Small Chinese Solar Manufacturers Were Decimated In 2012
Someone from ENF recently passed on the post below. It does a good job of succinctly presenting what was a rather huge solar story of 2012, so I decided to go ahead and repost it from ENF (with minor edits). Check it out:
2012 has been the most difficult year to date for Chinese solar manufacturers. Too many new manufacturers flooded into the industry in 2011, with the number of core solar chain producers (ingot, wafer, cell, and panel) rising from 807 manufacturers to 901 manufacturers.
This has resulted in a serious price crash as producers fought to keep their factories running. Prices that Chinese manufacturers were selling their crystalline panels in December 2011 stood at €0.68/Wp ($0.92) but by December 2012 that had plunged to €0.46/Wp ($0.60).
For thin-film panel manufacturers, the situation was even worse. Unable to lower their cost of manufacturing fast enough, they saw their average selling price actually become more expensive than crystalline panels. Chinese thin-film panel prices dropped from €0.63/Wp ($0.85) in December 2011 to €0.57/Wp ($0.74) in December 2012. Historically, most large customers would only purchase thin-film panels due to the cost being significantly lower than crystalline panels, and so, much of the thin-film industry has come to a grinding halt.
As profits vanished, many manufacturers went bankrupt. During 2012, the number of core solar chain manufacturers dropped from 901 to 704, with a particular drop among panel manufacturers from 624 manufacturers to 454 manufacturers. In addition, a further 180 core chain manufacturers went to sleep, meaning that there are now only 524 currently operating manufacturers (a drop of 42% since 2011).
In the Chinese solar industry, a small manufacturer will generally only take a customer order if he can make a profit, and will generally not produce anything until a profitable customer is in hand. So, when a bubble occurs and orders dry up completely, a small manufacturer will often just shut their gates and ask their employees to come back in the future when the industry is in better health. This phenomenon is excellent for the industry’s health – instantly sucking capacity out of the market as it becomes too bloated. So while the small players may have contributed to the solar bubble by jumping in without understanding global market supply and demand trends, they also act to remedy an unprofitable market.
2013 is showing signs of increasing demand – and as the solar winter ends, we should see the re-emergence of the small sleeping manufacturers.
About ENF: ENF Solar (www.enfsolar.com) is a solar market research company that actively interviews Chinese solar core chain manufacturers throughout the year. It also publishes a free online directory of all solar companies in the world.
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‘Being laid off’, to be precise.
It sounds so simple in China, and it probably is. When 20 million Chinese migrant workers lost their jobs in the 2008 crash, they were “absorbed” back into their rural infrastructure, until manufacturing recovered. In the west, when we lose our jobs, we dont have a “family paddy field” to tend to until times get better. We lose our homes and cars and hopefully find a family member who would reluctantly offer a place to stay. How ironic that China offers a better manufacturing model – in good times, and in bad times.
Probably won’t last in China. China will most likely go in the same large scale agricultural direction as the US. All over Asia small family farms are being absorbed into larger operations.
no mention of US anti-dumping tariffs
The Chinese government giveth. The US government taketh away.
Bottom line, too many people got into the panel manufacturing business Manufacturing capacity exceeded demand. The least efficient manufacturers are getting pushed out.
This is something that happens as new products mature. Over 150 computer manufacturers failed, some were major players in the field for a while.