When government intervenes in the private market and tries to make some companies winners, the normal business rules are thrown out the window. Companies don't follow the normal business rules they would if they had to compete on-on-one with other companies. Such was the case with solar panel maker Solyndra. They were making a product for $7 in costs that the Chinese could make and ship here for $3. Instead of wisely spending their cash and and bringing their costs down, Solyndra was spending money like drunken sailors on shore leave.
Former Solyndra engineer Lindsey Eastburn:
“After we got the loan guarantee, they were just spending money left and right. Because we were doing well, nobody cared. Because of that infusion of money, it made people sloppy.”Of course Solyndra wasn't worried about becoming profitable anytime in the near future. They had applied for a second "green: loan so they would have money to spend after they
(WaPo) — Former employees of Solyndra, the shuttered solar company that exhausted half a billion dollars of taxpayer money, said they saw questionable spending by management almost as soon as a federal agency approved a $535 million government-backed loan for the startup.
A new factory built with public money boasted a gleaming conference room with glass walls that, with the flip of a switch, turned smoky-gray to conceal the room’s occupants. Hastily purchased state-of-the-art equipment ended up being sold for pennies on the dollar, still in its plastic bubble wrap, employees said.
As the $344 million factory went up just down the road from the company’s leased plant in Fremont, Calif., workers watched as pallets of unsold solar panels stacked up in storage. Many wondered: Did we even need this new factory?
“After we got the loan guarantee, they were just spending money left and right,” said former Solyndra engineer Lindsey Eastburn. “Because we were doing well, nobody cared. Because of that infusion of money, it made people sloppy.”
...Within a week of getting a loan guarantee commitment from the Energy Department, Solyndra applied for another guarantee worth $400 million. It never won final approval. Read more here.