In what executives now call a "fundamentally changed" solar industry, thin-film panel maker First Solar Inc. is closing down factories and cutting 2,000 workers.
The layoffs represent 30% of the Tempe, Ariz.-based company’s global workforce. First Solar is also planning to close down a factory in Frankfurt, Germany, later this year while indefinitely idling four production lines at its facility in Kulim, Malaysia, on May 1.
The workforce reductions, which will cost First Solar up to $70 million in severance, will also reach employees in the U.S.
The scale-back is expected to save the solar giant as much as $60 million this year and then up to $120 million a year after.
"After a period of robust growth, First Solar is scaled to operate at higher volumes than currently exist following the reduction of subsidies in key legacy markets," interim Chief Executive Mike Ahearn said in a statement.
By that, he means Europe, formerly a clean-energy leader but now suffering from lapsed interest amid the region's financial crisis. Add an influx of cheap Chinese panels in recent years and First Solar (along with many other makers of solar photovoltaics) found itself with a serious shortfall in demand.
"It is clear the European market has deteriorated to the extent that our operations there are no longer economically sustainable,” Ahearn said.
First Solar’s stock has deteriorated throughout the year, closing at $136.94 on April 18, 2011 and ending at $20.82 on Monday. Investors seemed cheered by Tuesday’s plan, boosting the stock nearly 10%, or more than $2, to $22.87 just before markets closed.
BrightSource Energy, an Oakland-based solar thermal start-up, said last week that it was canceling plans for an initial public offering due to "continued market and economic volatility [that] are not optimal conditions."
In May, the U.S. Commerce Department is expected to say whether it believes that Chinese manufacturers have illegally flooded the U.S. market with imported solar products.
But in the U.S. in 2011, photovoltaic installations boomed by 109% to a record 1.8 gigawatts, according to the Solar Energy Industries Assn. in March. The total domestic solar market's value surpassed $8.4 billion, according to the report.