By Ted Sickinger and Mike Rogoway

The Oregonian/OregonLive

SolarWorld AG, the German parent of a major solar factory in Hillsboro, said Wednesday that it cannot cover its debts and will file for insolvency.

It's unclear what will happen to the company's Oregon operation, which taxpayers have supported with tax breaks worth tens of millions of dollars. SolarWorld Americas employs 800 on its 103-acre campus in Washington County, and is a big customer for a number of suppliers in the region.

Should the Hillsboro factory close, it would be the final blow to an economic development strategy hatched more than a decade ago by then-Gov. Ted Kulongoski to transform Oregon into a solar manufacturing powerhouse.

The company, citing "ongoing price erosion," said in a written statement that it "no longer has a positive going concern prognosis, is therefore over-indebted and thus obliged to file for insolvency proceedings." German insolvency cases are roughly analogous to corporate bankruptcy in the United States.

SolarWorld's chairman called the filing "a bitter step" for the company and the industry. "The next few weeks and months will now decide the future of Europe's ... key industry of photovoltaics," Frank Asbeck said in a written statement. "We will do everything we can to preserve as many jobs and as much production as possible."

SolarWorld's statement

"All employees of SolarWorld are owed great gratitude for the extraordinary fight we have waged during the past years and months for our company and for fair competition in the solar sector. At our sites, we have built up production that sets high standards in terms of quality, automation and productivity. We were the first to industrialize PERC high-performance cells and Bisun modules, the latter of which generate power on the front and rear side. Over the past five years, we have massively reduced our manufacturing costs and increased the power output and the life span of our products.

“SolarWorld has led the fight against illegal price dumping in the U.S. and Europe. However, this dumping has increased again. Chinese companies are undermining anti-dumping measures by the EU and the USA either by relocating production to neighboring countries in Asia or by other forms of circumvention.

“Prices for solar cells and modules have decreased dramatically since the middle of last year. Instead of an expected market stabilization, prospects have now also deteriorated for the coming months. In view of this development, the strategic measures taken at the beginning of the year are not sufficient to maintain the going-concern premise confirmed again in March. In this context, the Board of Management will immediately file an application for insolvency with the appropriate District Court (Insolvency Court) in Germany.

“This is a bitter step for SolarWorld, the Management Board, the workforce and the solar industry in Germany. The next few weeks and months will now decide the future of Europe's largest and most modern production in the key industry of photovoltaics. We will do everything we can to preserve as many jobs and as much production as possible."

-- Frank Asbeck, CEO and chairman of SolarWorld AG

For years, the company has been seeking trade protections from a glut of solar panels it says Chinese manufacturers are dumping on the U.S. market.

Western photovoltaic and module manufacturers have struggled amid collapsing prices and global oversupply. SolarWorld competitor Suniva, based in Norcross, Georgia, shuttered a Michigan solar manufacturing plant in late March, then filed for Chapter 11 bankruptcy protection three weeks later to reorganize.

Paula Mints, principal analyst with SPV Market Research, said the SolarWorld filing, in that light, was sad but not unexpected. She described the global pricing environment as "deadly" and said it was nearly impossible for any non-Chinese manufacturer to compete given the level of government support there.

Mints said the U.S. tariffs imposed on Chinese solar panels in 2012 and 2014 were too little, too late, and that the U.S. government had intervened without understanding the pricing environment. It will be very hard for any domestic manufacturer to successfully emerge from bankruptcy, she added, as prices for both solar cells and modules are still below the cost anyone can manufacture them.

"This is bad for the industry," Mints said. "There's no crystalline manufacturing left in the United States. When you have all the manufacturing migrate to one country or region, you lose innovation, you lose the ability to control quality."

This is not SolarWorld's first brush with financial difficulties. In 2013, it avoided insolvency through a reorganization in which much of its debt was swapped for equity, and it received an eleventh-hour injection of capital from Qatar Solar Technologies.

Jade Jones, senior analyst with GTM Research, said another cash injection could keep the company limping along, or it could consider a takeover by another supplier. Still, she said, oversupply conditions would persist and continue putting pressure on prices.

