An attempt to regain lost revenue has led to MEMC Electronic Materials’ decision to cut its global workforce by 20%, or over 1,300 employees. The cuts, only 250 of which will be from its US workforce, will see the company’s solar materials staff reduced by approximately 47% and its semiconductor segment by 41%. Among other activities, the company will also idle its 6,000MT Merano, Italy polysilicon facility, which it says it will close unless “dramatic feedstock, power and other cost reductions are achieved” in the near future.
In addition to the idling of the Merano poly plant, MEMC will reduce production capacity at its Portland, Oregon crystal facility and will also rein in the ramp of its Kuching, Malaysia wafering facility to 300MW.
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As operating costs are currently at a level that renders the company uncompetitive, company CEO Ahmad Chatila says that the efforts are intended to result in “a more balanced manufacturing model aligned with our downstream business”. With this in mind, MEMC’s Solar Materials and the SunEdison business units will be consolidated into a single Solar Energy business unit, taking effect on January 1, 2012.
The staff restructuring activities will see MEMC shouldered with a fourth-quarter 2011 charge of around US$700 million, of which approximately US$520 million will be non-cash. Half of the resulting cash charges will be incurred after 2012, according to the company. However, the staff cuts and other cost-reduction strategies will bring about a cash-flow hike of over US$200 million by the end of 2012 and a 15% reduction in operating costs.
Fourth-quarter 2011 guidance has been revised to take market conditions into account. Non-GAAP revenue will be in the region of between US$789 and US$861 million, with GAAP revenue to be between US$523 million and US$585 million – neither of the guidance ranges has taken into account the impairment and restructuring charges incurred by today’s announcement.
