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October 29, 2012Job Cuts in Solar Industry
The solar industry crisis continues to take a massive toll on solar jobs as top solar companies Sunpower, Showa Shell and Gintech all announced major job cuts in one day. Note the falling solar panel prices have refused to stop declining as a massive capacity overhang keeps prices below costs. The big Chinese solar panel makers continue to churn out solar modules despite huge losses as local governments refuse to let these companies fail. Western solar manufacturers have little option but to shut down as they do not receive bailouts from their governments/banks.
Sunpower which is the second biggest US solar panel manufacturer announced 900 job cuts as it closed down 6 of its 12 solar cell lines at its Phillipines factory. Note Sunpower had already closed down its Fab 1 earlier this year. Sunpower which makes the highest efficiency solar power panel, has much higher costs than other crystalline solar panel producers. This is making its going tougher despite the backing of its parent – the French oil and gas giant Total. The CEO of Total had said in an interview that Sunpower would have been in Chapter 11 by now without Total’s acquisition.
Sunpower is surviving due to its big parent Total. Note the CEO of Total was candid enough to say that Sunpower would be facing Chapter 11 without its support. Total just increased stake in Sunpower as the company continues to make losses. Sunpower has a high cost structure which in these times means you are dead. Even the most cost efficient companies in the West like First Solar faces survival questions. Sunpower with its high cost and high efficiency solar panels would have been dead by now. Note Sunpower has a bad balance sheet, contorted accounting (already faced a scandal). In fact there are similarities between Sunpower and LDK. LDK Solar is one of the most insolvent companies in the world right now with billions of dollars in debt, a battered balance sheet, continuing losses and dodgy accounting.
Solar Frontier which is the biggest thin film solar panel company after First Solar also announced that it is closing down its 60 MW older plant. Note shutting older smaller plants has become the new normal for the solar industry. With solar prices being so low, it is impossible to run higher cost plants and almost all companies have streamlined operations to close higher cost factories.
Solar Frontier K.K., a unit of Japan’s Showa Shell Sekiyu K.K. (5002), will suspend production at a facility that has the capacity to make 60 megawatts of solar panels annually to focus on a larger plant. Production at the MP2 plant in Miyazaki prefecture in southwestern Japan will stop at the end of this year. The facility may be used to make “specialized solar products currently in development,” according to an e-mailed statement from Solar Frontier today. The larger Kunitomi plant, which began production in February 2011, may produce solar products with a capacity of 600 megawatts this year, Akane Yamiya, a Solar Frontier spokeswoman, said by phone today.
Gintech which is the largest Taiwanese cell producer also fired 40 workers. Gintech had seen a steep 50% y/y drop in revenues in Sept 12 . This was mainly as demand fell in the European markets leading to a drop in utilization. Gintech had to sharply reduce production as current prices were leading to huge losses.
Taiwan-based solar cell maker Gintech has revealed that the firm has cut down its workforce by 40 employees. The firm added that the anti-dumping and anti-subsidy investigation in the US previously helped increase OEM orders from China and during that time period, Gintech added temporary workers. However, demand has been falling in recent months, prompting the firm to adjust its workforce.
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