SunPower to streamline Philippines Fab 2 manufacturing plant

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SunPower has announced plans to restructure its Fab 2 cell manufacturing plant in the Philippines. The company’s Fab 1 facility was shuttered in April this year with some equipment transferred from there to Fab 2, to reduce manufacturing constraints during the second quarter.

SunPower is expected to temporarily idle six of the 12 lines in its Fab 2 plant and 20% of panel manufacturing in the Philippines to significantly reduce inventory, lower operational costs and improve efficiency. As a result, the company expects the overall blended utilization for the fourth quarter to be approximately 60%. Additionally, the company will reduce its workforce by approximately 900 employees with the reductions occurring primarily in the Philippines.

“Industry conditions continue to be challenging and while it is never an easy decision to reduce positions, we must make prudent decisions to effectively compete in an industry with significant overcapacity. Additionally, we'll further our efforts to reduce costs and improve operational efficiencies,” said Tom Werner, SunPower chief executive officer and president. 

This summer, the Philippines’ Energy Regulatory Commission (ERC) approved a much celebrated feed-in tariff rate for renewable energy. The FiT for all solar installations was set to 9.68 PHP (US$0.23) per kWh, regardless of the size of the system or technology used.

“With this aggressive reorganization plan, SunPower is well positioned to lead the solar market due to our world leading technology and products, significant downstream presence in multiple end segments and ability to open new market opportunities.”

Through companies like SunPower, IMS Research is expecting CPV to gain a 13% share of  the target market in USA and Central America in 2012, increasing to 27% by 2016.

On the contrary, Finlay Colville, VP Solarbuzz, told PV-Tech, “End-market global demand during Q3'12 was below the levels that most PV manufacturers had hoped for, resulting in greater levels of upstream inventory build. Much of the year-end Q4'12 demand is coming from the Chinese market that is dominated by lower-efficiency multi c-Si panels, the vast majority of which is being supplied directly by domestic c-Si manufacturers.

“Therefore, SunPower is simply joining a growing list of Western and Japanese c-Si producers that have been forced to idle lines or permanently shutter legacy uncompetitive capacity. The big question however will be what happens to the most-recently idled lines at SunPower once their internal pipeline of project activity calls for an increased mix of high-efficiency modules, or whether outsourcing module supply today is simply the most cost-effective means of maximizing downstream margins,” concluded Colville.

SunPower asserts that it continues to make strong progress on its cost reduction roadmap and remains committed to reaching its cost per watt goal of less than US$0.75 per watt on an efficiency adjusted basis for SunPower's lowest cost solar panels by the end of 2012. The company's previously disclosed Fiscal Year 2012 earnings guidance remains unchanged. SunPower will provide additional details on its strategic initiatives during its third quarter 2012 earnings conference call on November 1, 2012.

SunPower expects to record restructuring charges totalling US$10 million to US$17 million, composed of severance benefits, lease and related termination costs and other associated costs, the majority of which will likely be in the fourth quarter 2012. The company expects that greater than 90% of these charges will be cash.
 

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