Meyer Burger To Cease Production At Swiss Plant Under Reorganization

Meyer Burger Technology Ltd., a Switzerland-based PV manufacturing equipment provider, says it has initiated a cost efficiency program to optimize manufacturing costs and further concentrate its product portfolio. As a result, the production site in Thun, Switzerland, which currently manufactures equipment used in the wafer and module processes as well as for building-integrated photovoltaics applications, will be reorganized. All of the manufacturing activities in Thun are scheduled to be discontinued by the end of 2018 – a decision that is expected to lead to the loss of up to 180 jobs.

“The decisions to close down production in Thun in 2018 and to reorganize certain parts of our product portfolio were difficult to take, especially since it also affects many long-term employees of Meyer Burger,” says Hans Brändle, CEO at Meyer Burger, in a press release. “But this transformation and reorganization has become unavoidable and necessary to improve the group’s operating efficiency and to secure the future of Meyer Burger. We will ensure that the personnel measures are carried out in a fair, respectful and socially responsible way.”

The company says that, with a majority of PV wafers manufactured in Asia (largely in China), Meyer Burger will move its production of diamond wire saws from Thun to China during the course of 2018 in order to achieve more flexible cost structures, reduce delivery time and costs, and further increase customer proximity. (Notably, Meyer Burger discontinued diamond wire production at Diamond Materials Tech Inc. in Colorado earlier this year.) In its modules division, the company is going to focus its resources on establishing SmartWire Connection Technology (SWCT) as an industrial standard. The proprietary Busbar technology and JT laminator technology will be discontinued. For its solar systems division, which mainly addresses the Swiss market with its MegaSlate products for building integration, strategic alternatives are being evaluated. The panel production in Thun will also end during 2018.

According to Meyer Burger, existing manufacturing capacities at the Thun site are significantly underutilized, and transformation of the site is necessary to reduce this excess capacity and cost. The resulting measures will affect up to 180 positions mainly in manufacturing, logistics, purchasing and production planning in Thun over the next 15 months. An initial meeting with the employee representatives regarding the relevant consultation procedures has taken place.

Meyer Burger expects most of the transformation to be completed by the end of 2018. As part of the measures, the company will also assess solutions for production and logistics space no longer used going forward. In the future, the Thun site of Meyer Burger will be dedicated mainly to global sales and marketing, services, research and development, and headquarter activities.

Once the transformation program has been executed, the company expects a positive EBITDA impact of about $10 million on an annual basis (as of fiscal year 2019).

The implementation of the program will result in one-off cash-related extraordinary expenses of about $10 million for product transfer and personnel costs. Half of this charge is expected to be recorded in the 2017 and the remaining half in the 2018 financial statements. In addition, there will be a one-off non-cash related extraordinary charge of about $40 million, mainly due to a write-off of worldwide inventory, impairment on the building in Thun and impairment of intangible assets, which will be recorded to the 2017 financial year.

Meyer Burger says it confirms its outlook for net sales 2017: Based on the planned customer acceptances, as previously stated, the company expects net sales of about $440-460 million. As some of the extraordinary expenses in conjunction with the transformation program will affect the 2017 income statement above the EBITDA line, Meyer Burger says it has to adjust its previous EBITDA guidance for fiscal year 2017 to a level of about $5-15 million. Furthermore, the company says it also plans a reorganization of its Dutch subsidiary in Eindhoven, Netherlands, with business activities in ink jet printing solutions and thin-film encapsulation and about 75 employees (FTE), during 2018.

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