March 22, 2006

Halfmoon Solar-Cell Developer Opens California Unit To Manufacture Equipment

By: by Richard D'Errico, Staff Writer, The Business Review


DayStar Technologies, Inc, a developer of solar cells, is expanding its operation into California, opening up a new division called the Equipment Development Group. 

The company, which is located in Halfmoon, is leasing a 50,000-square-foot building in Santa Clara, Calif. The company currently has 23,500 square feet of space in Halfmoon. A new manufacturing site is planned for the Saratoga Technology + Energy Park in Malta.

DayStar (Nasdaq: DSTI) was originally formed in California. It was drawn to the Albany region with an $11 million incentive package from the state at a time when DayStar was a two-person company with no product and no customers.

Since that time, DayStar has become one of the region's fastest-growing companies.

"Locating our new Equipment Development Group in the heart of Silicon Valley gives us immediate access to very specialized resources, highly trained personnel, control of our development speed, capture of intellectual property, and the cost savings necessary to secure DayStar's competitive advantage with our next generation production lines," said John Tuttle, DayStar CEO.

Terry Schuyler, DayStar's vice president of sales and marketing, said the new operation would have between eight and 10 employees. The company plans to announce the name of the person managing the new operation next week. DayStar will manufacture the equipment needed to make solar cells at the California site and ship them to New York.

Schuyler said there were no incentives offered by the state of California, and company officials had discussed concerns that might be raised about opening the center there in light of New York's investment.

"Obviously that very issue is a concern," Schuyler said. "But the reason we located from California to New York was to manufacture solar cells. This isn't that scenario. It isn't really that we're going back to California to manufacture solar cells but to make tools to manufacture solar cells."

Schuyler said the manufacturers of the equipment are located primarily in Japan and Germany, but the company couldn't wait to have tools built, so DayStar decided to build its own tools.

He said Silicon Valley has the experts in the field needed to build the machines.

Noah Kaye, a spokesman for the Washington, D.C.-based Solar Energy Industries Association, said the industry DayStar is tapping into is in its infancy, but noted that some of the equipment needed has been developed by Miasole, also located in Santa Clara.

When the company announced its move to New York in 2004, CEO Tuttle said "the sophisticated academic and technology resources in Albany's Tech Valley played a major role in our decision to move to New York."

Since relocating here, the company has formed a relationship with the state University at Albany's College of Nanoscale Science and Engineering.

"We're trying to get them to develop the technology at a faster pace and be successful here in New York," said Pradeep Haldar, a professor at the nanocollege and director of UAlbany's Energy and Environmental Technology Application Center. "We're doing our best to help them to grow and succeed here."

He declined to comment on DayStar's decision to open a facility in California.

Harry Apkarian, a member of the Saratoga Technology + Energy Park board and CEO of TransTech Systems Inc. in Schenectady, said his immediate reaction to the news wasn't positive.

"My God, why are they going out there when ... we're doing everything we can to help them grow?" he said. "That's a legitimate question."

But Apkarian said it's important to let the heads of businesses make the business decisions.

"We don't want to keep second-guessing business tactics and management judgments required to grow the company," Apkarian said. "If they don't grow the company, it won't have much economic impact. It behooves us to be supportive and not question management judgment and tactics."

The New York State Energy Research and Development Authority--which has provided funds to DayStar--didn't second-guess the decision.

"Hey, anytime you can attract jobs to New York, it's nice; but we understand the parameters they were working with," said Tom Collins, a NYSERDA spokesman.

Kelly Lovell, a member of the DayStar board of directors and president and CEO of the Center for Economic Growth Inc., said the board was fine with DayStar's decision to open the facility in California.

"We did discuss DayStar's desire to continue to grow in Tech Valley and that has not been diminished," said Lovell, one of the players working to get companies to relocate here.

Lovell said she asked the company to explain the need to open the California operation.

"I absolutely asked the company to justify this decision and to ensure that it wouldn't be better for the company to be doing the work here," she said. "Obviously, having a part of the operation [in another state] is not the easiest thing to manage. Definitely, the case was successfully made for the entire company to be successful, this move had to be made. It's not taking anything away from the operations here."

Daniel Walsh, president of The Business Council of New York State, said maybe there's a lesson in DayStar's latest development.

"We are open to talk to anybody from DayStar to find out what may be deficient in the atmosphere and the regional concerns that they may have--whether it's the quantity of the talent or the quality," Walsh said. "Maybe there's a lesson to be learned here. If there's something we can learn from their decision, I'd be more than happy to talk with them. And if there's something that can get corrected down the road, we ought to be working on it."