First Solar Makes Major Restructuring Changes

UPDATE: NEENACH / FAIRMONT, CA (Tuesday, April 17, 2012 at 4:21p.m.)—First Solar, Inc. said in their investors’ conference today that they will lay off 30 percent of their international manufacturing workforce, as many as 2,000 people. A significant proportion of those will be from their operations in Germany (1,200 manufacturing positions plus 150 from the sales force) and Malaysia (550 positions). Less than 10 percent of the job losses are in the U.S. The jobs held in the Western Antelope Valley are primarily construction positions, involved in building the Antelope Valley Solar Ranch One (AVSR1) utility-scale 230 MW photovoltaic farm, now owned by Exelon.

Reduced demand and increased supply in the photovoltaic module sector are driving the significant changes by First Solar. After the announcements, the stock closed today at $22.96.

NEENACH / FAIRMONT, CA (Tuesday, April 17, 2012 at 6:30 a.m.)—Major changes are underway in the international corporate offices of First Solar, Inc. in Tempe, Arizona. Today at 8 a.m. PDT there will be a corporate webcast explaining that the company’s manufacturing plant in Frankfurt, Germany will be shut down. Subsidies for solar upgrades in the European Union have ground to a halt with the economic turmoil in the EU. Product lines made at First Solar plants in Malaysia will be dramatically cut back as well. American manufacturing will continue. These changes are occurring in the midst of major upsets in the company’s executive offices and board room.

The stock (FSLR) has tumbled from its 52-week high of $145.16 to $21.41 this morning, April 17.

Locally, the Antelope Valley Solar Ranch One (AVSR1) project in Neenach (at 170th West and Highway 138) has been the source of substantial rumblings over the past month. Construction Manager Gary Baumeister was removed and employees are threatening lawsuits for illegal labor practices. Others, laid off iat the end of 2011 just before New Year’s Eve, have been promised they would be called back to their jobs, but have not yet received that call.

The facility, along with its 25-year purchase contract for renewable energy output to Pacific Gas & Electric, has been sold to energy company Exelon. Construction and operaton of the plant is contracted to First Solar, however, using First Solar’s components and management team. The facility will generate 230 MW of power and has received over $600 million in loan guarantees from the U.S. government.

This month a Los Angeles County routine inspection of the components being installed at AVSR1 led to an order to stop assembly of the photovoltaic (pv) panels when it was discovered that they are not UL approved. Project spokesperson Adam Eventov said there has been a misunderstanding and that the company is working with the county to smooth out the situation. In question, it appears, is whether utility-scale facilities behind fences need to adhere to California’s UL-approved standards.

The company abruptly cancelled its monthly briefings with the Oso, Fairmont, Three Points, and Antelope Acres Rural Town Councils for April.

Here are details from this morning’s First Solar, Inc. press release:

The restructuring initiatives are expected to reduce First Solar’s costs by $30-60 million this year and $100-120 million annually going forward. In addition, the Company’s average manufacturing cost is expected to improve to $0.70-$0.72 per watt in 2012 as a result of the changes, below prior expectations of $0.74 per watt. In 2013 the Company estimates average module manufacturing costs will range from $0.60 to $0.64 per watt.

To achieve these significant cost savings, the Company will record restructuring and other related charges of $245-370 million, of which $80-120 million are cash expenditures, consisting of:
• $150-250 million in asset impairment, primarily related to the Frankfurt (Oder) plants
• $50-70 million in severance
• $30 million for repayment of a government grant related to the Frankfurt (Oder) operations
• $15-$20 million for other charges which represents valuation allowances for deferred tax assets in Europe and costs associated with the repayment of the German debt
First Solar expects to incur these charges primarily during the first quarter of 2012 and the rest over the course of this year. In addition, First Solar has voluntarily paid down approximately $145 million of debt ahead of schedule in 2012, which represents repayment in full for outstanding amounts under the Company’s German loan agreement.

“After a thorough analysis, 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 Mike Ahearn, Chairman and Interim CEO of First Solar. “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 and the solar industry as a whole. We are committed to treating all affected associates fairly, and to building our relationships with European business partners that are aligned with our strategy of pursuing utility-scale solar opportunities in sustainable markets around the world.”

“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 Ahearn. “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. As a result, it is essential that we reduce production and decrease expenses to reflect the smaller volume of high-probability demand we forecast. These actions will enable us to focus our resources on developing the markets where we expect to generate significant growth in coming years.”

First Solar has scheduled a conference call today, April 17, 2012 at 11 a.m. EDT to discuss this announcement. Investors may access a live webcast of this conference call by visiting

An audio replay of the conference call will also be available approximately two hours after the conclusion of the call. The audio replay will remain available until Tues., April 26, 2012 at 2 p.m. EDT and can be accessed by dialing 888-203-1112 if you are calling from within the United States.


[Corrections were made to this breaking news report at 5:30 p.m.]

This is part of the April 13, 2012 online edition of The Mountain Enterprise.

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