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September 22, 2016 - 7:33am

Groundbreaking for STAMP expected next month, 1366 in the spring

posted by Howard B. Owens in WNY STAMP, Alabama, business, news, 1366 Technologies.

A groundbreaking ceremony should take place in Alabama sometime next month for the WNY Science, Technology & Advanced Manufacturing Park -- the STAMP project -- complete with state government dignitaries, said Steve Hyde, CEO of the Genesee County Economic Development Center, during a meeting Wednesday of the County's Ways and Means Committee.

It will signal the start of development of STAMP, a planned high-tech industrial center that Hyde first proposed more than a decade ago.

Initial development will be building the infrastructure to support the site's first tenant and serve to attract additional tenants with the dream of eventually creating 10,000 jobs at the industrial park.

The first tenant is 1366 Technologies. With headquarters in the Boston area, 1366 will use a revolutionary manufacturing process to create silicon wafers for solar panels. 

Once the infrastructure work -- roads, sewer, water, electrical -- starts, 1366 will begin the design process for its facility.

Hyde expects there will be a second groundbreaking especially for 1366 sometime in the spring and the plant will be completed by the end of 2017.

Legislature John Deleo asked Hyde to explain why local residents shouldn't be worried about the prospects of 1366 when Solar City, part of the Buffalo Billions project, seems to be struggling.

Solar City and 1366 are completely unrelated projects and the two companies are pursuing very different business models, Hyde told Deleo.

Solar City is building a very large factory to manufacture residential and commercial solar panels that the company will sell itself to a domestic market.

Whereas, 1366 is only making solar wafers and its product will be a component in solar panels built by others for large industrial solar operations in overseas markets.

So far, 1366 has about $100 million in private investment capital, overseas strategic partners and its initial customers.

At full capacity, 1366 is expected to employ about 1,000 people.

For prior 1366 Technologies coverage, click here.

william tapp
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whos bright idea is it to make the fonts to dam small that its hard to read

Laura Langmaid
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I hope this doesn't turn out like Mueller Quaker. They also promised lots of jobs . Now the employees are out of work but Hyde and his committee got their bonuses. Wrong.

Ed Hartgrove
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BREAKING NEWS:
Funny that you should mention the "Buffalo Billions" project. Just today (Sept. 22, 2016), there is a breaking story ( from http://www.nytimes.com/2016/09/23/nyregion/cuomo-former-aides-charges.ht... ), about corruption charges possibly being filed against Gov. Cuomo's former aide. It appears that the (possible) corruption charges might include "kick-back" schemes, involving companies chosen to do business with Gov. Cuomo's prized upstate economic development programs (which could potentially include companies affiliated with "Buffalo Billions").

Does it ever end?

Ed Hartgrove
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According to Bob Lonsberry (WHAM 1180 radio), U.S. Attorney Preet Bharara has scheduled a press conference concerning this (alleged) corruption. The press conference is supposedly scheduled for noon, today.

Of course, even if corruption charges are filed, under our system, everyone is innocent until proven guilty. And, of course, most of us also know that millionaires and high-end gov't. officials have a way of escaping justice, far too many times.

Howard B. Owens
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Here are some observations about Muller Quaker, Solar City and 1366, with a caveat: I'm not making any predictions about success or failure of any venture, just explaining some of the business differences as I see them (which is, in the end, why I'm personally optimistic about both 1366 and the former Muller Quaker plant).

Muller Quaker: Two big companies took a risk on what they saw as a hot market: Greek yogurt. In hindsight, it's not clear that executives clearly thought through the value proposition of their product. By the time they got product in market, the Greek yogurt market peaked and was saturated with competitors. If this was a start-up firm trying to get Venture Capital backing, it never would have happened. There simply isn't enough profit in highly competitive markets and the profit margins would be slim even in a less competitive market. The product wasn't significantly better than what was already on store shelves and the packaging MQ thought was such a break-through wasn't patented (by MQ) and quickly became available to other competitors. Also, the product wasn't Greek yogurt. The product was a Greek yogurt substitute that wasn't as healthy as Greek yogurt, and the health benefits of Greek yogurt is one of the drivers of the market. The yogurt was good, but not healthful enough and too derivative of regular yogurt. There was never a strong brand identity around the product, a problem with marketing, so the product never really caught on.

