These austere economic times are bad for business and even worse for predicting its future. The fate of green companies invested in innovative energy technologies is even more unpredictable.
Green holds the potential to launch the global economy into a new eco-era just as the dot-com era did in the 1990s, creating a market abundant in jobs and capital, but requiring hearty investment.
But people are scared. A recession screams for bear market bankroll, although now even once blue-chip investments can be unsafe.
So how will green technology fare amid the global economic slump?
The Cycle Of Green
In summer 2008, gas prices catapulted, raising the national average for the first time to more than $4 a gallon. The increase doubled the cost from the five years prior and nearly quadrupled from a decade earlier.
The rise was bad for SUVs but good for hybrids. Dealers nationwide reported waiting lists for the Toyota Prius, the most popular hybrid.
But by the end of summer, economic instability caused a sharp drop in gas costs, cutting the price per gallon in half and with it total 2008 Prius sales dropped 12 percent from the previous year, according to Toyota.
The explanation is simple. First, car sales all across the board dropped in 2008. The mean loss for the industry rested at 18 percent, but some companies such as Chrysler saw downturns at 30 percent from December 2008, and 55 percent from January 2007.
But the decline in Prius sales stemmed from a more important reason: When gas prices were high, consumers sought a more energy-efficient alternative, but when they dropped, petroleum consumption became less of a concern.
This is the cycle for many green tech industries.
In previous years, eco-friendly design was an almost indestructible industry. The notion of "green" was the golden ticket to attracting private investors and companies like California's OptiSolar and North Dakota-based DMI Industries, a steel maker that builds towers for wind turbines.
"We were at the stage of our growth and we were about to expand rapidly to a high volume production," said Alan Bernheimer, vice president of communications for OptiSolar, a California Bay Area company.
In 2008 energy created by wind power in the U.S. increased by 50 percent and with it came 35,000 new jobs.
Mewanwhile, the solar industry grew by nearly 50 percent per year since 2000, but the recession has affected this powerhouse as well.
Stock markets tumbled and nervous financiers pulled their money, forcing businesses, including OptiSolar, to lay off hundreds of workers due to lack of capital.
"We ran into this economic collapse, so we were unable to finance this growth," explained Bernheimer. "Investors simply were not contemplating risk in the same way that they have been, so we've put our plans on hold for a while."
Access To Capital Shrinks
For green companies there are only two ways to go: up or down. On one hand, green tech companies will fail when providing them with capital is viewed as too risky.
"Because that [economic] downturn originated from the banks, financing for wind plants is very slow, there's not a lot of capital out there," Julie Clendenin, spokeswoman for the American Wind Energy Association, told Hispanic Business Magazine.
Indeed, renewable energies have not demonstrated a broad success at creating jobs and bolstering the economy. When times get tight, like they are now, people tend to stick with what they know and what they think works. In this case, it's old standby fuels like coal and gas. Economic prosperity in any sector requires consumer and investor confidence in order to stay afloat. With nearly everything appearing to be on the downturn, green companies are bound to lose investors' trust and ultimately suffer.
"In tough times everything is more uncertain and investors want to take less risk," said Bernheimer. "I think its slowing us down. You've got the freeze-up in equity and credit markets and then you have the short-term drop in fossil fuel costs, which takes [people's] mind off the fact that they are going to need alternative fuels later."
For eco-business, dejection is not an appropriate investor response.
"Investors don't think it's risky to invest in solar, they are just more choosy now," Bernheimer said, adding "so we've put our plans on hold for a while."
In the limited instances where green tech has had a chance to prove itself worthy of economic stimulus, it has done very well. Green collar jobs -- the new buzz term surrounding work in industries that seek to improve, conserve or protect the environment -- are among the few career paths on the rise.
Green jobs include making steel for wind turbines, installing solar panels, working as a receptionist at a green company, or driving a public bus. A green-collared job, like its blue and white predecessors, implies full-time, salaried employment, livable by families.
What Is The Future?
The future is where the money goes. "Going green" has proven itself more than a cliche. This is the second time it has reared its eco-head since the 1960s. Green represents the next era of growth, demonstrating a potential for new markets, jobs, and technologies.
Some companies, like Fisker Automotive, are banking on progressive technology. Producing a line of hybrid, plug-in luxury sports cars, Fisker is confident that its business will not suffer at the hands of the recession.
"We're a little bit isolated by gas prices, the car is $80,000 to $90,000 to start so people who are going to be buying these cars are going to be worried more about the environment and less about gas prices," said Fisker spokesman Russell Datz. "The time is right for this kind of technology and we're going to try to lead and change the way people think about driving."
Hispanic #1 Breaking News for Entrepreneurs, Professionals and Small Business Owners - HispanicBusiness.com
OCTOBER 31, 2014
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