Date: 05-Sep-11
Country: GERMANY
Author: Anneli Palmen and Christoph Steitz

The company sign of Solarworld AG is pictured at their headquarters in Bonn in this November 19, 2008 file photo.
Photo: Ina Fassbender

SolarWorld, Germany's No.2 solar company by sales, will shut down production at one of its U.S.-based solar module plants, looking to cut costs in response to falling prices, demand and tougher competition that squeeze margins.

The company said on Friday that while it would retain and further strengthen sales and distribution at its site in Camarillo, California, production would be pooled at its plant in Hillsboro, Oregon.

Europe's solar companies have looked for growth abroad as governments in Italy and Germany, the world's two largest solar markets, cut back support for the sector.

At the same time, they are desperate to cut costs as Asian rivals eat into their markets, helped by lower production costs and better financing conditions.

"With this, we will continue to keep our wage cost share at below 10 percent," SolarWorld's Chief Executive Frank Asbeck said in a statement.

"It means that we offer quality from Germany and quality made in the U.S. that is competitive with the Far East."

SolarWorld did not say how many jobs would be affected by the closure of production at Camarillo, which it had acquired as part of its takeover of most of Shell's solar activities in 2006.

According to industry group EPIA, the United States could become the world's third-biggest market this year.

(Writing by Christoph Steitz and Maria Sheahan)

© Thomson Reuters 2011 All rights reserved