Taiwan’s largest solar enterprise United Renewable Energy Co. (URE) has announced that it will be significantly cutting its workforce and production capacity for this year. According to Taiwan’s news outlets, the labor department under the government of Hsinchu County has confirmed that URE on July 4 submitted its plan for laying off 239 workers at its manufacturing plant in Hukou – a township within its jurisdiction. URE explains that this move is necessary in order to stem the losses in its photovoltaic cell business.
Taiwan-based manufacturers of photovoltaic products have been struggling in the recent years. Their operational conditions have deteriorated even more rapidly since the second quarter of 2018, when China lowered its FiT rates and imposed stringent capacity quotas under the “531 New Deal.” At the same time, prices in the global solar market have been falling as manufacturers in Mainland China with their size advantage adopt an aggressive pricing strategy. Due to the impacts from changing market demand and increasing competition, Taiwan’s entrants in the markets for photovoltaic wafers and cells have been trying to protect their bottom lines by scaling back their production, reducing their workforces, and modifying their business strategies. Companies that have made the painful transition include E-TON Solar Technology Co., Motech Industries Inc., Green Energy Technology Inc., and TSEC Corp. As of now, the total layoff number in the upstream sections of Taiwan’s solar industry has exceeded 3,000. There are also a large number of workers that have seen reduced work days or been furloughed.
Regarding this latest development, the Ministry of Labor under Taiwan’s central government has stated that the local solar industry is facing numerous challenges in a critical period. The ministry points out that manufacturers in Mainland China are being supported by generous state subsidies. Furthermore, the solar market with its low technological barriers is already saturated with entrants from around the world. Hence, Taiwan-based manufacturers are faced with excess capacity.
URE was created from the merger of three major solar enterprises operating in Taiwan – Neo Solar Power Corp., Gintech Energy Corp., and Solartech Energy Corp. The reason behind the deal, which was backed by the government, was to create a larger and more efficient entity that can better compete in the international market. Upon its formation, URE already decided to shift away from photovoltaic cell manufacturing by reducing the combined production capacity of the three merged companies. The focus instead will be on designing and selling branded photovoltaic modules. However, URE currently has yet to pull its cell business out of the red despite its efforts. To expedite the restructuring process, further layoffs appear to be necessary.
URE has continued to streamline its workforce since its establishment. Based on reports from local news outlets, layoffs have occurred at its factories in southern Hsinchu, Hukou Township, and Hsinchu Science Park. The idle factory spaces have been put up for lease as well. URE’s latest official statement on this matter asserts that trimming the workforce is in line with its restructuring plan. The company also points out that it has achieved early success with the strategy of developing branded modules and expanding into the downstream sections of the industry chain. For instance, the revenue from sales and installations of whole photovoltaic systems has grown by 231%.
Sam Hong, chairman of URE, previously announced that the cell production capacity of his company will be scaled back from 3-4GW to around 1-1.5GW.
While corroborating the announcement, the labor department of Hsinchu County has noted that URE began dismissing workers at the Hukou plant as early as July 8. The current labor code mandates that the employer must give a 60-day notice when proceeding with mass layoff. Therefore, the official contract termination date for the workers at the Hukou plant has been pushed back from July 10 to September 10. In addition to severance pay, URE will also have to provide the additional two months’ worth of salary and benefits that cover the notice period.
In response to the charge of not giving workers enough time to prepare for the layoff, URE emphasizes that it has been abiding by the law when implementing its restructuring plan. Moreover, the company promises to provide as much assistance as it can to the laid-off workers so that they can be transferred to other positions within the organization or find new employment.
(This article is an English translation of news content provided by EnergyTrend’s media partner TechNews. Photo credit: United Renewable Energy Co.)