The bad news continues to come for solar energy developers. First Solar (NASDAQ:FSLR) announced Tuesday morning that it would lay off 2,000 employees — almost a third of its work force — and close facilities, as part of cost reduction plans.
The company will reduce output of its thin-film solar panels, shuttering its Frankfurt, Germany, manufacturing facility, and stopping production on four lines at its Kulim, Malaysia, plant.
First Solar expects the restructuring to save between $30 million and $60 million this year and at least $100 million per year in coming years. It will record accounting charges of between of $245 million to $370 million arising from the planned shut down of facilities.
The cuts at First Solar follow the much-publicized bankruptcies of rivals Solyndra and Solar Trust of America.
American solar firms have faced rising competition from Chinese solar technology manufacturers. In fact, overproduction by Chinese companies, coupled with weak consumer demand, have sent solar panel prices down by as much as 50% over the last year, CNBC said.
Falling prices and low demand make solar stocks a lousy bet for investors.
“This is the first sign that you’re starting to see some capitulation by a major manufacturer,” Mark Bachman, analyst with Avian Securities, told CNBC. “We need to get some alignment between global supply and demand.”
Investors reacted positively to the news; First Solar shares were up about 9% in Tuesday afternoon trading.