News24

Solar plant closure hits German city

2012-04-24 08:26

Frankfurt an der Oder - The sudden closure of a solar panel plant with 1 200 jobs lost has devastated Frankfurt an der Oder, a small east German city that has become the symbol of an industry in decline.

In a region already scarred by high unemployment, the decision of US firm First Solar last week to mothball the factory in October has been greeted with anger and incomprehension in this city of 60 000 people near the Polish border.

"We knew that solar was under pressure and not just here but we were surprised that First Solar took such a radical decision from one day to the next," said the city's mayor, Martin Wilke.

"It's a bitter reversal of fortune," said the director of the regional employment office, Jochem Freyer, alluding to the fact that the city had until recently enjoyed a reputation as something of a solar industry boom town.

The news that Arizona-based First Solar was pulling the plug on its brand-new factory, situated on the outskirts of the city, came as a major surprise.

Competition

"Some colleagues found out through the media," said one employee who declined to be named.

In a statement last week, First Solar blamed worsening conditions in the sector for the decision, which also saw a factory closed in Malaysia.

"After a thorough analysis, it is clear the European market has deteriorated to the extent that our operations there are no longer economically sustainable," said Mike Ahearn, chair and acting chief executive.

Only six months ago, the firm opened a second factory here, doubling its capacity to manufacture its thin-film solar panels and investing a total of €170m ($223m).

But fierce competition from low-cost China and a gradual reduction in government subsidies has quickly cast a huge shadow over the solar industry in Germany.

Q-Cells, the top German maker of solar cells, announced earlier in April that it was filing for bankruptcy following a series of corporate failures in the sector.

Two other firms in the sector that employ people locally have also failed.

Unemployment

"The sky is full of dark clouds and we have to fear that it is going to get worse," said Freyer.

"The crisis in the solar industry is not a problem limited to the region but there are a lot of people here employed in the sector," he added.

With an unemployment rate of 14.6%, more than twice the national average, Frankfurt an der Oder could do without the implosion of an industry once seen as its potential saviour.

More than 27 000 people have deserted the city since the Berlin Wall fell in 1989, seeking work in the more prosperous west.

And the signs of decline linger over the city centre, full of discount shops and cheap eateries. People live in decrepit blocks of flats and countless houses lie abandoned.

Local businesses were battered by the entry of Poland to the EU in 2004.

Just across the city's eponymous river Oder lies the Polish city of Slubice, where vendors of lower-taxed cigarettes and alcohol have mushroomed, stealing customers from their German neighbours.

On the German side of the river, more than one in five are below the poverty line. Seventy percent of the unemployed have been without a job for more than a year.

"What's important for people is to have a job. The working conditions are less important," said Siegfried Wied, head of the local branch of the IG Metall union.

"At First Solar, people worked 12-hour shifts but they told us: 'We're just happy to have work'," he added.

Many employees were unwilling to express their views.

"They have experienced the same story since reunification" of Germany in 1990, said Wied. "Factories open and then close shortly afterward."

"Now they say: 'Leave us alone, we know how it works, we'll just go back on the dole.'"

Comments
  • Robin - 2012-04-24 09:16

    Seems like the solar industry (like the wind industry) cannot survive without massive government (and other) subsidies. I can see a gloomy future where many industries in the "first world" will have to close under pressure from the "Yellow Peril"

      Gungets - 2012-04-24 09:30

      Robin - you are right but possibly not for the reasons you think. Solar is not expensive - conventional (fossil fuel based, hydro, nuclear) is cheap. It is cheap because nobody is factoring in the clean-up costs of these technologies. The damage caused by fossil fuel based is socialised, meaning you pay for the damage and clean up via tax. In South Africa the medical effects are paid for by medical aids and insurance. The damage to infrastructure such as roads is paid for by levies on petrol, the looming toll roads etc. We have yet to start paying for the nuclear waste and risk - Japan is paying right now. Solar cannot compete without subsidy becaue the subsidy is visible - the subsidy for the other technologies is hidden. Yellow peril - yeah, well. That subsidy is hidden behind human rights and labour abuses, and the difference in standards between the West and China.

  • ludlowdj - 2012-04-24 09:34

    Western profit driven concerns will continue to fail against the so called "yellow peril" going forward with an inspected steady increase in the number of companies closing in any given month. Solar panels simply have not advanced to the point where they are viable as a permanent replacement for grid dependency. China's ability to manufacture and distribute high quality panels in large amounts at extremely low prices means that they will dominate this market going forward. Why should anyone spent R20 000 on an American or European panel when the same panel can be bought from China for R5000.00? When people like Bill Gates and other powerful and influential businessmen tell you that the Capitalist system has failed and that without a serious rethink of strategy western companies will fail at an ever growing rate its time to serious rethink the future.

  • Zing - 2012-04-24 11:16

    Cheap labour in China comes at a hefty price.

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