BP Solar Restructures Manufacturing, Cuts Jobs

BP Solar, a unit of BP (NYSE: BP) yesterday announced plans to refocus its manufacturing activities globally, and to reduce its unit costs by 25% by the end of 2010. It aims to achieve this by accessing lower cost supplies, and by continuing to grow only its most competitive manufacturing worldwide.

As a result, module assembly at Frederick, MD will be phased out, and silicon casting, wafering, sizing and solar cell production will continue. The end of module assembly at Frederick will result in the elimination of approximately 140 jobs out of around 600.

"The decision is part of our long term strategy to grow our solar business by reducing the cost of solar power to that of conventional electricity delivered through a modern power grid, and in time without the need for government subsidy," says Reyad Fezzani, CEO of BP Solar.

The company also announced the closure of its cell manufacture and module assembly facilities in Madrid, Spain with the loss of approximately 480 positions out of 575.

In spite of the reductions, BP Solar said its total global manufacturing capacity is expected to increase in 2009 and 2010. In 2008 BP Solar signed a series of contracts with suppliers of wafers and cells to supplement its own manufacturing capacity. This has enabled the division to increase sales and lower costs, it said in a release.

"This comes at a time when solar markets are unsettled by the impact of the global economic environment, an over-supplied market and increased competition," Fezzani said. "While the long term fundamentals for solar power remain strong, soft demand, lack of available credit for many players, and substantial price reductions due to high inventories require us to respond to remain competitive. In this environment access to low cost manufacturing and supply is critical to our profitability and to serve a growing customer base."

In 2009 BP Solar has the raw material resources and capability to manufacture and sell up to 320 megawatts (MW) in modules, a 100% increase on 2008, the company said.

Commenting on the long term prospects for the US solar market, Fezzani added: "We believe that a growing market is the way to create material solar-related jobs–and three in every four of those jobs will be in downstream distribution, construction, installation, financing and other support services."

 

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