The story is about Solyndra, a company that manufactures solar energy equipment in California. Solyndra received a $535 million loan guarantee from the federal government to help build a new plant and expand their business making solar cells and other solar energy equipment. They are going to lay off some 40 employees, not take up the contracts of about 100 others and shut down one of their plants. The reason given is that they cannot compete with the prices of the companies manufacturing similar equipment in China. Here's a link to an article in the Los Angeles Times--I didn't just take Rush's word for it.
Now, let's do a thought exercise. Let's engage our imagination for a minute. Imagine a group of people perceive a demand for a certain widget. The type of widget is not really important--just that it is an actual object that needs to be made from raw materials. The group of people gather some money together--let's make it all private money--and start a company that manufactures widgets--Widgets Incorporated. They get a building, the fabricating equipment, the material, a couple of employees and start making widgets. Lo and behold, the widgets find a market and sell reasonably well. It costs our imaginary company some amount--say $8--to make each widget, but the price they can sell at covers costs, returns a small profit and still attracts customers.
All is well until we find out that Chow Mein Heavy Industries decides it wants to make widgets too, either under its own name, or under the name of a conglomerate--you know one of those makes everything from A to Z things. Any how, Chow Mein works its numbers, and makes widgets. At $5.50 a piece, since their labor costs are much lower. They price the widget accordingly on the market. Lo and behold, people start buying Chow Mein's widgets, because they are cheaper.
This means trouble for Widgets Incorporated. Widgets Inc. has lost market share, and is not selling enough widgets to be cost effective, and keep going in their current state. What to do? Cut wages? Cut staff? Change marketing? Major on service with and after the sale? Manufacture in China with General Tso's Manufacturing Company? Just keep going but make less money per unit? Close up shop altogether and leave the making of things to the peasants of China?
This is the life of Solyndra right now--forget the federal loan situation for now--how are they to proceed? And what is best for our country? Should that be a consideration? Or did they just miscalculate and tough for them?