Evergreen moves production to China

DFN: What interesting to me, is Evergreen in the last couple of years, spent $M on building a plant in Massachusetts, demand is down, prices are down, yet their building another plant in China? Doesn’t make a lot of sense; perhaps their trying to set themselves up for lower cost of production and higher profit margin, for when the solar market comes back?

Also, the State of Massachusetts, offered to pay $23M (GRANT) to subsidize a new plant, in MA, China offered $33M (LOAN), sure the cost of labor is cheaper in China, I guess this was enough to swing the NPV on the business case proving this in to be positive? I’d be curious about how more positive it was, it be curious if there was in fact a business case.

There’s a lot of talk about leadership, and its decision like this one that speak to the quality of a company’s leadership. To me, it puts me on the fence in regards to Evergreen, and if I were looking at ‘investments’ in this industry, I’d also be evaluating other companies.

Evergreen Solar to Move Solar Panel Production from Massachusetts to China
Ryan McBride 11/5/09
http://www.xconomy.com/boston/2009/11/05/evergreen-solar-to-move-solar-panel-production-from-massachusetts-to-china/

[Updated and corrected—8:30 pm ET on 11/05/09]Marlboro, MA-based Evergreen Solar (NASDAQ:ESLR) said it will move its solar panel production from Massachusetts to China—dealing a blow to the clean technology economy in the commonwealth.

Evergreen plans to begin migrating the manufacturing of solar panels out of its Devens, MA, plant to a facility under construction in Wuhan, China, in mid-2010, the company announced in an earnings statement on Wednesday. A lull in demand for solar cells globally and other factors have caused the price of solar panels like the ones that Evergreen makes to plunge by more than 30 percent since mid-2008, when its Devens production facility opened, the firm said. However, the company said it does plan to continue producing its silicon wafers and cells in Devens. It will also produce the silicon wafers in China beginning next year.

An Evergreen spokesman was not immediately available for comment this afternoon, and it was unclear how relocating panel production would impact its work force in Massachusetts.

Manufacturing in China is intended to reduce overall production costs, and Evergreen said it is receiving a $33 million loan from Chinese government to help cover the expenses of moving into a new plant that the company will lease from a contract manufacturing firm called Jiawei Solar. Evergreen’s move may sting some Massachusetts politicians and taxpayers; the state committed $23 million in grants to the firm, behind considerable support from Gov. Deval Patrick and his administration, to support its manufacturing in Devens. And Ian Bowles, the state’s secretary of Energy and Environmental Affairs, said in a statement about two years ago when construction of the Devens plant began that “we are breaking ground not only on a factory, but on the commonwealth’s clean energy future.”

Evergreen said it will manufacture its “String Ribbon” wafers at the facility it is building and will own in China, and that the wafers will then be sent to the the plant that its partner Jiawei Solar is building to convert the wafers into solar cells, which are used to make solar panels. The worldwide solar panel market has taken a beating over the past year or so due to reduced government spending or subsidies for the products in Spain and Germany, both of which are big solar panel users, as well as lower-than-projected demand in other countries such as the U.S., according to a recent report by Lux Research, which has an office in Boston. [Editor's note: the above paragraph was corrected to say that Evergreen, not its Chinese manufacturing partner, will build and own the facility where its silicon wafers will be produced in China. There are also added details from the company about the overall production process.]

Ryan McBride is Xconomy’s correspondent. You can reach him at rmcbride, or follow him on Twitter at http://twitter.com/Ryan_McBride.

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