ECD updates guidance: Thin-film solar PV company slows production, expansion plans

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Thin-film solar PV manufacturer Energy Conversion Devices announced that it will slow down the pace of its “demand-driven” manufacturing and expansion plans, because of the what it calls the “impact of credit availability on project flow in the global pipeline for photovoltaics.” The company–known for its Uni-Solar brand flexible TFPV laminates–will enact a series of cost-cutting measures, such as temporary shutdowns and factory and workforce consolidations, including layoffs.

The Michigan-based company said it will implement a two-week production hiatus, effective March 22. It will also postpone equipment orders and new hiring until demand improves, while it completes basic construction at its new Battle Creek 120-MW a-Si module facility, which was originally scheduled to go online by the end of 2009.

The company plans to relocate about 130 employees from its Auburn Hills 1 facility to its newer Auburn Hills 2 site, as part of efforts to consolidate production and cut overall costs and enhance manufacturing efficiencies.

The move will lead to a permanent reduction of approximately 70 positions at Auburn Hills 1. The affected individuals will receive severance and outplacement services, but will have the opportunity to apply for future jobs at ECD facilities.

The lack of visibility caused by the stormy economic conditions also led ECD to back off its previously stated third-quarter and full fiscal-year 2009 financial guidance. The company said that its previously stated financial guidance numbers for those periods no longer apply.

The company believes that solar product revenue for the fiscal third quarter will approximate the results from the same period a year ago; ECD’s 3Q08 revenues were $70 million, mostly coming from the solar lines, with net income of $7 million.

The impact on the company’s longer-term expansion roadmap remains unclear. ECD stated in early October that it planned to accelerate its plans, with nameplate-capacity production targets of 420 MW inj 2010, 720 MW in 2011, and 1 GW in 2012.

In his prepared remarks, Mark Morelli, ECD’s president and chief executive officer, noted that the company has “a strong balance sheet and financial stability. To keep our company strong, we continue to focus on operational excellence and cost reductions.

“We are making strategic investments in our company, including staffing the global sales and marketing team, strengthening customer service, and broadening our government relations capabilities,” he continued. “We are continuing to improve our ability to serve our customers worldwide, and we have flexibility to quickly respond to changes in the market. We are prudently slowing down production and expansion plans and are taking immediate action to decrease our spending and to adjust our demand-driven expansion to better align with current market conditions.

“Even in these tough times, there are opportunities on the horizon. The worldwide outlook for the alternative energy industry is tremendous, and the recent announcement of the U.S. stimulus package is excellent news. I believe the outlook for our business has never been stronger,” Morelli concluded.

To read the companion blog to this story, click here.

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