The transcription of the video is below.

Introduction and Background

Kerim: Well Jim, Jim Wood of SEG Solar, I am very excited to talk to you about what’s new in SEG’s world. Before we get in there, quick intro. You have been one of the OGs in the solar industry for probably 15-20 plus years at this point.

Along with some colleagues that you started the solar industry with, 10-20 years ago, you guys have a really unique position in the market, having bootstrapped an American solar panel manufacturer starting in the US, with a foot in Asia.

You are a really unique animal, if I can call that in the industry. I would like to start with that unique beginning of SEG to set the stage of what you guys do, and then talk a little bit about what’s new in the world of solar panel manufacturing.

Jim Wood’s Journey to SEG Solar

Jim: Okay, happy to.

Kerim: Tell us about how SEG started, where its roots were, how far back it goes, how it came together, and how you guys managed to be a global, bootstrapped American company. 

Jim: Prior to SEG, a number of the folks at my company, we all worked together at another module company. That module company was acquired by one of the largest module companies in the world. 

We quickly found ourselves wanting to do something else. As a group, myself, Jun, who’s our COO, was Chief Technology Officer at the other company we worked at, Michael Eden, our Chief Legal Officer, came with us, CFO, procurement team. 

We were all working at Company A. Then a month, two months later, we were starting, and we started SEG Solar here in the US so that was eight years ago.

Been in the industry now for a little bit over 20 years. Originally started out on the installation side and former NABCEP and Certified Installer. I got my startup on the roof. Did lots of solar thermal back in the day and originally started working early on with Trina Solar. Then was at ET Solar for a number of years to help that company get launched in the US, get on the Tier 1 list, and all that good stuff.

The Bootstrapped Growth of SEG Solar

Kerim: SEG is now an international company with operations in Asia as well as US. Can we talk about how that evolution happened? Were you first manufacturing here or first manufacturing in Asia? How are you positioned right now in terms of market mix of your customers? How that has evolved over the past eight years, and also now with the new administration and all the changing dynamics, how it’s looking.

Jim: We originally started out, again, we’re a team here in the US and we leveraged contract manufacturing so we started selling modules using contract manufacturing in Southeast Asia.

As we continued to grow as a company, we never took any profits out of our company so everything, unfortunately, didn’t get paid a whole lot at the beginning and still today don’t get paid that much.

Kerim: But you’ve been investing into… 

Jim: Reinvesting so everything is rolled back into the business. Again, contract manufacturing, as we started to make a little bit of money, started rolling it back and we started doing joint ventures. We did a few joint ventures in Southeast Asia. Then we started to build our own manufacturing facilities. That began with our site in Houston, Texas. We bought the land, built the factory, we did all that on balance sheet.

Now we’re currently building out additional cell capacity beyond our JV. That’s 100% owned by us. It’s in Indonesia. We have our own facilities in Indonesia.

We’re at the point now and out of Houston where we’re shipping about 5,000 modules a day, I think, are shipping out of Houston. So it’s slow progress out of Houston, but it’s consistent, and that’s really what we need. I don’t need to ramp up and slow down. I’d say that we need to keep it consistent and disciplined growth. 

SEG’s Expansion into U.S. and Asian Manufacturing

Kerim: Do you guys have customers in Asia, Europe, as well as the US? 

Jim: Yes. So in Indonesia, there’s a domestic content requirement, and so we do supply the Indonesian market with modules. Our largest customers here in the US are large Spanish IPPs, and so our secondary market is Spain. We do sell modules to Spain, but the US is our primary market. I mean, we do most of our business here. We do quite a bit of business through distribution, residential, but we do large utility projects as well.

Kerim: When I used to run a distribution company, CivicSolar, people used to ask us, “So how did you guys carve your market share?” Because there are so many players trying to do that, and in a way, I can ask you the same question. How the hell did you manage to carve a respectable market share in a super competitive market like panel manufacturing? Especially in the US. 

Jim: We really don’t have the opex that a lot of our competitors do. We had the advantages of when we started, technology was pretty reliable at that point. P-type was very reliable, and so we didn’t have to have the huge fumbles.

We didn’t have to have the huge workforce that other folks, again, leveraged a lot of contract manufacturing when we began. We have a number of employees in Indonesia. And then here in the US, we employ about 300 plus folks in Houston. And then obviously, sales and other roles scattered throughout. 

SEG’s Market Position and Why Customers Choose SEG

Kerim: What makes you guys unique in the eyes of the customer? 

Jim: We, as a company, we’ve never really… We don’t have a lot of customers. Our customers always come back to us.

