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David Goldstein’s Blog

Green Jobs: Keeping your eye on the ball

David Goldstein

Posted September 9, 2010 in Green Enterprise

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A recent Washington Post article bemoans the closure of a GE plant making old-fashioned incandescent lamps with a loss of 200 jobs, and tries to frame the question in terms of government regulation. It uses this plant closure to question whether a focus on green jobs will really help the economy.

But the article errs in focusing on only one detail -- the closure of an individual plant -- while not connecting the dots (even though it paints many of these dots itself).

Let’s start with the plant closure. GE’s Winchester, VA plant was obviously not up to date -- the uncomfortable working conditions at that plant (described in the article) are typical of plants that are being milked by their owner for output until they close rather than investing in upgrading for the future. The GE plant closure, which the article incorrectly links to new light bulb efficiency standards, was a decision made by GE to eliminate jobs rather than modernize the plant. A competing company, Sylvania, made the opposite decision with their St. Mary’s PA plant, investing in new production facilities to make more efficient light bulbs and retain 265 jobs.

This is the continuing tragedy of green jobs: the consequence of companies that fail to innovate and modernize their American manufacturing plants can still make money from overseas operations, while their workers, who could be assured continuing jobs with better working conditions, suffer the pain.

I wonder how any rational person could link the closure of the GE plant in autumn of 2010 to the problems of meeting a standard that doesn’t begin to take effect until 2012 and still allows production of the old technology through 2014. If the plant was otherwise viable, why not keep it in production through the end of December 2013? Clearly other factors were the real ones responsible for this plant closing: no one would close a plant in response to a regulation that isn’t even in effect.

The real story here is about the need to be out in front when it comes to green technology. The article clearly (but slowly) explains that if GE had invested in CFL technology development in the 80s the business would not have gone to China. The U.S. could have had dominance in the market for efficient lighting if our companies had worked on the innovative green technologies when they had the lead in technology.

We still have a chance to do this with other green technologies, especially with lighting. The U.S. Department of Energy is working in collaboration with lighting companies on research that aims at developing LED lights that are even more efficient than the best products available today, and several companies are establishing new facilities in the U.S. that can assure that American products are at the leading edge of technology and that American workers are being used to produce them.

There is a consistent trend of companies with no-longer-competitive plants opposing policies promoting environmental technologies while letting these obsolete plants limp along without being modernized as long as they can produce any revenue at all. They then blame environmentalists, or just the government, when the fruits of their neglect are ripe and the plant finally is closed.

And speaking of blaming the government, we must remember that in a free enterprise system, jobs are often lost due to plant closures. We could assure job stability by government regulations preventing layoffs or through government ownership of production facilities, but America has chosen (wisely, I think) not to go down that road.

The key problem with looking at the plant closure in the context of lamp efficiency is that the lamp standards referred to in the article will save consumers $10 billion a year when fully phased in.

This $10 billion represents money that consumers and businesses will no longer have to pay in their utility bills and instead can use for purchases that are more fun. Lower utility bills for lighting will allow consumers to go out to eat more, to buy baseball tickets or go to the movies more, and when they do this, new jobs will be created. This is where the real green jobs come in. $10 billion in new spending will produce 100,000 new jobs. As much as losing 200 jobs at a GE plant is a tragedy and saving 265 jobs at a Sylvania plant is something to celebrate, they are small potatoes compared to 100,000 new jobs from greener light bulbs.

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Comments

CarbonicusSep 10 2010 04:38 PM

David - It is ludicrous and sophomoric - if not intentionally misleading - to suggest that the biggest or only reason GE is shuttering the Winchester, VA plant is because they chose to "eliminate jobs rather than modernize the plant". It is equally disingenuous to ask "how any rational person could link the closure of the GE plant in autumn of 2010 to the problems of meeting a standard that doesn’t begin to take effect until 2012 and still allows production of the old technology through 2014". This plant closing is directly related to the new regulation wiping out incandescent bulbs, no matter how you try to paint it.

Unless and until the govt. decides to take over the means of production and distribution and make such decisions for companies instead of allowing them to make these decisions themselves, companies will use their best judgement taking into account all available information, including modernization costs, labor costs, shipping costs, regulatory environment, etc., etc., etc.

As the article in the WaPo mentions, CFL's are labor intensive due to the glassworks required. Due to standards of living and the lack of unions, of course this labor is going to be cheaper in the developing world than in the US. It is no accident that GE, Vestas, and a variety of solar component mfrs. are moving production to the developing world (read: China).

