About 700 people will be laid off, a message to shareholders on Tuesday said. Third-quarter revenues of 3 billion kroner ($543 million) were not enough to stave off closures, and management used the occasion of its quarterly earnings release to deliver the bad news.
The company had been curbing Norwegian production of solar cells in line with a world surplus, but faced an uphill battle against labour costs and the shortage of lending to its European customers.
With just its newest Norway plant surviving the cuts, investors turned on the company and its stock fell nearly six percent in morning trading to 5.96 kroner.
REC’s 775-megawatt-a-year solar wafer plants at Herøya and Glomfjord and its solar cell plant at Narvik (180 MW) will be shut down. Contract earnings are expected to cancel out the cost of shutting down the plants.
Though partly expected, the news of a complete shutdown for three plants comes as a shock after the company had trimmed a 6.2-billion-kroner loss from this time last year down to 445 million kroner.
The layoffs mean REC production in Norway is cut in half, although in an online presentation, company president and chief executive Ole Enger warned it might not be the end of Norway cuts.
“It’s regrettable, but a necessary measure in today’s market situation,” Enger said, adding, “We’re working now to regain our competitive power at the remaining Norwegian plants.
Once one of the largest solar players, REC’s enterprise value had fallen to fifth place behind Wacker, First Solar, GCL Poly and MEMC. Much of that value was debt, and those four rivals are now nearly debt free in a lending-tight world.
The cuts followed earlier layoffs in Glava, Sweden, although the company’s prized Asian plants are not expected to declare redundancies.
The Norwegian cuts mean a loss of 45 percent of REC’s wafer capacity.