAYS profit from bankruptcies and disasters like this!
on November 11,2013 | 05:20AM
Mythman wrote:
Bankruptcy affords the veneer of rationalism when in reality, it's C H A O S........
on November 11,2013 | 11:14AM
palani wrote:
The government cannot legislate innovation nor can it create markets for unwanted products. Add Hoku to the long list of failed "green" energy taxpayer-subsidized failures, including the following:

Solar Trust of America: FAIL - Filed Bankruptcy in Oakland, CA, April 3, 2012 – On April 2, 2012
Bright Source: FAIL - Bright Source warned Obama’s Energy Department officials in March 2011 that delays in approving a $1.6 billion U.S. loan guarantee would embarrass the White House and force the solar-energy company to close.
Solyndra: FAIL - Obama gave Solyndra $500,000,000 in taxpayer money and Solyndra shut its doors and laid off 1100 workers in August 2011.
LSP Energy: FAIL - LSPEnergy LP filed bankruptcy protection and a sale of its assets in Feb 2012.
Energy Conversion Devices: FAIL – On February 14, 2012 Energy Conversion Devices, Inc. and its subsidiaries filed for bankruptcy.
Abound Solar: FAIL - Abound Solar received a $400 federal million loan guarantee and announced in June, 2012 that it would file for bankruptcy
SunPower: FAIL – SunPower stopped producing solar cells last year at near bankruptcy.
Beacon Power: FAIL – Beacon Power Corp filed for bankruptcy Oct 2011 just a year after Obama approved $43 million Government loan guarantee.
Ecotality: FAIL - ECOtality, a San Francisco green-tech company that never earned any money on the verge of bankruptcy after receiving roughly $115 million in two loan guarantees from the federal government.
A123 Solar: FAIL-A123 received $279 million from taxpayers thanks to Department of Energy loan guarantees and after Solyndra bankruptcy is getting another $500M from Obama and it has lost $400M.
UniSolar: FAIL - Uni-Solar filed for Ch 11 bankruptcy in June 20 this year laid off hundred.
Azure Dynamics: FAIL - Azure Dynamics files for bankruptcy in June after receiving millions in Obama “Stimulus”.
Evergreen Solar: FAIL - Evergreen Solar received $527 Million in Taxpayer money then filed bankruptcy
Ener1: FAIL received more than $100 million in government funding from the Obama administration filed for bankruptcy January 2012

on November 11,2013 | 05:48AM
BluesBreaker wrote:
Why not expand this list to banking, computer manufacturers, sports apparel, restaurants and all other industries? The list for every industry is lengthy. Failure of a company has little to do with the industry and everything to do with poor management. Cherry picking industries you don't like for political reasons is intellectually dishonest.
on November 11,2013 | 06:03AM
palani wrote:
Those companies, for the most part, have not received taxpayer loans, subsidies, and grants. If they fail, their voluntary, private investors suffer, not all of us.

And yes, cherry picking politically favored industries/companies is wrong, but that has become the norm for this administration.

on November 11,2013 | 06:35AM
BluesBreaker wrote:
It's not just the administration, it's Congress as well. The willingness to subsidize agribusiness with tax dollars is truly amazing, especially in the area of bioenergy. Ethanol subsidies and support for companies in experimental areas, like cellulostic ethanol are unconscionable. Please consider the following article:


Further to my previous post, the banking industry receives tremendous subsidies of tax dollars from the government, as do auto manufacturers and many others. Again, I believe this is more of a management issue than anything, but subsidies for infant industries do need to be phased out when they don't perform as advertised (and even when they do).

