FirstSolar closes European solar manufacturing base

US solar panel manufacturer FirstSolar is cutting its production output and laying off nearly a third of its workforce in an effort to cut costs that will see it close its European manufacturing base.

As part of the plans, First Solar will permanently close its sole European manufacturing plant in Frankfurt. In addition, it will idle four of its 24 production lines at its manufacturing plant in Kulim, Malaysia from May, leaving just one fully operational plant, in Perrysburg, Ohio.

The company will also lay off around 2,000 personnel across its operations at all three plants, accounting for around 30% of its workforce.

Mike Ahearn, chairman of First Solar, said: "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 Ahearn.

He added: "Decisions like this are not easy, especially given how important the European markets and our associates in Europe have been to the development of our company.”

The move comes as solar companies around the world struggle to combat falling sales prices, caused by a glut of solar panel manufacturing in the sector. Last month German manufacturer Q-Cells became the latest victim of the squeeze on revenue, as a decision by the German high court scuppered the company’s plans to settle its liabilities with a corporate restructuring.

Several other companies have also filed for bankruptcy in recent months, including Solon, Solar Millenium, and Germany’s Solarhybrid.

"The solar market has fundamentally changed, and we are quickly adapting our market approach and operations to maintain and build upon our competitive advantage," said Mike Ahearn, chairman of First Solar, adding that the company is scaled to operate at higher volumes than currently exist – the result of a reduction of subsidies in key markets.

He added: “It is essential that we reduce production and decrease expenses to reflect the smaller volume of high-probability demand we forecast."

The company said the reorganisation will ultimately save it around US$100-US$120 million annually, while reducing manufacturing costs to around US$0.70-72/watt in 2012 from previous estimates of US$0.74/watt.

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