As we reported yesterday, Pepsi and Muller invested some $206 million in the plant. The tax subsidies they received were a fraction of that cost, so both companies lost a lot of money on the venture ( with no idea how much they lost on operations). DFA picked up the plant for about 1/4 of the cost of construction, and note the plant closed in December and DFA bought it in January, signaling a clear strong interest in the plant. They didn’t buy it to just see it sit there empty. Clearly, they felt they needed to move quickly to make sure they secured ownership of the plant before another buyer came along. Since it kind of fell into their lap, it’s not surprising that they still don’t have a clear plan on what to do with it, but clearly they intended to do something productive with it. They wouldn’t dump $60 million into a purchase and just let it sit there. Time will tell if their business model, or the next owner’s business model, is any more sound than Pepsi/Muller.

(Alpina continues to thrive in niche markets, but from what I observe, hasn't made the leap into a broader market in the U.S.)

Solar City is part of Elon Musk's plan to be the major player in renewable energy markets, from the Tesla electric vehicles, to solar-charged batteries to solar panels for your home. This is known as vertical integration. Musk wants to run the company that sells you your car, powers its electric batteries that it builds and charge them with electricity generated by the solar panels on your roof. It's a hard thing to pull off. Musk and the Solar City executives have borrowed a lot of money to rev up these companies and that makes investors nervous, as does Musk's plan to merge Tesla and Solar City. (Meanwhile, Musk is trying to commercialize space travel with SpaceX). Solar City is trying to create a new market were none exists before there is even much demand for it (though demand is growing, and there's an economic principle known as Say's Law that says "supply creates its own demand"). This a high-cost venture, from creating its own technology for making solar wafers, to building the entire solar panel to selling the solar panels to installing the solar panels, all by one company. That is simply a very cost-intensive venture. Hence, the nervousness about whether Musk can pull it off. Solar growth has been driven a lot by tax breaks for homeowners and those tax breaks are constantly under threat and Nevada has already cut off subsidies, which was no small part of Solar City's market.

Which brings us to 1366 Technologies, a totally different approach.

We normally don't see innovative disruption in immature industries (meaning solar), but that is what 1366 appears to be doing. They see a demand, a job to be done, as Clayton Christensen would put it, for producing wafers at a lower cost, thereby lowering the cost of the power generated by those wafers, not only lower than any other solar product, but lower than the price of power from coal (the true target of their disruption). As any smart disruptor does, their initial aim is one product (just the wafer, not the whole panel) with just one segment of the market in mind (industrial solar installations in overseas markets). That's a very narrow focus which helps control costs and will help them achieve profitability sooner (if not immediately). Success in that narrow focus will help drive growth. Eventually, maybe, 1366 becomes a vertically integrated solar company, but that potential is so far down the road, they're not even talking about it. And at this point, 1366, unlike Solar City, isn't relying on loans to get up and running, as far as I've heard, but is entirely investor-backed. That's stronger ground to be on, generally, because while investors expect a profit, they go in knowing there is no guarantee and they get nothing if the business fails. Bankers expect their money and will seize assets if loans are not repaid or force bankruptcy even if the company still has runway. It's also important to note that 1366 has developed patented, proprietary technology that, we are told, will make the cost of production much lower. If they're right about that, and given their narrow market focus, it's hard to believe the company won't succeed (but again, no predictions or guarantees here, just how I personally read the prospects).

Billie Owens
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William, we have the same fonts we've always used. You ought to have the ability on your computer to increase the magnification of your computer monitor screen. Howard has had to do this in the wake of his retina detachment surgery and it helps him read the better much better. Ask someone to help you.

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