I worked at other very large Tier 1 suppliers. We would sell to somebody and they’d go away and we wouldn’t see them for years. In general, our customers buy from us and keep buying from us.

It’s a little different being a U.S.-based, U.S.-owned company. We have real assets here. We have to deliver our contracts. There’s no renegotiating contracts unless there’s some sort of change of law or tariff or something like that. We have to fill our deals. We can’t run away.

We have a consistent history where maybe somebody bought modules somewhere else. Modules got detained in port. They couldn’t build their project or tariff modules didn’t come into the US and so we’ve always delivered and so those customers keep coming back. They might go look somewhere else. Even today, we’ve had lots of conversations and we see them come back.

Evolving Product Mix and Market Strategy

Kerim: Product mix-wise, you guys, I’m going back to eight years ago. Did you start in the resi side of the market or the utility side? How did that product mix evolve over time and what does it look like now? What are some dynamics in the market that you’re seeing right now? 

Jim: We started out almost 100% utility. We had a few utility deals early on. Duke Energy was a longtime customer of mine in previous lives and they continued to work with us as we started this gig. We had some really good large utility business customers that worked with us. Very grateful for those folks.

And so starting out, we were just doing a few large utility transactions a year. As things grew for us, we started playing in distribution. 

It’s been a long game for us. We never looked at distribution as something that we wanted to get involved with and then step out of. So for us, distribution has taken about six years really for us to get going.

We don’t sell around distribution. We don’t sell any residential modules direct. One hundred percent of our residential supply goes through distribution.

Kerim: Who are those distributors? 

Jim: Greentech, Sonepar, U.S. Renewables are our primary distribution partners here in the US. We have a few other ones. 

Kerim: Krannich. 

Jim: Krannich sells our product as well. So we have a few. We have our three national distributors and then we have some more, I would call them more regional-focused distributors that we do work with. 

Kerim: How do you target the C&I market? Do you go direct? Do you go through distribution? A little bit of both? And then product-wise? 

Jim: I would say with the large C&I customers, we do have a history of selling to them directly. I would say historically, if there was probably 20 plus megawatts or something like that, we did sell those direct, but we do a lot of that business through distribution still. We have some unique modules to our offering that are a little bit smaller.

For those companies that don’t want to use big 595s or whatever on their roof or 630s, we do make a smaller footprint module. 

Kerim: What’s the benefit of that? In this day where panels have been getting bigger and bigger. When I entered the industry in 2009, I think the largest panel was 250 watts. Now, what is it? 

Jim: When you look at loading, you look at hail, you look at all these different things in different regions, I started on the installation side. 

Kerim: Right.

Jim: The thought of me carrying a 630 up on the roof or a 730 on a utility site or even a 595, if there’s any wind – the OSHA two-person handles anyways or more. I just looked at it from my perspective. If I was working on the roof, what can I handle and manage as a human? That’s where it originated.

As you look at commercial rooftops, lots of penetrations, so it gives you more design flexibility with a smaller footprint. We’re not talking a lot smaller. 

Kerim: What’s the size? 

Jim: The 495, it’s a 60-cell. 

Kerim: Yes, 495.

Jim: It’s a 60-cell module, so it’s in between a resi and a 595 in size. It’s a niche. We have excellent traction with it.

Kerim: I assume that’s increasing percentage of your business now with resi and commercial. 

Jim: We definitely see our commercial business has been thriving. We’ve been focused on it. Again, we didn’t play the short game. So in 2022, when there was a shortage of residential modules, we didn’t sell them direct. We still continued to sell those through distribution.

And so that long-term disciplined approach to distribution, again, has paid off for us. There’s never been a case where we’ve sold around distribution so we’re very good about that.

Kerim: Smart, smart. 

Policy and Tariff Challenges in Solar Panel Manufacturing

Kerim: Let’s also talk about the changing legal tariff policy landscape with the new administration. What challenges do you see ahead? What opportunities do you see ahead? Does being a company with one foot in Asia, one foot in the US, understanding both markets really well, what kind of advantages does it give you and your customers? 

Jim: It’s a tough market no matter where you’re at, and so for us and a number of other folks, we are U.S.-based, U.S.-owned. We don’t have any outside investment. There is some comfort.

We do have customers that do work with us because they feel significantly more confident in our ability to deliver. They feel confident that there are real assets here in the US, that type of thing. Again, we continue to see business.

