SolarWorld will survive fiscal crisis, chief executive Frank Asbeck says [The Oregonian, Portland, Ore.]
(Oregonian (Portland, OR) Via Acquire Media NewsEdge) Feb. 06--In Germany they call Frank Asbeck the Sun King. The outspoken chief executive of SolarWorld, a Bonn-based manufacturer with a Hillsboro factory, has helped transform his country into the world's leading solar power producer.
The king now has a castle, having bought a 19th Century Rhine River chateau, where he'll base his charitable foundation. But the ramparts of Asbeck's business empire cracked last month, as prospects of drastic financial restructuring slashed SolarWorld's shares by 31 percent in a day.
Some stock analysts predict insolvency or sale. The company trimmed hours of its German factory workers. It's announced more Oregon layoffs, gradually reducing its Hillsboro work force from 1,000 to 725.
But Asbeck, 53, told The Oregonian in an interview by email that he fully intends to lead SolarWorld through the crisis that affects not just his business but solar companies worldwide as prices hit new lows. He blames manufacturers' woes on China's government, docked by U.S. trade agencies for subsidizing Chinese companies, which dumped solar panels at below cost in the United States. Importers of Chinese solar panels must now pay U.S. tariffs.
"Every day we fight hard against Chinese dumping, and our people are continuously improving our performance, too," Asbeck said. "We know our business plan is strong, but only if we can restructure our debt and halt illegal Chinese trade practices."
Among analysts, the rap on SolarWorld is that it has failed to differentiate its cells and panels from cheaper commodities made by competitors. Critics say SolarWorld's costs are too high because SolarWorld insists on manufacturing in Europe and North America instead of Asia.
Could it be that it's just impossible to manufacture economically in the West
"It is odd to receive such a question from the state of Oregon, where Intel operates several sites for factories," Asbeck responded. "Intel appears to be a going concern, no Our labor costs in Hillsboro and in Germany are about 10 percent of production costs. In fact, it is a big advantage to manufacture with high quality, environmental and social standards exactly in the market where you sell your products."
Lynn Frank, a solar industry consultant who headed the Oregon Department of Energy, backs him up.
"We demand family wage jobs, a safe and healthful workplace and environmental stewardship, but then conclude that products reflecting those values are too costly and choose by our investments to outsource jobs in countries that reflect none of those values," said Frank, president of Five Stars International Inc. "We decry the subsidy of solar and yet blindly accept the far greater environmental and economic subsidy of competing energy resources.
But Ocean Yuan, chief executive at Grape Solar Inc., a Eugene solar dealer, said the bottom line is that SolarWorld charges high prices for panels of average efficiency. Chinese companies can duck the U.S. tariffs, he noted, through a loophole that allows them to assemble panels in China from cells made in other countries.
SolarWorld is asking U.S. authorities to close that loophole. Meanwhile Asbeck has high expectations for decisions this spring by authorities in Europe on the company's request for tariffs on Chinese products there.
"The European market is still 10 times bigger," than the U.S. market, where tariffs are beginning to help, Asbeck said. "Therefore determinations there will have a much bigger consequence for all parties."
Asbeck said SolarWorld is not for sale. He said there are "no current plans" for more job cuts. In Hillsboro, the company is investing in innovation, developing improved products.
Asbeck defended SolarWorld as a good investment for Oregon taxpayers. The company opened the Hillsboro plant in 2008 on the promise of about $100 million in incentives. It's received less than $30 million so far in Oregon tax credits, costing the state $42 million. But SolarWorld can exercise more credits.
"Oregon is an excellent location to manufacture solar technology," Asbeck said, "in part because such manufacturing ... can capitalize on deep background in silicon-based ... processes" used in the state's semiconductor industry.
Ultimately SolarWorld's fate and the future of its Hillsboro plant will be sealed far from Oregon in European financial negotiations. The company's latest results aren't yet public, but even by Sept. 30 finances looked grim.
With $1.4 billion in debt, SolarWorld lost $322 million before taxes during the first three quarters of 2012. It generated some cash during the period by reducing inventories and receivables, and by getting more prepayments from customers.
But with debt and dividend payments totaling $358 million during the period, SolarWorld burned through nearly 60 percent of its cash reserves. The company finished the third quarter with $316 million in cash, down from $751 million at the beginning of its fiscal year. Asbeck says that about the same amount of cash remains today.
SolarWorld is hardly alone in its predicament. Solar companies continue going bankrupt worldwide. Some of China's solar giants are barely standing, despite the heavy government subsidies.
Asbeck aims to outlast them.
"I'm confident," he said, "that even the communist government doesn't want to burn money infinitely."
-- Richard Read twitter: ReadOregonian
(c)2013 The Oregonian (Portland, Ore.)
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