Evergreen Solar (ESLR) Considers Outsourcing

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08:56:14 am on February 9, 2009

According to PV-Tech.org, Evergreen Solar is considering outsourcing some of its production to Asian subcontractors to cut costs. This move would allow Evergreen to address its current backlog in orders and move forward with expansion plans while reducing its need for capital. 

Evergreen Solar’s President and CEO commented on the possibility of outsourcing during the company’s 4th quarter earnings call:

“Using a subcontractor would significantly reduce our need for expansion capital, while allowing us to meet our sales expansion goals,” noted Feldt. “For example, we have stated that our next factory, built in Asia, would cost about $1.50 per watt to build or about US$225 million for 150 megawatts facility. Under the subcontract manufacturing arrangement we could reduce our capital needs by about 75%, meaning we will be about US$56 million instead of US$225 million and still meet our sales goals in 2010."

“Some (EMS companies) have facilities that are already built and require modest capital to retrofit our cells and panel… some have volunteered to front the enormous money capital cost. So we do not have a deal yet but we are in discussions with a few subcontract manufacturers and the discussions are pretty serious and they are pretty enthusiastic so we think that offers us a real opportunity,” remarked Feldt.

Although Feldt initially said that outsourcing further capacity expansion would mean module production rather than ‘String Ribbon’ production, the executive conceded under numerous analyst questions that Evergreen had not ruled out complete outsourcing for its expansion plans, considering the keen interest for EMS companies to work with the company.

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