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Solyndra to Close Factory, Layoff Dozens

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This year just hasn’t panned out for Solyndra. The company is going to close its first factory, is delaying expanding its gleaming new factory and is laying off dozens of employees.

The New York Times (s nyt) posted the news on Tuesday night. Solyndra received a federal loan of $535 million last year to build its second factory, which it had aimed to have 500 megawatts of annual production capacity. The Obama administration held up Solyndra as an example of a home-grown cutting-edge technology developer that would deliver lots of green jobs through its factory expansion plan and more than $2 billion in announced sales deals.

Instead, Solyndra CEO Brian Harrison — who joined the company only recently, replacing the founding CEO — told the Times that the company plans to let go about 40 employees and will not renew contracts for 150 temporary workers. (The company said Wednesday morning the number is actually 135.) The Fremont, Calif., company will shutter its first factory to save at least $60 million in capital spending. Instead of boosting its overall production capacity to 610 megawatts by 2013, it’s now looking at up to 300 megawatts by then: less than half the original plan.

Harrison said the company needed to come up with a new plan to deal with the intensifying competition from solar panel makers, particularly those in China, that boast large factories for producing cheaper products.

Solyndra has completed the construction of the second factory building, but as of a few weeks ago, it hadn’t started production. Company spokesman David Miller told me during Solar Power International (SPI) in mid-October that the company was putting in equipment on the factory floor. Production is set to start before the end of the year.

Here is an excerpt from a company statement issued Wednesday morning:

“There is a clear need for more aggressive pricing. This plan allows us to stay very competitive on a fully installed cost basis with all in pricing next year around $3.50 a watt which we believe will be highly competitive or even lower than (silicon module-based system) pricing. We expect this plan will allow us to double shipments next year and take us to cash-flow positive by the end of 2011.”

The company has been an interesting one to watch because its solar panel designs are so different from the more common, silicon solar panels. Its copper-indium-gallium-selenide solar cells are lined up inside tubes to take advantage of the reflected light from the rooftop or the ground. The company also has engineered its own racking system to support the panels, a design it says can shave installation costs. Solyndra unveiled a new panel and racking system during SPI.

Financially, the company has not only snagged a huge federal loan; it also has raised $198 million in private equity to build its second factory. As of October 2009, the company had raised about $970 million in equity.

Solyndra also wanted to raise even more money through an initial public offering. But it canceled it in June, citing poor market conditions. Instead of raising as much as $300 million through the IPO, the company said it would instead sell $175 million worth of convertible notes to exiting investors to get the money it needed to make and deliver the goods to its long list of customers.

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5 Responses to “Solyndra to Close Factory, Layoff Dozens”

  1. Nothing wrong with the Government trying to pick winners, so long as they put in the effort to properly assess the prospects.

    In the case of Solyndra, it is looking more and more like the PV Industry’s ‘Introductory’ Phase is over. The industry is consolidating and commoditizing. Rapid growth enjoyed by crystalline alternatives will enhance performace and drop costs at a rate that alternatives will find increasingly hard to match. First Solar is past a critical threshold and has reached a size where it, too, can gain in the Growth phase.

    Meanwhile, standardization in field installation (along with automation and further cost reduction) will also discriminate against novel new entrants.

    The opportunity thus shifts to extension technologies. Potential disruptions will have to wait for the next cycle.

    Regards, David (

  2. I think the problem is that the Government was acting as kingmaker by selecting a unique technical approach to solar (glass tubes) and plowing big time cash into Solyndra. They probably picked wrong and should have supported more conventional approaches (flat surface panels with coated PV material).

    The lesson here is that the Government should encourage the domestic solar industry, but it should craft broad financial incentives usable by any solar companies and not annoint one particular technical approach. Government is not competent enough to determine the best approach. Let the marketplace and open competition reveal the winners.

    • I often hear this rhetoric about how “government shouldn’t be in the business of picking technology winners.” Why not? The government funds all sort of research but it can’t fund all proposals out there. So it has to pick and choose. A lot of the telecommunications technologies we use today came from government-supported projects for the space and military programs. A lot of the solar technologies on the marketplace today also are a result of public-funded projects. That said, no government or any private investor and company can make the right investments 100% of the time. You can debate the merit of the Solyndra funding, but to say that government involvement is a no no whatsoever doesn’t make sense.

    • Jim, the goal of the government program is to fund companies with promising technologies, particularly given that banks have been stingy about making all types of loans in the last two years (a result of their own follies by making bad bets in the housing market). Certainly, whether Solyndra’s technology and business will be successful remains to be seen. It hasn’t met expectations (its own and others). It’s too early to say it’s not using the government funding well. If money is tight, then it’s logical for the company to tighten its spending. I’m waiting to see how smoothly the company can start and ramp up production of its new factory in order to meet its sales targets.