Solar firm Suntech to shut plant in Arizona

Updated: 2013-03-13 10:50

By Yu Wei in New York (China Daily)

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Move helps struggling company hurt by tariffs and oversupply

Suntech Power Holdings Co, one of the world's biggest makers of solar panels, will close its only US manufacturing facility next month, the Chinese company announced on Tuesday, a week after its founder was ousted as chairman.

American depositary shares of Suntech fell 6 cents, or 5.2 percent, to close at $1.09 on Tuesday on the New York Stock Exchange following the news. Two years ago, the ADRs were trading around $8.

Suntech blamed the April 3 closing of its first and only US factory, in Goodyear, Arizona, on higher production costs "exacerbated" by US tariffs on Chinese-made solar cells and aluminum frames as well as global oversupply.

The 43 employees at the plant will be laid off, the company said.

It said the decision was "in line with" Suntech's global effort to cut operating costs by 20 percent this year.

"Rationalizing production capacity is necessary to improve our manufacturing utilization and help Suntech to return to profitability," CEO David King said. "We're hopeful that these tough decisions will help put Suntech back on track for growth."

The plant near Phoenix opened in October 2010 and was once expected by company executives to be capable of producing 120 megawatts' worth of panels each year, to help meet growing demand in the United States. However, the facility reached peak production of 50 mW a year in 2011. In November, Suntech, citing the oversupply problem, scaled back Goodyear to only 15 mW and laid off workers, who at one time numbered about 100. It also reduced capacity at its base in Wuxi, in eastern China's Jiangsu province.

Suntech has been hit hard by shrinking demand for its products since the European Union and the US imposed anti-dumping and anti-subsidy tariffs against the company and other Chinese solar-panel makers last year. The US International Trade Commission in November voted to slap unilateral tariffs of 36 percent on Suntech solar cells, a panel component, made in China.

Those tariffs, along with US duties from 2011 on aluminum frames used in panel manufacturing, made it "more challenging" for Suntech to profitably produce panels in the US, according to the company's statement.

The local government in Goodyear, a city of about 65,000 residents, attributed Suntech's move to the US tariffs, according to a statement carried by Phoenix media.

"It's no coincidence that this decision comes on the heels of the International Trade Commission's decision last November to impose heavy tariffs on solar cells and aluminum frames, greatly impacting Suntech's ability to remain competitive," the statement read.

Officials at the Goodyear factory couldn't be reached to comment.

According to Soft6.com, a business news website in China, production capacity at Suntech's Wuxi headquarters has been trimmed to about 30 percent of the original while the work force has been reduced to fewer than 5,000 from more than 10,000 previously.

With the industry weakened, last week's replacement by the company board of directors of founder Shi Zhengrong as executive chairman added to doubts about Suntech's future. Shi, who remains as a board member and the chief strategy officer, was succeeded by Susan Wang, who had been a director.

yuwei12@chinadailyusa.com

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