GE is no different than any other capitalist organization (setting aside their role as part of the new Climate-Industrial Complex, which is shameful and a clear conflict of interest, but we can debate that separately some time). They will find a way to maximize profits for shareholders. In fact, as a corporation created in the US, they have a legal obligation to do so. (I know it might surprise you to learn that this legal obligation supercedes the requirement to satisfy the preferences of green utopians, eco-hyperbolians, and the Obama administration). If that means mfg. CFL's overseas due to the absence of labor unions and lower labor costs, there's little the US govt. can do to change it except for import tariffs. (and ask any sane historian how those tariffs worked out for the US during the Great Depression).

You write that "the real story here is about the need to be out in front when it comes to green technology". US companies invented CFL's and US companies invent most of the "green technology" you're so in love with. But they are smart enough to know that they cannot possibly manufacture this hardware as cheap as they can overseas, even allowing for high transportation costs, given US standards of living, wages, and union demands.

The spin here is shameless and misleading. But there is nothing else you can do but engage in such spinning.

And that's because it is now becoming apparent to all that the promise of "green jobs" is a myth to try and gain electoral support. Essentially, all these policies have done is ensure "carbon leakage" and exporting jobs building "eco-friendly" products to the developing world. Worse yet, none of these efforts will have any impact on global climate that can differentiated from natural climate variability. So, the policy you support and about which you are spinning the realities in the WaPo article does nothing more than drive up cost to US consumers, strengthen our competitors, enrich corporations that are part of the Climate Industrial complex, and do nothing for the environment in the process. Brilliant.

Historical, empirical data show that all gains in US energy efficiency are more than swamped by new uses for electricity no one imagined. Think PC's in every home and the large numbers of server farms today more than overwhelming the energy saved from that more efficient refrigerator in your house.

And the $10 billion will never be "saved" by US consumers if you get your way with cap and trade. It will be more than eaten up by the increased cost of electricity paid by consumers. Unless you're talking about the administration's plan to redistribute wealth under the auspices of "middle class energy rebates".

No, this isn't "the continuing tragegy of green jobs", as you've described it in your post. The continuing tragedy of green jobs is that for all the propaganda, they are going overseas due to the laws of economics. The continuing tragedy of green jobs is that for every green job that is created, we will lose 2 or more "dirty" jobs in the process (see Calzada's study from Juan Carlos Rey Universidad which showed 2.2 lost in Spain due to similar policy). The continiung tragedy of green jobs is that there is an entire voting populace who doesn't have enough common sense to call b.s. on the propaganda, investigate for themselves, and realize that they are being sold a bill of goods.

Please help environmentalism get back on track to fixing the things that are most harmful to human health, wildlife, and the environment. This crusade of saving the planet from Thermageddon is misdirecting limited environmental expenditures away from these priorities and wasting them on pseudo-science utopian ideology parading as necessary to save the planet and humanity. While the intent to "save the planet and humanity" is admirable and teflon from a political perspective, not all of us are dumb enough to take this at face value without digging deeper to figure out what's really going on here.

Janice FraserSep 10 2010 09:19 PM

This is Janice Fraser from GE Lighting. I want to address some of the many inaccuracies and falsehoods in Mr. Goldstein’s comments about our lamp plant in Winchester, VA.

First, GE Lighting takes the closure of any of its operations very seriously, analyzing a number of factors before such a serious decision is made, in particular the impact on the work force. To suggest otherwise is simply false. When we do make a decision to close a facility, we work very hard to provide affected employees with the benefits and assistance they need to make a positive transition.

Next, Mr. Goldstein chooses to ignore the dramatic changes underway in the lighting industry. Demand for the type of lamps made at the Winchester Plant is rapidly declining as new lighting energy-efficiency regulations are instituted in countries around the world and as customer preference shifts to more energy-efficient light sources. In fact, according to the National Electrical Manufacturers Association’s lighting division, the market for standard household incandescent bulbs has declined by 50 percent over the last five or so years – well before any legislation takes effect.

The considerable decline in incandescent demand, only to accelerate as new energy standards take place, has created tremendous overcapacity across our global factory network. In order to remain competitive and able to continue to deliver the products and value our customers and the market demand, we have been consolidating redundant factories around the world and reshaping our business in response to this evolution in technology. That is what any responsible business would do to remain viable for its employees, customers and shareowners.

