Day4 Energy lays off one-third of workforce

Burnaby, British Columbia-based Day4 Energy (TSX: DFE) announced today a layoff of a 95 workers at its solar module manufacturing facility in Burnaby.

The layoff affected a third of the company's total staff. The workers will receive severance and human resource support, costing the company $700,000 in 2009, according to a statement from Day4.

That facility has 50 megawatts of production capacity. A company spokeswoman declined to say how the layoffs could affect production volumes. 

The solar developer and maker's staff reduction was necessary to "meet the new realities of the new solar economy," George Rubin, president of Day4 Energy, said in a release.

Day4 said there was strong demand for its products in Europe but wanted to avoid an inventory build-up. The cost of solar panels in dropping in Europe thanks to a growing inventory in Spanish ports (see Extra solar panels in Spain driving down prices). 

The company said it could reduce working capital costs and materials costs during the next couple quarters by reducing production.

"We are confident that with these changes we will be able to adjust our production to effectively and efficiently meet the best timing and geographical demand for 2009," Rubin said. "This will allow us to focus on those parts of the business that drive the highest returns."

Part of that streamlining involves outsourcing production. In December, Day4 signed a long-term agreement to outsource manufacturing of modules to St. Petersburg, Fla.-based Jabil Circuit (NYSE: JBL).

Jabil bought 48 MW of equipment that was originally planned to expand Day4's Vancouver facility (see Day4 Energy to expand with new plant). That equipment is expected to be fully operation by the end of the second quarter in Poland, where it will serve demand from the European market, the company spokeswoman said.

Day4 also said it was confident in its 55 MW of contracted sales for 2009.

Day4 is Canada's largest manufacturer of photovoltaic modules for residential, commercial and utility scale installations around the world.

Day4 Energy was listed on the Toronto Stock Exchange in December 2007 in a $100 million IPO.

In July, the company said it developed a design and manufacturing process for its Generation II solar cells with efficiency up to 19 percent on mono-crystalline and 18 percent on multi-crystalline silicon materials (see Day4 Energy boosts solar cell efficiency).

Day4 Energy's largest cell supplier is Germany's Q-Cells, but the company also receives cells from Gintech and Motech. The company spokeswoman said Day4 was not one of the customers Q-Cells was referring to in December when it announced half its customers delayed or canceled orders. Q-Cells then lowered its forecasts for 2009 because it had inventory it couldn't place elsewhere (see Bad news from Q-Cells spreads through solar supply chain).