ALBANY – The loss of global manufacturing giant Panasonic Corp. from Buffalo’s RiverBend solar panel factory saw government officials reacting with different messages on Wednesday, a day after the Japanese company said it will abandon its local presence and cut hundreds of jobs at the sprawling, state-owned facility.
The administration of Gov. Andrew M. Cuomo, which came up with the original idea to put a solar plant at RiverBend, sought to downplay the Panasonic departure and focus instead on the state's primary deal with Tesla, the facility’s ongoing tenant. In particular, state officials emphasized Tesla's new claims that it already has exceeded job creation quotas for the plant that were required by the state as a condition of financial incentives.
“It was never about Panasonic, right. The project was about the creation of jobs," Cuomo said at the Capitol Wednesday about the manufacturer that came on board in 2016 after the state’s initial deal with Tesla to occupy the state-built and equipped factory.
After amendments to the original agreement, Tesla eventually vowed to create at least 1,460 jobs by this April or pay a $41.2 million penalty; Tesla this week said it met the job target, although the state said it would have to confirm that first.
“The project has created more than 1,460 jobs so it, by definition, has been successful," Cuomo said of the factory.
Cuomo officials said Panasonic’s decision was a global move by the company and not specifically directed at cutting jobs in Buffalo. Panasonic said Wednesday it plans to end manufacturing in Buffalo in May and will be gone from the plant in September.
State lawmakers whose districts include RiverBend or nearby areas sounded some alarms.
“It’s very disappointing and it’s very concerning," said State Sen. Tim Kennedy, a Buffalo Democrat. “I’m most concerned about the 380 employees getting laid off and we need to make sure they transition to gainful employment immediately."
Kennedy said he was uneasy about the decision by Panasonic, even if it was part of a global move by the Osaka-based company.
Even so, he said the region’s strengths will still be able to attract global companies and that the region shouldn’t let Panasonic’s decision “impact our continuing focus to bring jobs to Western New York from the international market.”
“We would have loved to have kept Panasonic in our industry marketplace as we’re trying to grow our solar hub. It’s disappointing they’re pulling out. I believe it’s a mistake on their part. The future of the industry revolves around green jobs," said Assemblyman Sean Ryan, a Buffalo Democrat.
Ryan said the next task is for the state to verify Tesla’s claims that it has hit its employment quota as part of a deal with the state for its massive taxpayer investment in the plant.
“We are in the trust-but-verify realm with Tesla," he said.
Panasonic was greeted as a kind of savior for the project when it announced in 2016 that it was joining California-based Tesla – which at the time was struggling to build up the RiverBend plant – to move operations forward at the sprawling facility. That same year saw federal prosecutors bring corruption charges over how the Buffalo Billion program, which included RiverBend, was awarded. The case led to guilty pleas or convictions of several individuals, including Buffalo businessman Louis Ciminelli and former SUNY Polytechnic president Alain Kaloyeros.
One fiscal watchdog who has raised concerns about a nearly $1 billion investment by the state taxpayers in a plant “big enough to have its own weather system” said the Panasonic departure could be troublesome for the facility. E.J. McMahon, research director at the Empire Center for Public Policy, an Albany think tank, said Panasonic calmed investors in 2016 who might have been concerned about Tesla’s move to operate the largest solar plant in the Western Hemisphere.
A key question for the publicly owned plant, he said: “What are the prospects for employing anybody there … a few years from now?”
State officials noted New York did not have a job creation deal with Panasonic, but only with Tesla.
Local government officials had their own reactions to the news by Panasonic.
“I was surprised to hear the news about Panasonic. It does concern me, especially when we talk about jobs in this area and what was promised,” said Buffalo Common Council President Darius Pridgen. “I know this is business and this is how business is done, but I am very concerned.”
The decision was seized upon by state Republican Party Chairman Nicholas Langworthy, an Erie County resident, who called it a continuation of Cuomo’s “Buffalo Billion boondoggle.”
“This latest news from Panasonic is just another kick in the teeth to upstate’s drowning economy," Langworthy said. He called on Tesla to open its doors to the factory to let the media observe its operations and see how many people are employed there.
Erie County Executive Mark Poloncarz said he viewed the decision as a "business decision" from Panasonic pertaining to solar roofs in North America.
"It’s not like they’re moving from Buffalo to somewhere else, like Knoxville or Bismarck, N.D. They just decided to get out of the solar roof business in North America, so I don’t know that there’s anything we really could have done to keep Panasonic here,” he said.
He said Tesla “did assure us” that it has met the 1,500-job requirement and “they’ll be able to absorb the work that Panasonic was doing.” But he was disappointed to learn that people would be losing their jobs.
“I’m hoping some of the individuals that are currently employed by Panasonic will be absorbed into Tesla," he said. "If not, we will work to help those individuals find jobs in the many other advanced manufacturing industries that are growing here.”
Buffalo Mayor Byron W. Brown said he met Wednesday morning with three Panasonic representatives. “The way they framed it, I knew it was not going to be good news,” he said.
Brown said Panasonic told him that its workforce – he cited 403 workers – would remain on the job at least until May 20, and possibly through September to handle the decommissioning, equipment removal and cleanup. Workers would get severance based upon length of service, and Panasonic would provide retraining opportunities as well, Brown said he was told.
Brown and several state lawmakers toured the Gigafactory a few weeks ago, and he said he “was very impressed with the activity” and that the plant was “bustling.”
“They were one of the most diverse workplaces in Buffalo and Erie County that I have seen, and I was told they had a high percentage of city resident employees,” Brown said. “The employees had good, positive things to say about their employment.”
On Tuesday afternoon, Joseph Mendelson, a senior counsel at Tesla’s Washington office, emailed state officials to tell them of the “unfortunate news” about Panasonic. But he said the move will not affect Tesla’s plans to continue to grow its presence at the Buffalo factory. He said Tesla has plans to use the Panasonic space for its own future growth at RiverBend.
The Tesla executive included a four page document – labeled “Frequently Asked Questions” – about its Buffalo plans. The document was obtained Wednesday by The Buffalo News.
The Tesla executive wrote that the company's current headcount is “well over 1,500” workers at RiverBend, which includes company employees and contract workers who are qualified to become Tesla workers after 90 days on the job. He said Tesla does not use Panasonic solar technology in its solar roof products so the pullout will not have a direct impact on Tesla’s business.
The document said Tesla also employs more than 300 workers in other areas of the state. Mendelson said New York is Tesla’s sixth largest solar and energy storage market and that it has had 18,185 customers as of last August; the document said Tesla would not disclose where its solar roof customers are located.
The Tesla executive wrote to state officials saying the company would hire “as many as possible” of the Panasonic workers losing their jobs and that job fairs are already being planned for those people facing job losses.