Finally, let me address how, as we reshape our lighting business, we are investing in our U.S. operations. With $60 million in investment, we are creating a global center of excellence for linear fluorescent manufacturing in Bucyrus, Ohio, an action that will double that plant’s employment. We are also investing in our LED lighting business in Cleveland, adding engineering and other jobs to support the growth of energy-efficient products. Meanwhile, across GE’s businesses in 2009, the company created more than 10,000 new U.S. manufacturing and related-engineering jobs and retained over 5,000 American manufacturing jobs through new product introduction, investment in growth sectors and productivity improvements that kept facilities cost-competitive globally.

We are committed to continue to find other ways to both add jobs back at GE in the U.S. and help drive a manufacturing renaissance in this country.

CarbonicusSep 12 2010 10:29 PM

Janice, thank you for confirming that the incandescent bulb legislation entered into the closing as did other traditional cost/benefit analysis decisions that industrial corporations routinely make.

I am more troubled by GE's legacy environmental liabilities and remediation of soil, groundwater, surfacewater, and sediments that directly effect human health and wildlife than the plant closing in VA (although I feel for the families of the workers). I am even more troubled by GE's lobbying as part of the new Climate Industrial complex.

In regards to the latter and the NRDC position taken by David in his blog post, it is ironic that the two of you are in disagreement. Consider the root cause of the VA plant closing in the first place.

The incandescent bulb law is a function of Thermageddon fears, "global warming", "greenhouse gases". The entire reason for having CFLs as the only option is that they are more energy efficient (a fact Carbonicus will not deny). The theory is that less energy used to create light in millions of homes and businesses, the less GHG's, the lower the planet's temperature the lower the risk of Thermageddon.

So, the incandescent bulb law is directly, irrefutably (and sophomorically) tied to "global warming" fears.

Let us forget, for the moment, that "global warming" is not a major threat, not materially contributed to by human CO2 emissions from burning fossil fuel (3.3% of total CO2 released to atmosphere annually), and that the miniscule amount of energy saved has no correlation to future lower planetary temperatures that can be differentiated from natural climate variability. Let us even ignore the reality that all energy efficiency gains are always more than swamped by new uses for electricity. As per my initial post, the energy saved by your newer refrigerator and air conditioner is more than offset by new server farms, consumer electronics, business uses of technology and, soon to come, plugging electric vehicles into the grid (more Nobel genius, as we will see).

No, the only point and sad irony here is that Janice and David politely disagree as to the real reason for the VA incandescent bulb closing, when they are both directly to blame for the closing.

NRDC has advocated for "global warming" legislation, and continues to do so.

GE has lobbied for "climate change" legislation, too, possibly more so than any other US corporation. GE has done so for competitive reasons (sale of more "eco-magination" products), but it doesn't change the fact that they've done so.

Worries about "climate change" are the underlying reason for the incandescent bulb law. You both lobbied for it!

Same deal with green jobs. NRDC supports it, GE supports it. Both lobby for it.

NRDC, do not try and pin blame on the corporation when they - as required by law - try to maximize earnings for shareholders by making green stuff in China that you intended to be made here. One of Carbonicus' famous sayings: the laws of economics do not yield to ideology.

You both made this bed. Now sleep in it.

David GoldsteinSep 17 2010 05:54 PM

A careful reader will notice how much Ms. Fraser of GE and I agree on the issues of why the Winchester, VA plant closed and what the sources of new American jobs are.

I said in the blog that it was incorrect to blame the plant closure on the new lamp efficiency regulations. Ms. Fraser confirms this: the plant was closed due to “…the dramatic changes underway in the lighting industry. Demand for the type of lamps made at the Winchester Plant is rapidly declining as new lighting energy-efficiency regulations are instituted in countries around the world and as customer preference shifts to more energy-efficient light sources.”

I explained how innovative green technologies will be the source of new, better jobs. Ms. Fraser explained that this is in fact what GE is doing in Bucyrus, Ohio where they are “creating a global center of excellence for linear fluorescent manufacturing, an action that will double that plant’s employment.” They are also investing in a LED lighting business in Cleveland.

It is too bad that I was not aware of this job creation success by GE so that I could observe that the net effect of energy efficient technology on American jobs is favorable, even for GE alone.

Both NRDC and GE are committed to using new green technologies and designs to create jobs and drive American manufacturing.

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