I'm not sure if I'm ready to say business and politics shouldn't mix -- I can't see how to avoid it. But the skirmish over Solyndra LLC's bankruptcy is all about politics. If it had been more about business, the whole mess could have been avoided.
For those of you not following the story, the Obama administration backed a $535 million loan guarantee for the California solar panel maker. The move was part of an overall government initiative to spur development in solar power and other clean energies. The problem, other than this week's bankruptcy filing, is that the government's due diligence indicated Solyndra was in trouble as early as 2009. Two independent audits raised red flags about its long-term viability.
Either due diligence was ignored, or the government rushed to back the loan as part of its political agenda.
Now the deal is under investigation, and the responses have broken straight down party lines. Republicans accuse the White House of pushing its agenda to the detriment of fiscal responsibility. The Obama administration insists it granted the loan on the company's merits. Some in the GOP say global warming is a scare tactic embraced by the left. Most Democrats say the environment is in grave danger.
Politics aside, let's look at the business case. If I were a potential investor in a company, would I conduct due diligence? Would I require independent assessments of its business plans? Would I expect regular reports on its progress? Would I go over every report with a fine-toothed comb? Yes to all of the above.
Here's my problem. I consider that $535 million my money. A portion of it came from my taxes. Independent research indicated Solyndra was headed for trouble. The loan was granted anyway. It's bad business.
I can't even begin to list all the ways the government (under all administrations) uses my tax money in ways I do not support. But for the most part, I recognize when my objections are political and when they are not. As complicated as business is, some things are pretty cut and dried -- look at the numbers, measure your risk, and ask a lot of questions. Make a decision based on business, not politics.
Even though I am an avid supporter of alternative technologies, this is one investment I don't think I would have made.
@Pocharle I understand your point. We have to admit the government set out with all good intentions. Mostly the plans goes awry because of overzealous contingencies.
Perhaps I didn't state that as well as I could - the circumstances do give the appearance of political expediency given the realtionship and timing of the investment and subsequent announcement. That could, and should have been evident by decision makers prior to the investment, which is all the more reason to make sure that due diligence is performed thoroughly. At this point, one may even argue that we don't know if there was a lack of due diligence. But Barbara brought up an interesting point...would one of us have made this investment decision with our own money?
@ Eldrege, I hope we are not jumping the gun like the politicians and making all these judgement calls before the investigation is completed. It seems the Obama detractors are already screaming crucify him and not waiting for the final outcome of the investigation. The report may confirm just what is being released piece meal, or justify your statement "Sometimes even the best researched and vetted investments do not work out."
Please don't take my commentary the wrong way. I am not blaming the government for the mess we are in. What I am saying is, by their actions, the perfect storm was created.
Think of it this way, if you have a very expensive item and you leave it unattended somewhere and someone steals it, some would blame you for losing it, others would say the thief is to blame BUT you still had some responsibility on it happening.
Am I the first one to bring up the word corruption? Or is it implied that whenever a government intervenes, the corruption is an inevitable part of the process?
I would be very wary of any investment the government makes when they are the only ones making it. Not that private investor get it right all the time but they are more careful (when handling their own money, at least).
Barbara, if you able to create another discussion “do businessmen make great leaders”, it’s very interesting. From news we had seen that most of the dictators from Middle Eastern counties are good business leaders. If we are analyze the annual report from some of the Switzerland based banks, majority of the high value transactions are happens from businessmen cum leaders.
My understanding is that the company has gone bankrupt, so the investment is probably gone. Furthermore, an additional $75M invested after the gov't loan has been given priority in the bankruptcy proceedings, against the original terms of the loan, so there is no recovery for taxpayers unless more than $75M can be recouped.
As discussed in a previous article on business investment, executives are being very conservative in their investment position. Sometimes even the best researched and vetted investments do not work out. Decisions have be made in a partial vacuum. Unfortunately, there is ample reason to question investment in Solyndra based on the information known prior to the decision, and it gives the appearance of having been made based on relationships and political expediency. The investment seems to have failed on two fronts.
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Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
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Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
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Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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