Aiming for Profit, ECD Restructures, Refocuses

In the wake of a favorable court settlement related to their battery technologies, Energy Conversion Devices (ECD) plans on restructuring its operations to focus on its solar energy, hydrogen storage solutions and hybrid electric vehicle technologies. While this new focus means layoffs for some workers, the company believes it’s the key to reaching profitability.

Rochester Hills, Michigan – August 18, 2004 [] “The restructuring will increase our product revenues while enabling us to carry out major cost-reduction measures, including significant reductions in the workforce to right size activities to support our core commercial businesses,” Robert C. Stempel, Chairman and CEO, said. Stempel said ECD would manage a reduced portfolio of product development activities and a leaner R&D team in order to grow future businesses. Three of the four core businesses that ECD will now focus on are in the field of renewable and alternative energy. These include, United Solar Ovonic, which specializes in flexible thin-film photovoltaic (PV) cells; two ventures with ChevronTexaco — Cobasys which specializes in batteries for hybrid-electric vehicles, and Texaco Ovonic Hydrogen Systems which focuses on solid state, metal-hydride low pressure hydrogen storage systems. The company’s fourth, non-energy focus will be with Ovonyx, a venture which produces memory technology for the computer and electronics markets. This change in direction for the company comes largely from the conclusion of a patent-infringement suit in federal court dealing with the company’s nickel metal hydride batteries and their use in Toyota’s Prius vehicles. ECD and their subsidiaries will be awash in $30 million dollars from the settlement. So, why layoffs after a cash infusion? Because ECD want to put the funds to good use in order to reach profitability. According to the Detroit Free Press, ECD has not made a profit since 1996, and in last four years lost a combined $78.9 million. “As we transition to a more commercially focused business, we need to change the mix of skills within the organization,” Stanford R. Ovshinsky, President and CTO said. “Despite our commitment to fast growth in our core commercial businesses, we will unfortunately be losing some good people over the next few months. We appreciate our colleagues’ many contributions to the company and look forward to the future.” With this restructuring, ECD expects sustained profitability by July 2006.
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