Not So Fast
But wasted time and squandered opportunity, some contend, have been part of the legacy of McMaster's big-vision strategy. Buried in the SCI story is the existence of a generation of key technologists and managers who worked hard and with success under McMaster and who have since drifted into exile, their efforts to steer the company along a different course having proved ultimately fruitless. One of them, Bob Nicholson, recalls how the tightly knit crew, starting in late 1990, transformed what was an old machine shop cluttered with school desks into an operation that turned out world-class work. "We literally shoved stuff out of the way and painted the floor," he says. "Within two years we had produced what could become the most efficient panel in the world." According to SCI, the company's ability to coat a panel--the "deposition rate"--proved to be nearly 600 times faster than any competitor's.
The leader of that focused effort was Jim Nolan, a physicist and SCI's vice-president for operations from 1990 to 1993. Precise and methodical, Nolan also had the personal touch. Nicholson recalls rushing to meet a deadline and then getting home to find a phone message from Nolan, simply thanking him for his hard work. Peter Meyers remembers how Nolan once coolly entered a crucial board meeting and claimed a technical milestone had been reached--while the engineering group was still working on it. By the time the meeting was over, the team had, in fact, succeeded.
Steve Kaake, once an electrical engineer at the company, summarizes the sentiments of several others interviewed: "Jim was the best boss I'll ever have," he says.
Nolan, in contrast to McMaster, sought to commercialize SCI's state-of-the-art technology quickly by getting panels into the field, where he knew they would earn kudos from customers. Once the panels were available, they would create both a reputation and cash flow for SCI. But manufacturing panels at this point meant challenging the SCI orthodoxy. Think small, Nolan urged, not big. "I felt Harold's course was too big a step and the probability of success was low," Nolan recalls. "I didn't want to bet the company on that approach."
By early 1993, says Nolan, SCI had the ability, on a limited scale, to produce panels that would catch the market's fancy. While McMaster was thinking in terms of 500 megawatts annually, Nolan was squeezing 200 kilowatts of real product out of the pilot production machine designed and built by his team. In the meantime, he drafted plans for a full-production machine with 10-megawatt capacity. Though small by McMaster's standards, it would produce enough PV modules to satisfy about 10% of world demand, and it would cost $10 million to build, an investment within reach for SCI at the time. Moreover, as the company gained experience on that machine its yield and uptime would increase. Nolan estimates that he could have increased the capacity of such a machine to 30 megawatts within six years, "with little additional capital expense."
Nolan was driven by his belief that most start-ups work without a safety net. "A small company gets only a few chances to make mistakes," he says. Therefore, the risks it takes should be calculated. "Let's use the technology we had to enter the market," he recalls.
Furthermore, any company burning through capital, as SCI was, has a fiduciary duty to produce a return for investors in a reasonable amount of time. SCI seemed to have no timetable, perhaps because most of SCI's investors were members of McMaster's Ohio community and trusted him implicitly. Also, most of them were relatively well off; if their SCI investment went south, it wouldn't kill them.
Nolan argued that the company should start manufacturing in limited quantity and gradually scale up. The science concerning solar thin films was complex and largely untested. The leap from the lab directly to the large 100-megawatt machine that McMaster envisioned was fraught with unforeseen technical challenges. Confirms NREL's Ken Zweibel, "The technical infrastructure is not there for PV. It's being invented as we go along."
Cost
But surmounting such challenges has been second nature to Harold McMaster throughout his career. In fact, the challenges have made life worth living. McMaster knew that putting SCI on the map depended on driving down production cost in an effort to push the technology into mainstream markets.
Solar energy is currently most viable in specialized applications. "The 'off grid' locations or developing countries are where the market is now," says Rick Yocum, SCI's former director of marketing and former president. Going after those markets, he adds, would be a way for SCI to "build credibility."
McMaster sees such markets as little more than a costly nuisance. "We've been diverted by these niche markets," he says. He thinks that the gradual approach to the market championed by Nolan would have sent the company deeper into the red. "It would have been tough to make a profit," McMaster claims. He says that by his calculations, operating losses would have totaled $9 million over five years. Making panels in limited quantities for specialty markets amounted to death by a thousand cuts. To McMaster, the way out lay in driving down the cost by manufacturing in large volume. PV module manufacturers currently produce a watt of solar energy for $3 to $4. SCI's breakthrough could bring that cost down near $1. But, says McMaster, "if you can't get your cost of production down below $1, it's not worth it." He predicts that in five years SCI will be able to produce a watt of solar energy for 60¢.
