Solyndra, a U.S. Solar Company known most recently for receiving a federal loan guarantee of $535 million from the Department of Energy, is closing down and filing for Chapter 11 Bankruptcy.
The Company released a statement on August 31st to announce that “Solyndra LLC, the American manufacturer of innovative cylindrical solar systems for commercial rooftops today announced that global economic and solar industry market conditions have forced the Company to suspend its manufacturing operations.”
The Fremont, California Company, known for its innovative solar technology, had to lay off its 1,100 employees immediately. One employee reports that he was met by a security guard and told to go home. This is so devastating because the Obama Administration considered Solyndra a prime example of how green technology could offer jobs in this economy. Obama had even visited the facility in May of last year and said, “it is just a testament to American ingenuity and dynamism and the fact that we continue to have the best universities in the world, the best technology in the world, and most importantly the best workers in the world. And you guys all represent that.”
So what happened to the $535 million federal loan? Solyndra used the money to build a new $700 million factory just last year. Additionally, Solyndra had raised almost $1 billion dollars in private funding. Solyndra showed signs of their struggle last year when they closed an older factory and were forced to lay off employees. The Company then showed strong growth in the first half of 2011 and had plenty of orders for large projects. Unfortunately for Solyndra, they could not fill the orders or achieve full-scale operations quickly enough to keep up with global competitors.
Their biggest competitor was China, who has been competing with the U.S. in the technology market for many years. While the innovative technology was created in the U.S., foreign companies have picked up on the production techniques and are able to offer lower costs products. We saw this with TVs, VCRs and DVD players throughout the years. The foreign competition has less research and development invested into the project, allowing them to drop their price, sometimes significantly. Not only did the competition undercut the global price of Solar panels, but it flooded the market with too many panels, which led to a severe compression of prices.
So what’s next for the Company? Solyndra must figure out what to do with its intellectual property and assets. Since they are filing a Chapter 11 Reorganization and have already closed their doors they will most likely either license their technology or sell the company altogether.
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