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BP Solar closes Maryland factory, despite promising growth

BP Solar says its supply partners can now make solar modules more cheaply than its own in-house facilities

BP Solar closed its solar manufacturing plant in Frederick, Maryland, on Friday, with the loss of 320 jobs – despite achieving good growth in its sales.

The company said the move was part of a yearlong restructuring process for its operations, in which the company abandoned its own in-house manufacturing to cut costs and compete as the price of solar technology reduces worldwide.

It will now rely on the manufacturing efforts of supply partners and joint venture companies.

The company suggested its strategy would lead to a 45% cut in its costs.

The firm posted a 26% increase in sales last year, compared to a market average growth of 6% – and it expects sales to grow by more than 50% in 2010.

BP Solar, which has its head office in San Francisco, California, said it would retain its US presence in terms of sales and marketing, research and development and project development activities.

“Difficult”

Confirming closure of the plant, BP Solar CEO Reyad Fezzani said: “This was a difficult decision and we deeply regret the impact it will have on our employees and the community.”

BP had first revealed its plan to phase out the Frederick plant this time last year. Initially, 140 jobs were lost out the then-total of 600, as module assembly ceased. At the same time, BP Solar closed its manufacturing plant in Madrid, Spain.

Friday saw the end of wafer and cell manufacturing at Frederick.

Some 110 staff from the Frederick site could now be relocated, but the remaining workers leave with the promise of pay for three more months followed by severance packages and the offer of help to find new jobs.

Commenting on the closure of the plant, Maryland Governor Martin O’Malley said: “The closure of BP’s manufacturing arm in Frederick, MD will impact hundreds of workers and their families, and I have directed rapid response teams at DBED and DLLR to immediately begin reaching out to impacted workers and their families.

“These state agencies will work closely with local officials and representatives from BP Solar to make sure impacted workers have access to all available resources, unemployment insurance, and job training,” said Gov. O’Malley.

Solar prices

Mr Fezzani said solar prices had declined by 40%-50% since the onset of the economic slow-down,

He explained: “By shifting our supply to a high quality, low cost supply base to serve both distribution customers and large scale projects, we have strengthened our position as a provider of competitive solar solutions with our offer of the highest lifetime value.”

The BP Solar chief said his company was actually scaling up its supply chain as the global and US markets grow. He said the US market was forecast to reach 3 gigawatts (3,000 megawatts) a year by 2012.

The company recently completed the largest US rooftop solar installation at FedEx Ground’s Woodbridge, NJ facility, and 17 rooftop installations at Wal-Mart stores in California. Construction will begin later this year on the largest solar installation in New York state (32MW) for the Long Island Power Authority on the grounds of Brookhaven National Lab.

The closure of BP’s manufacturing arm in Frederick, MD will impact hundreds of workers and their families” - Maryland Governor Martin O’Malley

Mr Fezzani suggested that 70% of the solar industry jobs are now in design, installation and maintenance. The company is launching its Certified Installer Program in the US, with plans to expand the program as the market grows.

Mexico

BP Solar has been outsourcing its solar manufacturing activities since 2008, when it took on a number of partners initially to supplement its own production. It has since decided that the outsourced operations offer cheaper sources of solar modules.

Back in January, BP Solar announced that Jabil Circuit, Inc., would assemble its solar modules at its plant in Chihuahua, Mexico, from the second quarter of 2010.

Under the arrangement, Jabil Circuit will assemble various BP Solar-designed modules for residential, commercial and utility projects in North America.

Jabil Circuit, which has its corporate HQ in St Petersburg, Florida, had already been making BP Solar modules in its Polish plant for BP Solar’s European customers.