Three months after a “temporary” production shutdown and furlough of 400 employees, flexible solar thin-film laminate maker Energy Conversion Devices has filed today for Chapter 11 bankruptcy protection.
As part of its bankruptcy plan, Michigan-based ECD intends to sell its wholly owned subsidiary United Solar Ovonic and other assets including its minority stake in Ovonyx. The bankruptcy filing comes just a day after ECD sold Ovonic Battery Co. — a division that developed nickel-metal-hydride batter tech now used in hybrid vehicles — to BASF for $58 million.
ECD is spinning its bankruptcy filing in far sunnier terms than is probably warranted. In a release today, ECD said it “took these actions to facilitate a sale of the USO business in a manner that enables USO to be competitive and viable for the long-run. During the bankruptcy and sale process, USO will continue to operate and serve its customers while moving forward on its development of advanced nano-crystalline silicon photovoltaics.”
The company believes its problems stem from its large amount of convertible debt. It’s true the company does have a hefty debt load, including $263 million in convertible bonds that come due in June 2013. Still, it’s bigger problem is its product. Or more accurately put, the high cost of making a low-efficiency product.
Like other solar manufacturers, ECD has struggled by the precipitous drop in prices. ECD’s problems, however, weren’t entirely related to the rest of the 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 has yet to pan out.
As I noted last year, 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. Meaning the company’s survival hinges on its ability to make panels cheap enough to offset its lower efficiency. So far, the company hasn’t been able to deliver.
Photo: Flickr user hans.gerwitz, CC 2.0
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