on November 11,2013 | 06:50AM
palani wrote:
You are correct, Congress is equally to blame. As far as the banking and auto industry bailouts, they too were ill advised, but at least those industries were established and previously successful at providing real services and products to customers. They created their own customer base.
on November 11,2013 | 08:22AM
Mythman wrote:
There used to be a form of "subsidy" - it was known as stock. Remember it. Government subsidy. Stock. Which one is really dealing with reality and which one is dealing with a whole lot of brull sheet
on November 11,2013 | 11:17AM
palani wrote:
Yep. Private investors are always a lot smarter than government central planners.
on November 11,2013 | 11:41AM
soundofreason wrote:
The STORY is about a company IN a specific industry. I guess there are "shovel ready" ready jobs and then there are "bulldozer ready" jobs.
on November 11,2013 | 06:59AM
NanakuliBoss wrote:
Yes sound, tell palani to stick to the story. These tea rats always blame Obama for life's bumps.
on November 11,2013 | 08:03AM
Mythman wrote:
Right, let's hate on republicans, that will work for the country. Hate, hate, hate.
on November 11,2013 | 11:18AM
Mythman wrote:
Blues Breaker aka Mufi Hanneman displays that awesome power of rationalization that so characterizes those who govern us.
on November 11,2013 | 11:16AM
cojef wrote:
Starting data! EPA certainly grew big and nasty, but mostly costly. Wonder what their success stories are? Only in this way can the true effectiveness can be measured. Believe it would be negligible and costly to the taxpayer. Also, it would be interesting if these failed companies did contribute heavily to the political part favoring them with the largesse.
on November 11,2013 | 06:12AM
BluesBreaker wrote:
What does the EPA have to do with these companies? They did not fund them. The EPA is a regulatory agency.
on November 11,2013 | 06:52AM
Skyler wrote:
The EPA is pushing 'Green' - perhaps that is the connection.
on November 11,2013 | 10:34AM
Mythman wrote:
BB - the EPA handles one end of the government scheme - preventing, shutting down and punishing "polluters" - which govt subsidized "corps" then pump out the tech that allegedly won't "pollute" - except for wonderful, loveable China, that is.
on November 11,2013 | 11:20AM
BTO wrote:
This is just the tip or the iceberg. Imagine all the PVG on homes now. Who is backing up these warranties?? Once these panels and cells go awry.... going to be mess!!
on November 11,2013 | 07:47AM
palani wrote:
Not only will many of the manufacturers disappear, but so too will the fly-by-night installers.
on November 11,2013 | 08:24AM
NanakuliBoss wrote:
Palani sounds like a lawyer.
on November 11,2013 | 08:02AM
allie wrote:
I know him. Just a smart, educated whimsical man. Twinkle in his eyes.
on November 11,2013 | 02:14PM
awahana wrote:
Palani, your list is inaccurate at best; outdated, and full of palani.
Might want to validate your sources, or make up stuff that is more believable.
Only people who don't understand solar, or policy, will read your post with faith.
on November 11,2013 | 09:01AM
warriorrebel wrote:
good job #palani. good graphic on how failed gov't energy policies just add to the deficit and the waste of taxpayer money.
on November 11,2013 | 12:51PM
dsl wrote:
add on the soon to be: honolulu choo choo!
on November 11,2013 | 01:29PM
allie wrote:
on November 11,2013 | 02:13PM
Makua wrote:
What a mess this Hoku Corp turned out to be. Why would a contractor keep on working if so much ($13.6M) is outstanding? Anyway, If you are from Hawaii and visit Austin Minnesota you are surely welcome to see their meat museum. But if you visit Pocatello they will throw those little blue and yellow cans of Spam at you and blame you for the hurt they have endured.
on November 11,2013 | 06:33AM
Maneki_Neko wrote:
No where in this tale is mention of the huge tax credits given by the State of Hawaii to this company. This is a poster child of the Act 221/225 debacle that gave over giant tax breaks and credits to a "secret" list of investors. When the 5-year tax credit deals ran out, the company went turtle.
on November 11,2013 | 06:46AM
Mythman wrote:
Oh, How Quickly They Forget, Mr Mane-Neck - THANK YOU
on November 11,2013 | 11:22AM
SchofieldSoldier wrote:
Most of the solar companies are shady in the way they do business, they either don't know what they are doing or faiil to coordinate properly with financing corporations to ensure that financing issues don't hurt the consumer. I had a bad experience with local company Revolsun. It took them so long to get the project completed that the finance company charged extra interest during a period where the system was not producing electricity. The system itself is fairly good and functioning well, but due to Revolsun's lack of oversight of subcontractors and project delays, I had $1.5k of monies I lost out of pocket due to no fault of mine own.
on November 11,2013 | 07:24AM