We actually just got a 120 something megawatt contract finished today. We’re still seeing our business grow because there is a sense of reliable deliveries coming out of our Houston factory. The way we do it is we say, “Hey, if you want product out of Southeast Asia, we’ll backstop it with product out of Houston.” That gives a lot of comfort as well, but it’s challenging. I mean, I can’t say going into this year, glass last month versus this month, glass is going to cost me $500,000 more this month than it did last month. Aluminum frames are going to cost more this month versus last month, and it’s challenging.

There are lots of conversations around domestic content. We have a sell agreement. We have some other stuff going for us here where we’ll upsell in the US next year, but it’s challenging. 

Kerim: I assume that’s affecting the market. The orders, especially the larger utility-scale projects, seem to have slowed down a bit. I assume resi and commercial is a little bit more stable. How’s that looking?

Jim: For us, I can’t speak to other suppliers. I don’t know that the pie is getting any bigger, but we’ve been doing better. Like I said, we’re very good at retaining customers. We’re very good at keeping who we have. We don’t have a huge customer list.

Kerim: How come? What’s the secret sauce to that? 

Jim: If somebody picks up the phone, I mean, if you have a problem, you can always reach out to somebody at our organization. These decisions don’t take a week.

Kerim: And somebody answers the phone. That is so important. That was actually the answer for us, too. That was the reason we started our distribution company because we called all the big distributors. This is 15-16 years ago. And they didn’t pick up the phone. We left voicemails. They returned three days later, and that’s really important.

Jim: I always tell folks that work with us, even on the distribution side, resi folks that are working with us, we won’t sell to you. But if you have a problem, just reach out. I think a lot of them have tested that.

Whether they’ve texted me or emailed me or called me, they always get a call back. So we put a lot of focus on that. At least on my core team, we’re very good and very responsive in that area.

Advocacy and Policy Engagement for U.S. Manufacturing

Kerim: And you guys have a major footprint in Houston, Texas, the land of energy for the US. With all this changing landscape, do the legislators and the policy leaders there, do they understand the importance of our industry for the future? 

Jim: I think they’re starting to. Not just us, but a number of manufacturers have located in red states. As we reach out, not just individually, but together as a collective so in Texas, a number of us actually collectively reach out to our elected officials.

Our senator there in that region is Ted Cruz. We obviously work very hard to get in front of him. Luttrell is actually my congressperson there in that region. 

We’re very active going individually, but when we come together collectively, I currently employ about 300 or so folks in Houston. We’ll be about 100 more probably in the coming months.

You take that, you take other folks in that market. I don’t want to speak for them or their names. XYZ supplier has 800. This steel facility that’s making torque tubes for racking employs 400. When you look at the numbers, there are significant jobs being created in these red states. I think, through that, communicating that to our elected officials is important, and that’s really important for everybody in the industry to let their elected officials know what type of jobs are in their backyard. 

Kerim: If people are in Texas, they should contact you to jointly do this lobbying effort. Are you aware of other states doing the same thing? Is there any coordination? 

Jim: On a national level, obviously, you have SEA, you have ACP doing a phenomenal job on the advocacy side, reaching out. 

I’m in North Carolina. I’m very familiar with – there’s a company very close to me, a gentleman named Markus runs, called Strata Solar. Markus is very involved politically, reaching out and doing advocacy in our state.

We do see it regionally as well, but I can only speak to what I see in Texas, and there are a number of us working together to work with our elected officials as a collective voice so that we can be heard. Again, a lot of people with a lot of jobs, they’re important and they don’t want to lose those votes.

Kerim: When I look at the solar panel manufacturing business as a whole and the products, they remind me of bottling, bottling plants because in a way, they’re heavy products. Transportation costs are getting cheaper and cheaper, but the cost of glass is fixed. The cost of glass is probably not getting cheaper and cheaper like panels are getting cheaper and cheaper over time or at the same rate. 

I think US will need as many panel manufacturers as there are bottling manufacturing plants is my sense on that. I think it’s really important for us to ramp up the solar manufacturing or the panel manufacturing side of the ecosystem here in the U.S. market. 

Final Thoughts and the Future of SEG Solar

As we come to the end of this conversation, if you could wish for anything from the universe this year, what would that be? 

Jim: I would really just wish for stable policy and guidance because number one, that’s important for us to hire, grow, expand. How do you invest in more manufacturing in the US without having clear knowledge of what will be available or not available? What issues are we going to have with tariffs? Those types of things. So policy at the end of the day from a professional level, outside of that, always grateful and happy to have a happy, healthy family and life. Always have a good balance with that and I think it’s the most important thing for anybody. So I wish that for all. 

Kerim: Great. Well, Jim, thank you very much for your time.

Jim: All right.