Energy Conversion Devices Inc on Tuesday said it temporarily suspended manufacturing of its lightweight solar products, is cutting 500 jobs and has hired an advisory firm to help attract additional investment as it struggles to compete in the cutthroat solar power industry.
The company said that "solar projects are having tremendous difficulty closing" with the cutback in solar incentives in Europe and a volatile credit market.
Interim President Jay Knoll, in a statement, also blamed "a flood of cheap modules from foreign manufacturers" that "have created an environment where very few projects are getting completed without self-financing and steep discounts."
ECD, which is based in Auburn Hills, Michigan, said it has begun talks with holders of its outstanding senior convertible notes due 2013, which it it said will be key to repositioning its United Solar business.
The company plans to use proceeds from the previously announced sale of its Ovonic Battery Company unit to invest in its solar business. However, it also hired advisory firm AlixPartners to help it evaluate strategies for attracting additional investment. A closed-bid auction for the battery unit is proceeding, ECD said.
The company also said it would postpone its quarterly earnings conference call and will not file its results with the U.S. Securities and Exchange Commission on time.
Like many in the solar industry, ECD is struggling to contain costs as prices on solar panels nose-dived this year due to pullbacks in government subsidy programs in top markets Germany and Italy. Those subsidy cuts, combined with increased manufacturing capacity of solar panels, has created a glut of panels in the global market.
The industry turmoil has sent three U.S. solar companies into bankruptcy since August.ECD makes lightweight, flexible solar laminates for rooftops and buildings. Its solar products have faced stiff competition this year from traditional solar panels, prices on which have dropped 40 percent this year. ECD's products are less efficient at transforming sunlight into electricity than traditional, silicon-based panels.
Stock prices have also been hammered by the solar carnage. ECD's stock closed at 61 cents Tuesday on the Nasdaq, a decline of 89 percent from its 52-week high of $5.38, reached last December.
ECD said it will temporarily idle its manufacturing, furloughing about 400 workers. The workers are located at its Michigan, Mexico, and Ontario facilities.
Once market conditions improve, the company said it can return to normal production levels within 60 days.
In addition, 500 full-time positions will be eliminated by the end of the year, the company said.
The company has not posted a profit since 2009, and revenue in the fiscal first quarter slipped 66 percent to $22 million, the company said.
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