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Pew Law Center Blog
April 17, 2012 Lawrence 'D' Pew

Tempe Suffers Green Power Outage at First Solar Inc.

Tempe Suffers Green Power Outage at First Solar Inc.

First Solar Perrysburg Planet

Tempe, Arizona, solar panel producer First Solar, Inc., is laying off 2,000 employees, reducing its international work force by about 30%. Along with a reduction in its U.S. and European employment numbers, First Solar announced it will indefinitely idle four of its production lines in Kulim, Malaysia, by May 1. The Frankfurt, Germany, (Oder) factory will be closed in the final quarter of 2012. This is all part of the restructuring of operations to “align with sustainable market opportunities.”

What’s China and Europe Got to Do With It?

The harsh reality for photovoltaic (PV) solar system production is that it is an highly competitive industry. China’s solar panels are swamping the international market with low-cost products, out-competing (fairly or unfairly) First Solar and its ilk. Additionally, First Solar points to shrinking European demand where there was once a vibrant market for its solar panels. “[I]t is clear the European market has deteriorated to the extent that our operations there are no longer economically sustainable.” To remain competitive, these economic realities require that First Solar restructure its global operations.

By taking extreme cost reduction measures, First Solar expects immediate savings of between $30 and $60 million. By 2013, the Tempe-based solar panel company anticipates saving another $100 to $120 million. The 2012 restructuring charges are estimated to be $245 to $370 million; the company will also pay down $145 million of its debt.

Flashback:  2011 First Solar Benefits from $455.7 Million Federal Loan

US Export Import Bank

US Export Import Bank

Last September, we learned of a $455.7 million loan relating to First Solar from the Export-Import Bank of the U.S. (Ex-Im Bank is federally funded). The loan was earmarked for the First Solar manufacturing plant in Perrysburg, Ohio, where solar panels designed specifically for installation in Canadian power plants would be produced. The Ontario, Canada, utility facilities scheduled to receive First Solar’s Ohio panels are located in the townships of Amherstburg, Belmont, Saint Clair and Walpole.

Ex-Im Bank’s loan was not made directly to First Solar, but the company was unquestionably the intended beneficiary of the loan arrangement. The bank made separate loans to two different Canadian borrowers; those borrowers were to use the money to purchase First Solar’s Ohio solar panels. The federal loans were made to enhance First Solar exports of PV panels.

Last September, James Brown (First Solar President of Utility Systems) announced that:  “Ex-Im Bank’s support strengthens First Solar’s competitiveness and enables us to sustain U.S. renewable-energy manufacturing and the jobs that go with it.”

The $455.7 million dollar loan will put as many as 550 Ohioans to work – that’s about $828,540 loaned for each Buckeye employee hired into the Perrysburg solar plant.

The Canada loan comes after an earlier $117 million loan in 2011 to India interests benefiting First Solar’s panel exports to that country. That brings the total Ex-Im Bank loans to benefit First Solar’s export business to almost $573 million.

If you are unfamiliar with our 77-year-old Ex-Im Bank, it claims to have “supported more than $456 billion of U.S. exports, primarily to developing markets worldwide.” The Ex-Im Bank was created in 1934 by President Franklin D. Roosevelt’s executive order. In 1945, Congress made the Ex-Im Bank an independent agency of the executive branch. Here is an excerpt of the Ex-Im Bank’s mission statement:

The Export-Import Bank of the U.S. (Ex-Im Bank) is the official export credit agency of the U.S. Ex-Im Bank’s mission is to assist in financing the export of U.S. goods and services to international markets.

Ex-Im Bank enables U.S. companies – large and small – to turn export opportunities into real sales that help to maintain and create U.S. jobs and contribute to a stronger national economy.

Ex-Im Bank does not compete with private sector lenders but provides export financing products that fill gaps in trade financing. We assume credit and country risks that the private sector is unable or unwilling to accept. We also help to level the playing field for U.S. exporters by matching the financing that other governments provide to their exporters.

Ex-Im Bank provides working capital guarantees (pre-export financing); export credit insurance; and loan guarantees and direct loans (buyer financing). No transaction is too large or too small. On average, 85% of our transactions directly benefit U.S. small businesses.

Although First Solar’s export business clearly benefits greatly from the Ex-Im Bank loans, it seems a stretch to describe Canada as a country with “risks that the private sector is unable or unwilling to accept.” Canada?

Lastly, the 2,000 scheduled layoffs are not expected to affect First Solar’s Perrysburg plant.

Tempe Bankruptcy Resource:

Tempe-Based First Solar Laying Off 2,000 Workers

Tempe Solar Company to Benefit from Foreign Loans

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