Today SunPower dropped a bomb on a “business update” conference call by announcing that it plans to close one of its older factories and lay off a total of 2,500 employees. The closure of the company’s Fab 2 in the Philippines, which had the capacity to produce 700 MW of PV cells annually, will involve laying off 1,900 workers.
This follows SunPower announcing that it will close its PV module facility in the Philippines and transfer tools to a Mexico factory in August, which involved 1,200 layoffs.
SunPower plans to lay off another 600 or so workers from its corporate division, and the total of 2,500 workers in this round represents around 1/4 of SunPower’s current global workforce. “This was a difficult business decision for us,” noted SunPower CEO Tom Werner on the company’s call.
Fab 2 was SunPower’s first large-scale cell manufacturing facility, and SunPower notes that it featured older cell processes and a higher cost structure. But while closing the older facility, SunPower plans to begin production on a pilot line for its next generation of Maxeon back-contact PV cells for its X Series modules in 2017, and to reach “gigawatt-scale”production with the new series in 2019 or 2020.
Werner also noted that it may be possible to re-deploy tools from Fab 2, which produced cells for its E Series modules. Overall, SunPower expects to incur $225-$275 in restructuring charges through the end of 2017, an estimated 30% of which will be cash costs. Some of these charges will come in the fourth quarter of 2016.
SunPower has been reporting dismal financials for some time. During Q3 SunPower reported losses of only $40 million on $729 million in revenues, but the company has been losing money for at least a year. During the conference call SunPower declined to provide expected margins, stating that its Q4 results would come soon enough.
In its Q3 results, SunPower noted that crashed module prices were having a material impact on its business, and reiterated this on the conference call. However, the company also predicted that prices will stabilize in the near future.
Additionally, Total’s ownership stake in SunPower could mean a potential bailout if the company gets into more serious financial trouble. Recently SunPower announced a deal to supply PV systems at Total’s global network of gas stations, and SunPower expects to receive the first payment for the three-year deployment in Q1 2017.
And even with its restructuring, SunPower plans to continue investing in both its X Series and lower cost P Series modules, which will involve $100 million in capex investments in 2017. And while it is not clear how much of that is going to new P Series factories, Chief Financial Officer Chuck Boynton describes P Series as “very, very capital efficient”.
SunPower expects to reach 400 MW of annual P Series capacity in 2017, and currently the rest of its capacity is split fairly evenly between E Series and X Series. With the closure of Fab 2 and Fab 4 coming online, this should tilt the balance towards its X Series, most of which will feature integrated microinverters.
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