ECD announced a restructuring plan back in May, in response to "challenging" solar market conditions. The company, which provides solar laminates and systems for the building-integrated and commercial rooftop market, has now temporarily suspended all its manufacturing operations, "as an inventory control measure".
Consequently, 400 employees across Mexico, Michigan and Ontario have been given a temporary leave of absence. The company says it will resume operations when its existing inventory has been sold and the market conditions warrant it. It will take 60 days to return to normal production levels.
As part of its restructuring plan, a further 500 full time employees will be "let go" by the end of 2011, in addition to the undisclosed "personnel and other actions" taken back in June.
The restructuring plan has also seen the company enter into new markets, including Brazil, South Korea, India, the Caribbean and China. Solar sales to customers outside of Europe and North America are now said to account for about 40 percent of total shipments in the quarter, compared to just four percent in the prior year's first quarter.
ECD is further developing its thin film solar offerings by commercializing its patented Nano-Crystalline technology. Upgrades to existing capital equipment are currently underway at its Greenville, Michigan plant. The retrofitted line is expected to begin pre-production testing and optimization in mid-2012.
ECD expects negative results in its first fiscal quarter 2012, which ended September 30, 2011. According to its preliminary figures, total revenue will be around $22 million, down from the consolidated revenue of $65 million in the first fiscal quarter of 2011. Meanwhile, its United Solar subsidiary shipped just 11 megawatts of its branded solar products.
To successfully reposition its United Solar business, the company says it will be required to refinance or restructure its outstanding Senior Convertible Notes due 2013. As such, it has begun discussions with representatives of an informal group of holders of ECD's outstanding Senior Convertible Notes due 2013.
Due to the news, ECD has postponed the official release of its quarterly results until further notice.
According to Goetz Fischbeck of Germanys BHF Bank, the first insolvencies in Asia are beginning to emerge. He writes that both Korean solar cell manufacturer, Millinet and China-based Shanghai Alex Solar are "on the brink of insolvency".
He says that, globally, solar cell manufactures operating sub-scale production facilities are experiencing significant losses. As such, he believes that only a few will survive the current shake out. "As most of the 200+ Chinese cell manufacturers are rather small and privately held, their demise will go often unnoticed in Europe," he remarks.
He adds that those module manufacturers which are not tied into long-term solar cell contracts will have a better shot at survival. However, it is imperative that they manage their inventory levels competently.
In Korean-language newspaper, laoyaoba, it was said that the European debt crisis has had a negative impact on Korea's cell industry, with factory capacity utilization rates falling below the 30 percent level.
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