Blaming a “fundamentally changed” solar industry and plunging business in Europe, panel maker First Solar Inc. is cutting 2,000 jobs and closing a factory.
The layoffs represent 30% of the workforce of the Tempe, Ariz., company, which is the leading U.S. manufacturer of photovoltaic solar panels — the type commonly found on rooftops. The factory being closed is in Frankfurt, Germany. In addition, the company will indefinitely idle four production lines at its facility in Kulim, Malaysia, as of May 1.
Some U.S. employees of the company will also be cut, though First Solar did not disclose how many. The workforce reductions will cost First Solar up to $70 million in severance, the company said.
Still, the scale-back is expected to save the company as much as $60 million this year and then up to $120 million a year thereafter.
“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.
Europe, formerly a clean-energy leader, is 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 been pummeled. On April 18, 2011, it stood at $136.94. On Monday it closed at $20.82.
Investors seemed cheered by the cutbacks, which were announced Tuesday, boosting the stock 10.3%, or $2.14, to $22.96.
BrightSource Energy, an Oakland-based solar thermal start-up, said last week that it was canceling plans for an initial public offering because of “continued market and economic volatility.”
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. First Solar was the world’s top manufacturer of photovoltaic panels until 2010, when Chinese company Suntech took the first-place ranking, according to PV Insights.
In the U.S, the solar market is still growing. Last year photovoltaic installations boomed 109% to a record 1.8 gigawatts, according to the Solar Energy Industries Assn. The total domestic solar market’s value surpassed $8.4 billion, according to the report.