Flabeg, solar energy company in Findlay, going bust
April 4, 2013 4:00 AM
Flabeg, a solar firm that received nearly $20 million in state and federal tax incentives to build this facility on Sweeney Drive in Clinton, ceased production.
Flabeg, a solar firm that received nearly $20 million in state and federal tax incentives to build this facility, ceased production.
By Erich Schwartzel Pittsburgh Post-Gazette
A Findlay-based solar power firm that was awarded nearly $20 million in state and federal tax breaks and grants ceased production last week and cannot afford to pay $197,000 that terminated employees say is owed in severance packages.
Flabeg Solar U.S. Corp. will "most probably" file for Chapter 11 bankruptcy but is open to takeover offers, said its Pittsburgh attorney, Robert Lampl. Flabeg's parent company in Germany has cut off funding for the subsidiary, which operated in a 4-year-old, 228,000-square-foot facility covering more than three acres near the Pittsburgh International Airport.
On Wednesday, only three cars were in the company parking lot at the Clinton Commerce Park, and an empty coat rack could be seen through one of the windows.
The company stopped production March 28, less than three years after government incentives designed to spur clean energy technology helped build the huge facility -- a site big enough to hold more than three typical Kohl's stores. Flabeg's Pittsburgh-area location is one of two remaining North American sites for Flabeg GmBH, a German glass finishing firm that had a car mirror operation in Brackenridge that closed in 2011.
When reached at the plant Wednesday, Flabeg Solar president Torsten Koehler said "the overall slow environment in the industry" led to the closing of the Findlay energy company. The firm manufactured large mirrors used to generate solar power.
In a statement released Friday, Flabeg's parent company in Germany said "the current order and market situation in the North American solar market does not offer any prospect of profitably justifying to continue with the Clinton plant."
The company and government agencies are now researching what -- if any -- of the tax breaks or awards must be paid back.
Over the past several years, the solar industry has seen several high-profile bankruptcy cases. They include Solyndra, the California solar cell firm that secured a $535 million loan guarantee from the U.S. Department of Energy before going bankrupt in 2011, leading the Treasury Department to launch an investigation into the loan arrangement.
Flabeg's shutdown is a reversal of fortune for the firm, which just five years ago was heralded by local officials as the kind of business Pittsburgh needed to attract: a clean energy technology firm that promised hundreds of stable jobs.
But problems started emerging by mid-2010, when Flabeg said orders for its solar mirrors were being delayed by approval processes in the southwestern states where it hoped to do business.
The operation in Findlay can produce up to 4,000 mirrors per day, and was said to be the largest solar mirror facility in the world when it was built in 2009. At the grand opening, company executives said they were already planning for expansion.
Flabeg received $9 million in grants and loans for the facility from the state. In early 2009, the company won $10.2 million in tax credits awarded by the Obama administration as part of the American Reinvestment and Recovery Act.
The Recovery Act, also known as the stimulus bill, included $2.3 billion in such credits for clean energy manufacturing projects. Flabeg's $10.2 million was the largest clean energy tax credit awarded to a Pennsylvania company at the time.
The company also said Friday it has not yet used any of the $10.2 million in tax credits awarded as part of the American Reinvestment and Recovery Act because sufficient profits are required to use them.
Findlay Township received $500,000 in federal money to enlarge a sewer line in the area around the plant to plan for Flabeg's expansion.
Through it all, Flabeg said it expected about 300 jobs to be generated by the plant. The firm's payroll topped out more than 200 at one point, Mr. Lampl said, and had about 70 workers when it stopped production last week.
Flabeg is reviewing the incentive packages to see if the company is required to pay back any of the incentives in the form of so-called clawbacks, said Mr. Koehler. The state Department of Community and Economic Development, which gave Flabeg a $1 million grant, is also reviewing the case to see if any clawbacks are owed, a department spokesman said.
Oftentimes, state and federal tax breaks or grants come with requirements that a company must meet to qualify for the funding, such as a jobs quota or longevity timeline, and those that don't meet the terms can be forced to pay part of the money back.
Meanwhile, at least seven former Flabeg employees have filed a petition in bankruptcy court seeking severance packages they say are due after termination.
The severances range from $21,000 to $36,000 each, and in total equal more than $197,000. The employees are also requesting an unspecified payment of medical coverage they say is included in the severance deals.
Flabeg doesn't have the money to pay the former employees, said Mr. Lampl, adding that Flabeg expects to have between $6 million and $7 million in debt. Several vendors are owed money as well, he said.
The complaint about severances was filed in bankruptcy court for expediency, said the employees' attorney, Steven Shreve. Suing in state court would risk tying up the case in a yearslong lawsuit that could end after the company has sold its assets, he said.
Flabeg has not received overtures from potential buyers. "If they're out there, they ought to contact management," Mr. Lampl said. "All the equipment's in place."
Editor's Note: This story was updated to reflect comments from Flabeg's parent company.