SunPower Reducing Workforce in an Effort To Streamline Organization

Jennifer Runyon, Managing Editor, RenewableEnergyWorld.com
October 17, 2012 | 5 Comments

As solar module manufacturers continue to struggle to stay afloat in an oversupplied market, one more major player is planning to restructure. Yesterday module manufacturer SunPower announced its plan to idle half of its Fab 2 production lines in the Philippines and lay off 900 employees. The company said in a statement that the re-organization is a temporary measure.

"Industry conditions continue to be challenging and while it is never an easy decision to reduce positions, we must make prudent decisions to effectively compete in an industry with significant overcapacity. Additionally, we'll further our efforts to reduce costs and improve operational efficiencies," said Tom Werner, SunPower President and CEO, in the statement. He added that the company continues to make strong progress on its cost reduction roadmap and remains committed to reaching its cost per watt goal of less than $0.75 per watt on an efficiency adjusted basis for SunPower's lowest cost solar panels by the end of 2012.

The company said that its previously disclosed Fiscal Year 2012 earnings guidance remains unchanged. SunPower will provide additional details on its strategic initiatives during its third quarter 2012 earnings conference call on Nov. 1, 2012.

SunPower expects restructuring charges to total $10 million to $17 million, composed of severance benefits, lease and related termination costs and other associated costs, the majority of which will likely be in the fourth quarter 2012. The company expects that greater than 90 percent of these charges will be cash.

Yesterday RenewableEnergyWorld.com reported that GTM Research is predicting 180 module manufacturers will cease operations or succomb to acquisition over the next year and SunPower's announcement is just another symptom of the painful consolidation that is happening in the unhealthy solar module manufacturing landscape. According to the GTM report, the current downturn in the worldwide PV manufacturing segment is likely to last until 2014.

Lead image: Pink Slips via Shutterstock.

5 Comments

JP -Jon Pierce
October 22, 2012

Sounds like a good EXAMPLE of an MLM history in "networking"

-there is always a pyramid-

Already many geothermal heat pump manufacturers either fell off the US and or fell for a while until they decided to see if Energy-Star(TM) was enforced. -it is.
Then all the followers (huge to small) MATCHED the maverick designs and today arrive at COP's in HEATING-ONLY-MODE, not other attached modes/ reclaims/ --
in heating only they now slightly surpass COP: 4.1 ~ of a thrice-resold TETCO of Powell/Delaware/Columbus/NJ/IL (GEOComfort-owned to date, not the same product).
All that 1978 tech was : 1650-1700 CFM air entering at 68deg.f;
7.- ton hot air:HXcoil/near 20fins per inch; - on a 43-46k (~to 3.8 REAL-TON) compressor inside ---Found in your AHRI -ratings sales pitches= a 4.1/2"ton-size" in today's contract-hooting-baloo; all connected too a 5-ton water-evaporator ground-Refrigeration Earth-Coupled-(WELL WATER) used at 50-54 deg.f X only 5GPM, when clean of well-water-iron deposits (many RUNNING STILL 33 YEARS LATER, are at 6gpm, just 'well').

POINT:
Look today! Look at all the over 30 manufacturer's that MUST be Energy Star COMPLIANT ((not AHRI-RATED, ever required by law))- over CoefOfPerformance-COP's of 4+

and the THRIVING Hydro-Temp Corp OF ARKANSAS hydro-temp.com (not hydro-heat-hydro-delta) that PATENTED INSTANT FULL-TERM hot water (( a very best in schools, too, #1 in several states now))production is a couple months back-logged (3 weeks in the dip of 2009) of the full Prioritized Heat of the compressors, ON-DEMAND-HW 100% - AND SIMULTANEOUSLY IN COOLING for 100% Heat-Reclaim,
by creative design
pulled off so many sales
now ClimateMaster is the first major brand to nearly exactly copy (with its turn of problems, now , to go through the learning -training-dealers-curve).

SOLAR WILL SURVIVE THE nay-sayers !

WIND/ many over @ 40yr-ROI needs help WITHOUT taxpayers who pay into the credits and not soon benefiting most citizens at all.

ANONYMOUS
October 19, 2012

I agree with john-nistler about greed. SunPower stopped selling to distributors and went directly for the biggest installers. That move encouraged other manufacturers to compete with them and distribute directly to the end customer (installers). After the first phase, SunPower targeted the second tier of installers in an attempt to corner the US market and have more profits for themselves by cutting out the middleman. Again, SunPower Mgmnt didn't suffer, it was the workers at the distribution level that lost their jobs as well as US installers that weren't big enough to be considered a customer. They could not obtain SunPower product at the same competitive price as a preferred dealer.

ANONYMOUS
October 18, 2012

I have sold a lot of Sunpower systems over the years. SPR is a great company and makes a great product. I believe they will pull through the market contractions and emerge as one of the survivors. Sure, SPR has made mistakes, who hasn't? But they always work at being better and trying harder. Not sure what the above poster is referring to. As far as I know, SPR has always sold through dealers and has never manufactured it's branded inverters.

John Nistler
October 18, 2012

Years ago, I had the opportunity to have coffee with Robert (Bob) Noyce, co-founder of Intel almost every morning for half a year. One of Bob's concerns was that Intel would loose track of who its customers were by going after its customer's customers.

In my opinion, the issue at Sunpower is management. Unfortunately as in all cases, its the employees who suffer. Sunpower lost track of its core business, the production and sale of solar cells and panels due to the age old problem - greed! Sunpower management made a decision to go after its customers' customer. Sunpower specifically wishes you to divulge the location of your installation. If you do so, the next thing you know a Sunpower official installer or representative is targeting the same customer.

They got out of the sale of panels or solar cells trying to force everyone to go through their installers, eliminating the 1000's of qualified installers that would have continued to promote their product.

They decided that internally they could build inverters and tracking systems without looking externally to understand there were other companies doing a better job. Essentially not invented here or NIH syndrome is alive and well at Sunpower.

Basically, Sunpower management suffers from greed and no amount of restructuring will fix this issue unless you start at the top.

Tom Ferraro
October 18, 2012

As an SP dealer, we are saddened to hear of this "restructure", both in terms of the negative perception and the impact on those 900 workers. However, as a prudent businessman, cost reduction adjustments are now key to insuring longevity in this industry. This is especially welcomed as a strategy for SP to be one of the surviving manufacturers of the GTM consolidation mentioned in the article.

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Jennifer Runyon

Jennifer Runyon is managing editor of RenewableEnergyWorld.com coordinating, writing and/or editing columns, features, news stories and blogs for the publications. She also serves as conference chair of Solar Power-Gen Conference and Exhibition...