First Solar Lays Off 2,000 As Demand Wanes
NEW YORK (AP) — First Solar Inc. is laying off 2,000 workers and closing its plant in Frankfurt, Germany, in response to waning demand for solar panels and increased competition from China.
America's largest maker of solar panels said the layoffs amount to 30 percent of its global workforce. Some cuts come from shutting down the Frankfurt (Oder) plant, where it doubled the number of employees to more than 1,200 just last year. The company will also shutter some production in Malaysia. Additional jobs will be cut in both Europe and the U.S.
Solar manufacturers have been hurt by the global recession, an influx of Chinese panels and declining subsidy programs in Europe. Germany, the world's largest market for solar power, announced in February that it would cut solar subsidies by 30 percent.
"It is clear the European market has deteriorated to the extent that our operations there are no longer economically sustainable, and maintaining those operations is not in the best long-term interest of our stakeholders," said First Solar Chairman and CEO Mike Ahearn in a statement.
First Solar, which specializes in "thin film" solar modules that are both cheaper and less efficient than those made by competitors, lost $39.5 million in 2011. Its shares have dropped nearly 85 percent in the past 12 months. The rose about 5 percent in premarket trading.
First Solar must adapt to a solar market that has "fundamentally changed," Ahearn said.
"It is essential that we reduce production and decrease expenses," the CEO said. "These actions will enable us to focus our resources on developing the markets where we expect to generate significant growth in coming years."
After making the cuts, First Solar said it expects manufacturing costs to drop by $30-$60 million this year and another $100-$120 million a year afterward. It will book a restructuring charge of $245 to $370 million, mostly in its first-quarter results.