“The proceeds of the loan are insufficient to pay down current liabilities, resume construction or start commercial operations. The loan proceeds will be used to fund working capital requirements while we plan for a restructuring of our liabilities, and the liabilities of our subsidiary Hoku Materials Inc.”– Scott Paul, CEO of Hoku Corporation
At the end of May, 2012, the CEO of Hoku Corporation basically said that Hoku Materials, in Pocatello, Idaho, has ceased operations, even before it began operations!
I speculated that the 17 May decision to jack up U.S. tariffs on Chinese made solar products would be the final nail in the coffin for Hoku Materials, and it looks like I was right.
This is because Hoku turned to Chinese companies to bail them out of their financial woes. They became a subsidiary of Tianwei New Energy Holdings, which is an affiliate of China South Industries Group Corporation (CSGC). All their contracts are with Chinese solar product companies hoping to increase their business in the United States.
On top of that, JH Kelly, primary contractor working on the Hoku Materials project, is finally fed up with not being paid and has sued Hoku.
At the beginning of 2012 Hoku Materials laid off 20 employees (according to an Idaho State Journal report, that left around 150 employees).
In April, remaining construction work was stopped all together (due to the lawsuits).
At the end of May 2012, a local Pocatello TV station started getting phone calls from unnamed sources within the Hoku Materials factory. The callers were reporting massive layoffs.
Hoku Materials admitted to the local TV station that they laid off another 100 employees, because of massive debts, the increased U.S. tariffs on Chinese solar products, and civil suits by JH Kelly and other contractors! Hoku is now going through “restructuring”, which usually includes selling off assets to pay debts.
I’ve been warning since 2010 of the impending doom of Hoku Materials. The sad thing is that officials with the city of Pocatello, as well as Bannock County officials, bent over backwards to get Hoku to build their polysilicon plant in Pocatello (that included essentially giving the land to Hoku, by allowing a tax credit equal to the value of the land). This is because truly good paying jobs have become hard to find locally (no thanks to previous city and county leaders chasing off major employers for personal/religious reasons, such as refusing to allow Union Pacific to make Pocatello their Pacific Northwest Depot!).
Now there’s an unfinished polysilicon factory, taking up space equal to 50 football fields! To top that, the factory butts up to a residential area, a once dead end residential street is now the entry road to the defunct factory!