Thomas Friedman: Good insights, but not applicable to wind power

Thomas Friedman, the New York Times columnist, had another thoughtful column Sunday, “How Did the Robot End Up With My Job?,” about the dramatic changes that are being wrought in the global economy due to the Internet and the hyperconnectivity it provides.

In fairness, he said from the outset that his article concerned primarily white-collar workers and the way their jobs are, increasingly, being displaced just as blue-collar workers were by the advent of outsourcing. Still, it contained some takeaways that, I'd like to make everyone aware, don't apply to the wind power industry.

'Made in America' still counts for wind power: Friedman quotes the head of the World Trade Organization (WTO), Pascal Lamy, as saying terms like 'Made in America' or 'Made in China' are phasing out: “More products are designed everywhere, made everywhere and sold everywhere.” But, that's not true with respect to heavy industrial products like wind turbines. Turbine rotor blades are heavy, towers are heavy, and the large components are heavy, and shipping them around the world costs a bundle.  One major manufacturer reports to us that transportation costs amount to nearly 20 percent of the installed cost of a new wind farm. In a highly competitive world, that's a big number, and most manufacturers are looking to shave those costs as much as possible. Obviously, one of the best ways to do that is to assemble the turbines and manufacture major components as close to the wind farm site as possible. The result? More than 10 turbine manufacturers have opened factories in the U.S. in the past five years.

For the same reason–making the manufacturing process as efficient as possible and squeezing transportation costs, as well as recognizing political realities–manufacturers are working to source as many components domestically as they can.  As recently as 2005, only about 25 percent of the content of wind turbines installed in the U.S. was domestic. Today, that number is more than 60 percent, and there are more than 400 factories from coast to coast producing wind turbine components.

Many jobs cannot be outsourced: According to Friedman, “The term 'outsourcing' is also out of date. There is no more 'out' anymore,” essentially because global companies do business everywhere. A provocative idea, but it's certainly not true for wind power. In particular, a wind project typically creates dozens or even hundreds of construction jobs–jobs that can't be outsourced and that pay salaries to workers right here in America. The same is true for a number of other related disciplines–jobs operating and maintaining turbines, driving the trucks that carry rotor blades and towers to the construction sites, performing the engineering work, and more. You can't phone them in, and they can't be done over the Internet, so they definitely are tied to the physical locations where equipment is installed.

The bottom line: For the foreseeable future, wind power will remain an industry in which the key is building a domestic market. The creation of a market is that from which all flows–if wind farms are being installed here, the turbines and the vast majority of their 8,000 parts will be built here, and the associated construction and transportation paychecks will go to American workers and support American families.

The key to building a strong domestic market for wind?  Supportive, consistent tax policy, which in turn means avoiding a significant tax increase in the near term on this emerging industry that is churning out clean energy while bringing new manufacturing jobs to an economy that desperately needs them.