Order inflow is too low and production costs are too high was the message from Horst Piepenburg, who warned the 1,850 employees that massive layoffs are becoming unavoidable as the government aid to pay wages runs out at the end of the month. Just how many will be laid off is unclear, but it could be hundreds.
The downfall of the maker of photovoltaic cells and modules, founded in 1998, is a sad ending for what once seemed like a model innovative industry in the former East Germany.
At best, it seems there will be a chance to sell individual assets, such as the factories in Saxony and Thuringia, but even that could be challenging.
“Neither solar cell or module production makes any sense in Germany,” Warburg analyst Arash Roshan Zamir told Handelsblatt. “Production costs in Germany are too high. For that reason, I see no business model that could make Solarworld interesting to investors.”
At its peak, Solarworld employed 4,000 and had a stock market value of €4.6 billion ($5.2 billion). The firm was a beacon of hope in the depressed economies of the eastern states after Germany’s reunification in 1990.
Time to find a strategic investor for Solarworld is running out. Prospective buyers face not only the challenge of making a profit on the business, but would also have to take over €300 million in debt and the risk of $800 million in damages from a legal battle with the US silicon firm Hemlock Semiconductor.
Solarworld had €84 million in liquid assets at the end of April, but industry sources told Handelsblatt that creditors are insisting that be used only to keep production running. But that will be challenging, especially with significant layoffs.