As we have become somewhat accustomed to bad news in the solar panel industry, it is hardly surprising to hear that some companies are struggling to remain profitable. Earlier this week, First Solar, America’s largest solar panel producer, announced a plan detailing significant cutbacks to its workforce and production. The announcement came just weeks after Q-Cells, a major German manufacturer that was valued at nearly $11 billion in 2007 (now valued at just $46 million), said it was filing for bankruptcy. In both cases, losses have been mounting due to competition from China, declining government subsidies, and the persistent, industry-wide oversupply of solar panels that is cutting into profits.
As part of its downsizing plan, Arizona-based First Solar says it is restructuring “operations to align with sustainable market opportunities.” This means shutting down its plant in Frankfurt and indefinitely halting operations at four of its production lines in Malaysia. While operations in Malaysia could come back online in the future, the planned layoffs of 2,000 workers in its German plant—representing 30 percent of its global workforce—will be permanent. First Solar expects these changes to cut costs by $30 to $60 million this year, and $100 to $120 million annually in the future.
In its official press release (see above), First Solar stated that “the solar market has fundamentally changed, and we are quickly adapting our market approach and operations.” The company is, in part, referring to Germany’s announcement that it would reduce solar subsidies by up to 30 percent later this year. The subsidies cost Germany $10.5 billion last year alone. First Solar is also referring to the fact that it has been affected by increasing competition from China. According to the Wall Street Journal, many of its Chinese rivals are growing and competing in areas where demand typically has been driven by government subsidies.
