What Bloom Energy going global means for Delaware manufacturing

Bloom Energy's future hinges, in part, on the fuel cell appetites of South Korea and Japan, and on the investment whims of Canadian pensioners.

The Silicon Valley company, on which Delaware has pinned its hope of a manufacturing resurgence, has been busy in East Asia recently, securing deals for electricity-generating fuel cells that it says are becoming cheaper to produce and more efficient to run.   

For the first quarter of 2019, half of its fuel cell deliveries are headed for South Korea, Bloom officials told investors on Tuesday. Later in the year, shipments to Japan will ramp up, they said while emphasizing that such diversification beyond California reflects a "mainstream appeal." 

"We think our Korean revenue in 2019 will be north of 25 percent, maybe approaching 30 percent of 2019's total," Bloom Chief Financial Officer Randy Furr said Tuesday during an earnings call.

The shipments of Bloom's fuel cells start at a factory in Newark. There, technicians assemble the boxy devices that provide off-the-grid electricity through an electrochemical reaction with natural gas.

The company sells its "Bloom Boxes" mostly to large companies to power big corporate complexes. 

Bloom's Delaware workforce and others in the state have been waiting restlessly for news of prosperity within its financials in the hope that it would translate into a hiring boom at the Newark plant.

Yet, Tuesday's earnings statement continued the company's trend of reporting rising sales numbers that don't translate into a profit.

Bloom Energy IPO reveals losses, volatile Delaware workforce number

For 2018, company officials reported that revenues nearly doubled in 2018 to $742 million. Still, Bloom continued to lose money, reporting a loss of $241 million for a year in which its shares first began trading on the New York Stock Exchange. 

The share price peaked at $38 in September. It closed on Wednesday at $10.16. 

Such a precipitous drop reflects unease about Bloom Energy's future – and, as a consequence, uncertainty about its Delaware workforce, which has hovered just above 300 employees for much of the past year.   

In the wake of the Great Recession, Delaware officials placed a bet that the risky fuel-cell maker could restore the state's manufacturing sector, which had been decimated by the closing of General Motors and Chrysler auto plants.

Lawmakers approved a generous incentive deal for Bloom Energy that, to date, has resulted in the transfer of more than $200 million from Delawareans to the company.

The majority of those transfers are from a fee stamped onto the power bills of every Delmarva Power customer in Delaware for the purchase of expensive electricity produced by Bloom's natural gas fuel cells.

In return, Bloom Energy built its production facility at the site of the former Chrysler plant in Newark.

But the 900 jobs Bloom Energy had promised for Delaware never materialized.

As a result, the company and its Delaware incentives have been the target of several high-profile critiques in recent years over its workforce, its hazardous waste, and its incentive package.

Some of Bloom's current employees have pushed back against the doubters. During a public hearing last month, employees argued that their careers with Bloom Energy have allowed them to achieve middle-class livelihoods.  

Now, as Bloom Energy has plugged into global markets, it says 2019 will be a year with 20-percent sales growth and, more importantly, cash flows that dwarf production costs.

One curious wrinkle arose at the end of January when a Canadian pension fund, which holds Bloom Energy's debt, decided to convert it to Bloom Energy stock. 

If the deal is approved, it will transform the fund into Bloom's largest shareholder and, as a result, its voice will become influential at board meetings.  

Neither Bloom nor the officials at the fund provided a comment on the deal.

Contact Karl Baker at kbaker@delawareonline.com or (302) 324-2329. Follow him on Twitter @kbaker6.