PV inverter manufacturer SMA Solar Technology said it would close production facilities in Denver, US, and Cape Town, South Africa on continued competition issues and consolidate global inverter production in Germany and China.
SMA Solar noted that it expected further intensification of product pricing pressure in 2017 as competition in the inverter market increases. The closure of the production facilities is intended to help reduce its fixed costs and enhance its competitiveness.
The inverter manufacturer has been losing market share since the slowdown in end-market demand in its previously core and dominant position in the German market and the emergence of several China-based producers such as Sungrow Power and telecoms giant Hauwei, to name a few in recent years.
The global PV end market demand could exceed 70GW in 2016, driven by strong growth in the US, which has around 10GW of utility-scale projects under construction, according to recent figures from GTM Research. SMA Solar had benefited from the US demand growth in the last two years as US competitors exited the sector due to aggressive pricing and evaporating margins.
However, the expected decline in end market demand in China, Japan and the US in 2017 is expected to lead to a period of overcapacity and ASP declines.
SMA Solar said that around 280 full-time jobs would be lost at the Denver facility when it is closed.However, SMA's sales and service facility in Rocklin, California, would remain in operation and be expanded.
Pierre-Pascal Urbon, CEO of SMA Solar said, "The acceleration of price pressure in the solar industry has been unexpectedly strong in recent weeks. We therefore immediately initiated measures to lower our break-even point even further. The closure of our production locations in Denver and Cape Town was extremely difficult for us. However, this step is unavoidable if we are to lastingly counteract the persistent price pressure and to achieve better production capacity utilization in China and Germany in the future. The American market remains highly important to us. We will be maintaining our presence at the Californian location in Rocklin with Sales and Service moving ahead as well, and we will further boost our leading position on the American market.”
The company has been reducing its headcount in Germany and internationally after announcing major restructuring just over a year ago, which included a 34% headcount reduction and in Germany around 1,300 jobs were planned to be cut, accompanied by 300 job losses from overseas operations.