Layoffs at SolarWorld
SolarWorld, Germany's largest PV firm, plans to lay off 10% of its staff by the end of the year. The firm is behind the charges of price dumping in the US, but apparently the Department of Commerce's ruling in its favor comes a bit too late.
The firm says that unfair competition from Chinese manufacturers is the main reason for its dilemma. "State export subsidies and billions in loans allow Chinese industry to sell at far below market prices," says corporate spokesperson Milan Nitzschke. He therefore believes that at least 80% of German solar firms are going to "have their necks broken." Nitzschke also says, however, that the German government's decision to cut feed-in tariffs has also caused demand to plummet. "It is, of course, bitter when people in our firm are affected, but this is the only way that we can continue to compete," he adds.
Less than a month ago, the governor of the German state of Saxony, Stanislaw Tillich (CDU), praised SolarWorld for being especially competitive. "I know that SolarWorld is much better position than other industry representatives that are now in trouble," he told the press. But the firm actually posted major losses last year – nearly 300 million euros compared to a profit of 80 million in the previous year. The firm did not manage to turn things around either in the first quarter of 2012, though it firm did increase the sales volume of modules and components by an impressive 48% in the first response of the year, with most of the growth coming in Germany because, SolarWorld explains, of the boom caused in the run-up to expected cuts in feed-in tariffs.
But in terms of production in Germany, which is mainly wafers, the firm did not have any substantial sales in the first quarter, with total sales of wafers and panels falling year-over-year from 185 to 147 megawatts. Revenue also decreased by 26.8% from 233 to 170.5 million euros. Because panel prices continue to fall, the raw-materials-and-consumables ratio increased, as did the share of staff costs, which practically doubled from 11.6% in Q1 2011 to 22% in Q1 2012. SolarWorld is reacting mainly by reducing staff in wafer production, which is running at a loss. Some 250 people, mostly temporary staff, will be laid off at the plant in Freiberg.
At the same time, SolarWorld continues to work to have the European Union follow suit on the US decision to impose import levies on Chinese products. Nitzschke says he is certain that the EU will also find that China has engaged in illegal practices and resort to the same levies as in the US. But the Chinese are ready. "We expected this outcome [in the US], so we have quickly and effectively set up new sales channels for cells and modules over the past few months to serve demand in the US," explains Peng Fang, head of JA. "We have also assured quality and obtained the necessary certificates. Most of the products we have shipped to the US since December 2011 therefore fulfill the Department of Commerce's current requirements and will therefore not be affected by import duties."
Import duties might also prove counterproductive in Europe. German economist Urlich Blum doesn't beat around the bush: "Trade barriers are a bad idea. They will just cause us nightmares in trade policy. Our mechanical engineering firms will no longer be able to export. We would be shooting ourselves in the foot." And while a number of local Green politicians have also spoken out in favor of protectionism, the energy-policy spokesperson for the Greens does not like the idea. "If we set up trade barriers with import duties, we should not be surprised if they are used as an excuse for other countries to completely seal off their markets. Working with China is much more promising than fighting trade wars." (Sven Ullrich / Craig Morris)