The German Government has successfully received aid to the tune of €2.3 million from European Globalisation Adjustment Fund (EGF) to finance programmes to help support workers made redundant at two thin-film production plants closed by First Solar at the end of 2012.
However, for the German authorities to be awarded financial support from the EGF, they had to establish a link between the 959 redundancies and ‘major structural changes in world trade patterns due to globalisation'.
To that end, German authorities claimed that huge overcapacity in the PV industry, brought about by Chinese companies' expansion of manufacturing resulted in Chinese and Taiwanese firms being able to increase revenue faster than German and US companies. As a consequence, the revenue share of Chinese firms increased from 11% to 45%, while that of Germany declined from 64 % to 21%, between 2005 and 2011.
Overcapacity, coupled to a claimed worldwide decline in demand had led to a collapse in prices.
However, the arguments put forward by German authorities are in stark contrast to what executives at First Solar stated as to the reasons behind the closure of the two plants were announced in April, 2012.
At the time, Mike Ahearn, then chairman and interim CEO of First Solar said: “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.
“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.”
Mark Widmar, First Solar’s CFO had reiterated in a conference call at the time of the closure announcements that changes to the German feed-in tariff, that completely eliminated ground-mounted PV power plants from the EEG, was a contributing factor in closing its two production plants in Frankfurt (Oder).
Therefore the real reason for the plant closures was primarily due to the German Government and its reduction in support for PV, not because of competition from China or Taiwan. Indeed, First Solar did not mention in statements or in the specific conference call, at the time or subsequently, that overcapacity and price declines due to Chinese company actions had resulted in the need to close the plants.