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Low Module Prices Cause Impact Globally, SolarWorld Lays off 500 Workers

published: 2016-09-22 18:14

PV manufacturer SolarWorld was reported to lay off around 500 temporary workers from German manufacturing facilities. EnergyTrend regards this event as a consequence of the significant price drop in PV modules and reduction in utilization rates, situations that are occurring in the PV industry globally.

PV Tech reported that SolarWorld will slash 300 temporary jobs at its facility in Freiburg and 200 in Arnstadt starting from October 1, while permanent staff will stay.

Milan Nitzschke, vice president at SolarWorld, told PV Tech: “The reason is current market situation where we see a dramatic price drop, but not an increase of demand.”

SolarWorld had a workforce of up to 3,766 including temporary workers in the globe, noted in the company’s financial report for the second quarter of 2016. The workforce was 6% more than the same period in the prior year.

However, the weakening market and reduced utilization rates diminished workforce demand. Lowering module prices brought margins that were too low to remain profitable. These situations reinforced SolarWorld to adjust its workforce.

EnergyTrend’s comment

SolarWorld is not the only case of laying off temporary workers due to the flat market performance. Last week in Taiwan, tier-one PV cell manufacturer Motech filed to lay off 200 foreign temporary workers for better manpower adjustment.

“Weak demand leads to utilization rate reduction, and price war flamed in China causes global PV price to drop. These are the main reasons for SolarWorld and Motech to layoff their temporary workers,” explained an analyst at EnergyTrend. “China’s demand in the first half of this year was extremely strong, but was drastically weak entering the third quarter. The market demand since July was so poor that PV vendors can only sell their products by cutting prices. Furthermore, China’s first-tier PV manufacturers have been trying to win orders by slashing their module quotes, and this forced PV module suppliers across the world to sell products at nonbeneficial prices.”

However, the price drop doesn’t boost demand. According to EnergyTrend’s survey, utilization rates for PV modules in China has been reduced to approximately 50~60%, and worldwide to 60~70%. Hence, it is expectable that some PV module manufacturers would follow SolarWorld and Motech's decision of cutting jobs.

Looking ahead to 2017, EnergyTrend expects that all sections of the PV supply chain will see supply outpacing demand by 18~35%. Under this scenario, PV module companies will be able to supply enough products to their customers even if the utilization rates were not at full. They can hire temporary workers for temporary orders, and this could be sufficient to product delivery.

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