Energy Conversion Devices to Lay Off 140 in Michigan, Shift Some Manufacturing to Mexico

Energy Conversion Devices (ENER), which makes flexible films that converts sunlight into electricity, said Wednesday it will cut 140 jobs from its Michigan operation and move some of the manufacturing to Mexico this fall to cut costs.

The company, which makes the solar panels under its subsidiary United Solar Ovonic, has continued to struggle while many of its peers have recovered from the market slump of early 2009. Unlike conventional solar panels by the likes of SunPower (SPWRA) and First Solar (FSLR), which require glass to protect the solar cells from moisture and other environmental damage, ECD's solar panels are laminates without a sheet of glass on top.

ECD engineered its solar films to make them fit closely on roofs or even the sides of buildings. But the market for building-integrated solar panels, which include product such as embedding solar cells into roof shingles, hasn't taken off as quickly as some companies have expected, due to their prices and concerns over their durability.

Another problem is that ECD's solar films are less efficient at converting sunlight into power than conventional solar panels. The largest solar market is Europe,where many countries have policies that require utilities to pay premium prices for solar electricity. That means the more power a solar project can generate, the more money its owner can make. As a result, project developers tend to favor more efficient solar panels.

ECD said it will continue to make solar cells at its complex in Auburn Hills, Mich., but it will move its assembly of solar cells into panels to its Tijuana, Mexico factory.

Growing Solar Market

ECD's announcement comes at a time when some solar panel companies are reporting a big boost in product demand. Companies such as SunPower and First Solar posted a jump in second-quarter revenues and a forecast of an increase in 2010 earnings. ECD is scheduled to report its quarterly earnings on Aug. 31.

The company faces a growing competition in the market, facing not only new entrants but also established manufacturers who have aggressively cut costs. Last December, ECD announced a restructuring plan that included cutting 400 employees, or about 20% of its workforce back then. It also had postponed the completion of a 120-megawatt factory.

ECD is the second solar energy equipment company that has announced layoffs within the past week. Schott Solar suspended one of its two production lines in its New Mexico factory and let go 30 workers.

Schott makes glass-coated steel tubes in that factory. The tubes are used for solar power plants that use mirrors to concentrate and direct the sunlight to generate steam, which then runs a turbine for producing electricity. Securing permits and financing have been difficult for developers of this type of power plants because the projects tend to be large and set to be located on public land.