SolarWorld has complained repeatedly about "China's trade aggression" undermining domestic manufacturing. In an April 5 news release, it said that the Chinese have been employing an arsenal of price dumping, massive subsidization, cyber espionage and closed markets "as a battering ram to wipe out a U.S. industry and its employment."

SolarWorld said state-financed manufacturers in China have enough capacity to supply 1.3 times global demand, and had developed excess third country manufacturing capacity to circumvent existing duties. That's a principle reason, the company says, that the U.S. price of solar panels has dropped by more than 80 percent since 2009, from $2.09 per watt to 37 cents a watt today.

The company asked that the issue become part of the talks when Chinese President Xi Jinping visited the U.S. in early April.



Meanwhile, Suniva filed a petition last month with the U.S. International Trade commission seeking additional tariffs on imported solar cells and the establishment of a minimum price on imported modules. The requested tariff was 40 cents a watt on imported solar cells and 78 cents a watt on solar modules for a period of four years.



The commission's job is to determine whether imported modules and cells cause serious injury to domestic manufacturers and, if so, recommend a remedy. The president ultimately determines whether to proceed.

The deadline for the trade commission to respond to Suniva's petition is Oct. 23

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and any action from the president would typically take place within two months of that report. As part of its analysis, the commission will have to consider the impact of a price increase on domestic solar installers. That's generally seen as negative, and could argue against the imposition of new tariffs.

The Solar Energy Industry Association opposes Suniva's petition, saying it's looking to avoid damage to 9,000 companies and 258,000 jobs in other parts of the industry. "We will do everything we can to prevent the remedies proposed by Suniva from becoming reality," the trade association said.

The Trump administration has been a strident booster of increasing domestic manufacturing and jobs, but has not extended that urgency to renewable energy. Indeed, Trump's first budget proposal would slash federal spending on a variety of research and subsidy programs for renewable energy.



Last month, Energy Secretary Rick Perry called for his department to undertake a 60-day investigation into whether wind and solar power were destabilizing the grid and leading to the early retirement of coal plants. Meanwhile, Scott Pruitt, administrator of the Environmental Protection Agency, is bent on bringing back coal jobs that most industry analysts believe are gone for good.

SolarWorld bought its Hillsboro factory for $40 million in 2007. Built in the 1990s by Japanese electronics company Komatsu, the factory never opened after a downturn in the chip industry wiped out demand.

SolarWorld spent $440 million to overhaul the site, opening the 480,000-square-foot facility in 2008 with 250 employees. Oregon helped with energy tax credits and property tax credits that The Oregonian valued at $100 million in 2012.

SolarWorld's setback comes at a time of historic strength in Oregon's economy, with the state's jobless rate at its lowest point on record, 3.8 percent. Certain industries continue to struggle, however.

The state's manufacturing sector has regained only 60 percent of the jobs it shed during the Great Recession, for example, and the loss of several hundred SolarWorld production jobs in Hillsboro would exacerbate the sector's long-term decline.

Oregon once sought to become a leader in solar manufacturing, pumping tens of millions of dollars in subsidized loans and tax credits at a time into large companies like Sanyo and SolarWorld, as well as smaller outfits with little track record, such as the thin film solar manufacturer SoloPower and polysilicon manufacturer Peak Sun Solar.

The strategy has largely flopped, and state officials might even count themselves lucky that so many of the manufacturers they dangled incentives in front of went elsewhere.

Oregon has 4,509 jobs in the solar industry, according to the most recent census from the Solar Foundation. But only 1,200 of those jobs are in manufacturing, and SolarWorld accounts for two-thirds of them.

The solar installation and development business, by contrast, remains fairly strong, and is largely responsible for the 1,500 jobs the industry added in 2016.

Jeff Bissonette, executive director of the Oregon Solar Energy Industries Association, says it's good for the industry to have a flagship player like SolarWorld, with its major economic and technical footprint, in its back yard. He's hoping the U.S. operations will survive the insolvency proceedings in Germany, but says his group is aligned with the national association in opposing more tariffs.

"We're in a global market, he said. "Price is everything. We're in competition with fossil fuels, so we're trying to put the best price forward that we can."

–Mike Rogoway; twitter: @rogoway; 503-294-7699

–Ted Sickinger; twitter: @tedsickinger; 503-221-8505