Moses Lake REC Plant to Pause Production Services Wednesday due to China US Tariff Dispute
— Moses Lake, WA
- By MLWA 7 and other media outlets
The REC polysilicon factory for use in the manufacture of solar panels is shutting down Wednesday due to the nation’s on-going trade dispute with China, the company said.
REC Silicon announced it will halt production at its plant in the central Washington state community of Moses Lake on Wednesday and that its remaining 150 employees will be laid off at the end of June unless the dispute ends.
“We will keep the employees for another six weeks, until we see what is the outcome of the trade war,” company president Tore Torvund told investors last week.
The Columbia Basin Herald reported last weekend that REC is struggling because of China’s 57% tariff on U.S.-made poly silicon. Torvund said if the U.S. and China fail to reach agreement, the plant will be mothballed until prices improve.
China imposed tariffs on U.S. polysilicon, which is used to make solar panels, after the U.S. imposed tariffs on Chinese solar panels. The tariffs basically prevent REC from selling its product in China, which makes most of the world’s solar panels, REC Silicon has said. Despite the problems caused by the trade war, REC Silicon supports the actions of President Donald Trump, said Francine Sullivan, vice president of marketing for the company.
“This kind of brinksmanship is necessary in politics,” Sullivan said.
REC reported a loss of about $4.7 million on revenues of $45 million for the first three months of 2019. While the company has increased sales, Torvund said the world price for polysilicon keeps falling.
Meanwhile, the REC Silicon plant in Butte, Montana, remains profitable despite curtailed operations, the company said. The Butte facility makes silicon gas for the electronics market. The Butte plant reduced production earlier this year because of high electricity prices.
Torvund said REC Silicon will rely on Butte operations to keep the company going until the situation in Moses Lake is resolved. Few Chinese polysilicon producers are making a profit, Torvund said.
“No one in the value chain is making money at today’s prices,” he said. “There’s still an oversupply.”
President Donald Trump and Chinese President Xi Jinping could meet in Japan next month to resolve the escalating trade war between the world's two largest economies. Negotiations during the weeks leading up to that meeting will determine whether a deal is possible. The Office of the U.S. Trade Representative laid out its criticisms of those policies last year, prompting Trump to impose a 25 percent duty on $50 billion worth of Chinese goods.
During a scrum with reporters Tuesday, President Donald Trump called the situation with China "a little squabble" and said his relationship with President Xi Jinping remains "extraordinary." Stocks rallied strongly after Monday's aggressive sell-off.