Suntech Power Holdings Co., Ltd.(NYSE: STP), the world's largest producer of solar panels, will stop two of three production shifts and reduce its workforce at its Goodyear, Arizona, solar panel manufacturing facility. The slowdown in production is due to global oversupply and higher production costs related to recent import tariffs imposed by the U.S. government.
The Goodyear facility's annual production throughput will decrease from about 45MW to 15MW, and roughly fifty positions will be eliminated. The decision is in line with Suntech's global restructuring efforts to right-size production capacity and reduce operating expenses by 20% in 2012 and 2013.
"We will continue to produce solar panels in Arizona to meet the needs of our customers, particularly those who are willing to pay a premium for U.S.-manufactured products," said E.L. "Mick" McDaniel, Managing Director of Suntech America. "Our employees in Goodyear have done a tremendous job, however all PV manufacturers globally are facing challenging market and political conditions, and rationalizing production is necessary to maintain a competitive cost structure."
On November 7th, the U.S. International Trade Commission voted to impose unilateral tariffs of 35.97% on Suntech solar cells produced in China. Solar cells are a key component used at Suntech's Goodyear production facility. The rising costs of components like solar cells increases the costs of manufacturing solar panels in the U.S. Tariffs on solar cells come in addition to tariffs imposed by the U.S. government in 2011 on aluminum frames, another key input for solar panel manufacturing.
"Subsequent to our decision to invest in Arizona, unnecessary upstream trade barriers have made it difficult and more costly to manufacture solar panels in the U.S. In addition, these new tariffs limit our ability to utilize Suntech's advanced solar cell technology imported from China," added Mr. McDaniel. "We will continue to assess our options and if the political and business environment improves, we may reconsider expanding our manufacturing operations in the U.S."
Suntech's Goodyear, Arizona, manufacturing facility features highly-automated manufacturing and product testing equipment and currently produces Suntech's 300-watt solar panels for commercial and utility-scale electricity generation. All solar panels produced at the facility are backed by an industry-leading, 25-year power output warranty and are compliant for procurement in American Recovery and Reinvestment Act (ARRA) and Buy American Act projects.