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Sunday Extra: Interview with Dr.-Ing. E.h. Frank Asbeck
Interview on strategy
Mr. Asbeck, how does SolarWorld aim to counter the growing competitive pressure in the solar sector?
SolarWorld stands for premium quality made in Europe and made in the USA, for long service life and efficiency. We have always set ourselves apart from the competition with close customer loyalty and particularly high-quality products. This strategy remains true. This is the only way to get rid of cheap products from China and elsewhere.
However, we need to focus even more. In the past, we have continuously expanded our product portfolio. In addition, our close-by production sites in Germany still have many redundancies with its two integrated production lines. We will change this in order to achieve economies of scale, reduce costs, and redeem the customer promise with each module we produce: Whoever buys SolarWorld, gets high performance – always!
For this you now rely fully on monocrystalline silicon technology. Why?
Monocrystalline solar cells and modules are superior to multicrystalline technology in performance and aesthetics. Here, we also see the greatest efficiency potentials for the future. With the introduction of mono-PERC technology into our mass production, we are already achieving module capacities of 300 watts and more, where, with multi-technology three years ago, we only had 250 watts.
What about other technologies such as heterojunction or perovskite cells you hear much about these days?
I think it's a good thing for companies to do research on these cells and wage technology competition. But I totally agree with our research company, SolarWorld Innovations: With mono-PERC and future developments, we will always be ahead in terms of cost and performance.
What happens with multicrystalline production at SolarWorld?
Here, we had to decide. Existing orders for 2017 will, of course, still be delivered. In the future, cells and modules will be manufactured only on the basis of monocrystalline wafers. To achieve this result, we are increasing the production of mono-ingots in Arnstadt (Thuringia, Germany). We are upgrading our wafer production in Freiberg (Saxonia, Germany) to diamond wire saws and are continuing our PERC expansion.
You want to give up cell production in Freiberg. Many employees cannot understand this.
Our staff in Freiberg’s cell production (formerly Deutsche Cell) has done great things in recent years and have achieved excellent output in a confined space.
That is why I understand that the displeasure is great. But we have to concentrate on production and cannot produce everything at both close-by locations. At the end of the day, this is too expensive.
Our competitors are located in Asia and building enormous manufacturing units funded with state money. Facing this, we cannot compete using cell production split between two sites.
In Arnstadt, we took over Europe's largest cell-making facility from Bosch three years ago and have consistently increased its output since then, with the help from Freiberg employees.
That is why only Arnstadt can be our cell site in Germany. Conversely, this applies to module production. This should be located at Germany's most modern module factory, in Freiberg. That is why we will shut down the considerably smaller module production in Arnstadt.
Will you continue offering glass-film modules as well as glass-glass modules?
Yes, the majority of our customers traditionally relies on glass-film modules. But the demand for our particularly resilient glass-glass modules is increasing. In combination with PERC and our further development, the glass-glass module becomes a bifacial module.
Customers who have a suitable surface and use the original SolarWorld mounting system not only will have one of the most stable solar modules in the world with a 30-year performance guarantee and a 20-year product warranty, but can also benefit from the extra yield from solar radiation on both sides.
What effects do the changes in production and the product portfolio have on employee numbers?
Focusing on mono-crystallization and shifting cell production from Freiberg and module production from Arnstadt will lead to staff reductions.
At the same time, the further ramping up of crystallization in Arnstadt will create some new jobs. In addition, the reduction of product categories also saves overhead expenses.
Overall, SolarWorld has been working with a significantly higher overhead in the past years than many competitors. We therefore will reduce costs and staff.
In total, we expect to reduce around 400 full-time employees over the next two years, roughly in equal parts in production and overhead. We are currently discussing appropriate measures with the works council.
In 2016, SolarWorld had losses. Are the measures really sufficient to make the company profitable again?
In the first half of 2016, we had full order books and our production lines were fully utilized. Our operating figures were positive again in the second quarter. Like all of our competitors, we were caught without warning by China’s decision to virtually bring its market to a standstill and to channel the country’s overproduction of solar modules completely into export markets. And again, this was done at dumped price levels, which means below production costs.
Consequently, prices rapidly declined by 20 to 30 percent. Like many other manufacturers, SolarWorld was forced to reduce its production volume and to stimulate sales with special measures. That’s why the result for 2016 is negative. There won’t be a quick return to a more sustainable price level. The current recovery of the market and the expected decision to extend measures against Chinese dumping in the EU do help a little. The return to profitability, however, depends on our success to lower costs by exclusively focusing on products with outstanding quality and by taking measures in all areas. Apart from overhead and production, purchasing and the reduction of working capital have to be mentioned here. Some measures involve initial costs, which are planned in our budget. As a result, we are striving for a visible positive EBIT in 2019 and to increase module shipments to about 2 gigawatts by then.
What are your expectations for the development of the PV market in the next years?
Worldwide demand will continue to rise, especially in markets that are, unlike China, open. The Chinese government set new, much lower targets for new installations, after the record increase in the first half 2016. This means that we will have to deal with Chinese dumping, although demand in other markets is growing. Asia, Europe, the Middle East and again the United States will be the strongest markets.
Will demand on the U.S. solar market really remain strong after the election of a new host in the White House?
Even or especially Donald Trump can’t deny the economic reality that today solar is cheaper than any other energy source in large parts of the United States. What’s more, no other source of energy is more American than the sun, which is in ample supply there. Many initiatives that promote the extension of solar energy come from individual states, anyway. The administration in Washington couldn’t do much against that, even if it wanted to.
What about the site in Hillsboro?
In Hillsboro, we successfully produce monocrystalline PERC cells and modules made in the United States. We are aiming at providing for the U.S. market exclusively with products from Hillsboro. Of course, measures to focus and increase efficiency concern Hillsboro as much as the German sites.