Saturday, July 13th, 2024

World’s Largest Solar Company Announces Massive Layoffs: One-Third of Its Workforce to Go

Longi Green, the Chinese photovoltaic energy giant, is laying off a third of its 80,000-strong workforce, according to Bloomberg. The renewable energy company seeks to cut its cost structure in an environment marked by extreme competition and a price war. This move bolsters the job cuts Longi began in November when it started to dismiss thousands of people.

Beyond the problems of overcapacity and competition, Longi and the sector in China have faced other hurdles. Many firms have seen their exports to the United States delayed due to potential forced labor cases in the Xinjiang region. Longi saw its joint venture in Ohio, which was built with a partner, come under serious scrutiny following political tensions between Beijing and Washington.

However, while Chinese companies face the additional problem of US scrutiny, the sector as a whole is experiencing difficult times. Aside from a 50% price reduction by Chinese firms, which are feeling the impact of this offensive firsthand, other issues are shaking the sector. These include a drop in energy prices, mixed with high interest rates and delays in project permits. A perfect storm over their profitability that is hitting the entire renewable industry hard, but particularly the solar sector.

For Longi, financial pressures caused its net income to fall by 44% to 2.52 billion yuan ($350 million) in the third quarter of 2023. The company’s president, Li Zhenguo, said in October that the company “made a mistake” by not being aggressive enough in price competition with its peers and was likely to miss its annual shipping target. The company’s shares have fallen about 70% from their peak in 2021.

It’s not just Chinese companies that have completely shifted their focus toward layoffs given the drop in revenues. SolarEdge, for example, also announced the departure of 16% of its workforce, meaning it laid off 900 employees at the beginning of 2024. Aurora has laid off 20% of its staff, and Enphase Energy 10%. A recurring formula given the problems facing the sector.