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Another troubled solar panel maker halts production, cuts jobs

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Solar thin film maker Energy Conversion Devices will temporarily shut down production, furlough 400 workers and lay off 500 by the end of 2011. Why the company will struggle to survive.

And down goes another one. Energy Conversion Devices, a maker of solar thin film laminates, has shut down production and will furlough about 400 employees at its factories in Michigan, Mexico and Canada. The Michigan-based company also plans to cut 500 jobs at the end of the year, the Detroit News reported.

The company calls the temporary suspension an "inventory control measure," which means it made too many solar panels than it could sell. The company, which said it is working to restructure its debt, also has $263 million in outstanding notes that are coming due in June 2013.

ECD isn't the only solar manufacturer that is struggling. Energy Department loan guarantee darling Solyndra went belly up earlier this year as did Evergreen Solar and SpectraWatt; SolarWorld closed its California solar module assembly factory; and Solon closed its 60 megawatt solar panel factory in Tucson, Arizona.

A precipitous drop in prices -- thanks to a continuous flood of cheap solar panels from Asian manufacturers -- has been a boon for consumers. And while U.S. and European manufacturers saw sales go up in many cases in 2010 and 2011, prices have fallen even faster with a consequent drag on profits.

But ECD's problems began before this recent market shakeup. While other solar manufacturers enjoyed a boost in sales last year, ECD was in cost-cutting mode, which continued into 2011. In May, ECD announced it would cut 300 employees or 20 percent of its workforce, while at the same time it invested about $12 million on a new plant in Ontario -- a bet on future growth that so far hasn't panned out.

The root of the problem, lies largely with its product -- a flexible thin film laminate which doesn't require glass to protect the solar cells.  The product itself serves a niche client who needs a lightweight solar installation. However, the company is especially sensitive to price because its solar panels are less efficient than the common silicon panels.

That means the company's survival hinges on its ability to manufacturer their panels cheap enough to make up for the less-than stellar efficiency. A task that right now, it hasn't been able to achieve.

Photo: Flickr user hans.gerwitz, CC 2.0

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Kirsten Korosec

Contributing Editor

Kirsten Korosec has written for Technology Review, Marketing News, The Hill, BNET and Bloomberg News. She holds a degree from Northwestern University's Medill School of Journalism. She is based in Tucson, Arizona. Follow her on Twitter. Disclosure