Energy Conversion Devices Inc. (ECD), a Michigan-based supplier of solar laminates and systems, announced Wednesday (Nov. 9) it suspended all manufacturing operations as an inventory control measure and said it would furlough about 400 workers in Michigan, Mexico and Ontario, Canada.
ECD (Auburn Hills, Mich.) also said it would cut about 500 full time workers by the end of the year. The company said the actions were being undertaken in connection with a company restructuring that began in May. ECD's management is restructuring the company "in response to dynamic and challenging solar market conditions," ECD said in a statement.
ECD said it would continue to serve its customers through its direct sales force and global network of solar integrators and building materials suppliers. The company said it expects to resume production in its manufacturing facilities as soon as possible once the existing inventory has been sold and market conditions warrant. The company can return to normal production levels within 60 days, ECD said.
Beginning in May, ECD embarked on a corporate restructuring to reduce cost, expand addressable markets through globalization and enhance its core solar technology, ECD said. To reduce cost and manage cash, ECD took personnel and other actions in June with an estimated annualized savings of $20 million, ECD said.
ECD said it is gaining traction in new geographic areas including Brazil, South Korea, India, the Caribbean and China. Solar sales to customers outside of Europe and North America accounted for about 40 percent of ECD's total shipments in the quarter ended Sept. 30, compared to 4 percent a year earlier, ECD said.
ECD said it expects to report revenue of about $22 million for the quarter ended Sept. 30, down from $65 million in the year-ago quarter.
"With reductions in incentives in our core European markets and a volatile credit market, solar projects are having tremendous difficulty closing," said Jay Knoll, ECD's interim president, in a statement.
Knoll said these factors combined with a "flood" of cheap modules from foreign manufacturers have created an environment where very few projects are getting completed without self-financing and steep discounts. "The economics of this environment require us to rethink our approach to the sales process and rationalize our cost structure, both of which are currently underway," Knoll said.
Separately, ECD said its Ovonic Battery Company (OBC) subsidiary generated $2.3 million in the quarter in combined royalties and license fees from its proprietary nickel-metal-hydride rechargeable battery technology. ECD announced in July that it intended to divest OBC in a closed-bid auction and is currently proceeding with this sales process.