Aaron Glantz/The Bay Citizen

Hundreds of laid-off Solyndra workers crowded into a conference room at Ohlone College in Fremont for a workshop on jobless benefits sponsored by Alameda County's Workforce Investment Board

The Labor Department has waded into the thorny debate over Solyndra's demise, ruling that the Fremont-based solar panel manufacturer shut down because of stiff competition from overseas.

The ruling supports claims made by Obama administration officials, including Energy Secretary Steven Chu, that the company failed because of market pressure from China, rather than wrongdoing connected to the company's $535 million federal loan guarantee.

The decision, issued Friday after a two-and-a-half-month investigation, means more than 1,000 of Solyndra's former workers will be eligible for up to $14 million worth of additional unemployment, job training and relocation benefits under the federal Trade adjustment Assistance program, which helps workers who have lost their jobs as a result of foreign trade.

"This is great news," said Peter Michael Kohlstadt, a former Solyndra engineer. "A lot of people will definitely need it." 

Critics of Solyndra's loan guarantee, including congressional Republicans, will likely say the ruling means taxpayers are paying twice for the government's failed bet on a risky alternative energy company, losing more than $500 million on Solyndra's loan guarantee and another $14 million to cushion the fall for laid-off workers.

The Labor Department’s conclusion will not affect other investigations into possible wrongdoing connected with Solyndra’s bankruptcy.

On Sept. 8, two days after Solyndra declared bankruptcy, FBI agents and agents of the Department of Energy Inspector General raided the company’s headquarters and interviewed three company executives. “All affidavits in the case remain sealed,” said Julianne Sohn, a spokeswoman for the FBI.

The Labor Department’s inquiry was set in motion in response to a petition filed by Alameda County’s Workforce Investment Board, which argued that that “Solyndra and other U.S. solar industry manufacturers have been affected by a worldwide plunge in solar cell prices, based in part on huge subsidies Chinese solar manufacturers receive from their government.”

Analysts say the United States' share of the worldwide solar panel market has fallen from a peak of 43 percent in 1995 to just 7 percent last year, in large part due to hefty Chinese government subsidies, which far eclipse the more than $30 billion in loan guarantees the U.S. government has handed out to companies like Solyndra.

In his four-page ruling, Michael Jaffe, a Labor Department official, wrote that Solyndra's workers were entitled to additional benefits because increased imports "contributed importantly" to the company's failure.

Jaffe said the department reached the decision after reviewing Solyndra’s books and those of some of Solyndra’s customers, along with market analysis and data from the U.S. International Trade Commission, a federal agency that investigates the impacts of imports.

In the ruling, Jaffe stressed that other factors might have also contributed to Solyndra's demise. Federal law "defines the term 'contributed importantly' to mean 'a cause that is important but not necessarily more important than any other cause,'" he wrote.

To date, the Labor Department has rendered a split verdict on Trade Adjustment Assistance petitions filed on behalf of workers at failed solar energy companies — granting a petition to help workers laid off by Evergreen Solar of Massachusetts but refusing to grant extra benefits to former employees at SpectraWatt of New York, which manufactured the same type of panel. The department determined that foreign trade was not a major cause of SpectraWatt's failure.

Last month, Sunnyvale-based Calisolar filed a petition for additional benefits for 80 workers it laid off citing competition from China; the department has not yet issued a ruling in that case.

Rep. Pete Stark (D-Fremont) cheered Jaffe's ruling on Solyndra, saying it would “help more than 1,000 workers in my district who were blindsided by the Solyndra closure to get back on their feet and lessen the blow to the community.”

The job search has been slow going for many of Solyndra’s former employees. In an interview, Marybeth McCarthy, business director for the county Workforce Investment Board, said her agency had been in touch with 410 former Solyndra employees and found jobs for 60 of them, 24 of which were in the solar industry.

“This was a large-scale layoff, but there is not going to be any large-scale hiring,” said Michael Bernick, a labor lawyer and former head of California’s Employment Development Department. “We’ll probably continue to see a dispersion of hires in small numbers at a large number of firms, some inside, but mostly outside the solar industry.”