awahana wrote:
You did not do enough research.
I looked around, and while its hard to decide on a GOOD solar company, it was pretty easy to make a list of DO NOT BUY companies. Revolusun, Sunetric, Vivint, SolarCity, and Mercury were at the top of my NO BUY list.
You needed to check around more before making a $20-40k investment. Seriously.
on November 11,2013 | 08:57AM
bumba wrote:
In you don't know, Solar City has the contract to provide PV systems to every Military housing unit on Oahu over the next few years.
on November 11,2013 | 09:47AM
sarahm808 wrote:
Your list is quite accurate. You can also add Poncho's to the list. They and RevoluSun have many poor reviews on sites like "yelp.com" by consumers who bought from them WITHOUT researching the market.
on November 12,2013 | 07:17AM
iwanaknow wrote:
In the American Way, there will always be "winners" and "losers"..................just suck it up, learn from it, and move on.
on November 11,2013 | 07:25AM
inverse wrote:
if anyone thinks this is a bad end for Idaho or Obamacare with CGI, wait till the Oahu train project really starts with ANSALDO. Hawaii taxpayers are going to experience the kind of economic suffering you cant even imagine. Never mind the BILLIONS getting thrown down the sewer but the incredible negative impact on businesses, the visitor industry and all aspects of everyones lives when train construction begins in town and then permanently reduce car capacity of key roads, in the heart of Honolulu. And if there is ever an end to train construction going from an empty field in Kapolei to Ala Moana Ctr. Like the Idaho residents who were promised high paying jobs from the Hoku polysilicon plant, for all who supported the Oahu rail and not directly feeding off the rail feeding trough, don't ever say no one warned you the negative impact rail will have on almost everyone in Hawaii
on November 11,2013 | 07:33AM
psimmons wrote:
on November 11,2013 | 07:46AM
NanakuliBoss wrote:
Lol, throw in the Rail in Pocatello and Obamacare. Lol. Obamaphobics.
on November 11,2013 | 08:07AM
sooregonian wrote:
Inverse -- Your salient economic impact arguments can be applied to the "bromance bill." As the islands transform into a gay mecca, families will vacation elsewhere. They don't want to see public displays of affection such as the front page manly mugshot in the S.A.
on November 11,2013 | 08:09AM
Skyler wrote:
I beg to differ - that photo was not manly, in any stretch of the word.
on November 11,2013 | 10:38AM
Mythman wrote:
The New Orleans French Quarter has open full sexual contact by males in the open - men kissing is nothing compared to what is coming. Have you ever been to Needle Beach at Mokuleia?
on November 11,2013 | 11:24AM
allie wrote:
on November 11,2013 | 02:22PM
allie wrote:
on November 11,2013 | 02:21PM
Wazdat wrote:
Hoku was run into the ground. glad our tax money helped them out...NOT
on November 11,2013 | 07:41AM
SteveToo wrote:
Obama can fix it just like he fixed our health care problems. LOL
on November 11,2013 | 09:12AM
HanabataDays wrote:
Wait, you forgot the "LOL".
on November 11,2013 | 09:53AM
Mythman wrote:
The welfare mentality is dependent on government fixing stuff and guess what, they are in the majority. How does it end? History has some clues.
on November 11,2013 | 11:26AM
bumba wrote:
Hoku was a bust from the beginning but greedy investors jumped in hoping to make a killing. You could tell from all the insider trading that Hoku was going to end up burning everyone. Shindo (and his divorced wife) took their plunder and got out a while back.
on November 11,2013 | 09:49AM
Mythman wrote:
I would love to know how many legislators bought stock in this turkey?
on November 11,2013 | 11:26AM
oahujeff wrote:
Why provide tax subsidies to industries at all? I mean, if they are brand spanking new, maybe I can understand. But solar has been around for more than 50 years. It will catch on when it's ready. Not when some politician decide to make a statement. What a waste of hard-working people's money and confidence.
on November 11,2013 | 10:46AM
Mythman wrote:
Err, it's like a lot of other business stuff these days - how many governments were implicated in this debacle? Hawaii, Iowa, the town govt of Pocatello, China and Washington DC. How many non government entities besides contractors were involved. How many? None I think is the right answer. The jokers from Hawaii sucked the system dry and the system was set up by them for this purpose. Somehow, if we survive the present madness as a Nation, we really will be the strongest and greatest of nations. Somehow has be very, very worried it might all be over?
on November 11,2013 | 11:11AM
allie wrote:
on November 11,2013 | 02:23PM
saywhatyouthink wrote:
Sounds like the contractor is going to get a 700 million factory for about 30 million in the end. They'll have to find some other product to make there.
on November 11,2013 | 11:14AM
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