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World’s Largest Solar Panel Manufacturer Suntech Declares Bankruptcy in China
Suntech was once the world’s largest manufacturer of solar panels – but the company was just pushed into bankruptcy after defaulting on $541 million in bond payments. The company was a powerful force in China’s renewable energy market, generating 2.4 gigawatts worth of solar modules in 2011 alone. But the company faced a rapid decline as solar panel production in China increased tenfold over the past five years, causing prices to drop by as much as 75 percent. And that’s a small piece of a global problem in the industry—while year-on-year solar demand continues to grow, production capacity has far outstripped demand, putting Suntech in the company of Solyndra, German Solar Millennium, and a number of other solar manufacturers in Europe and the US that have been forced to cut back production, file for bankruptcy protection or shut down altogether.
The failure of Suntech is undoubtedly devastating for employees and investors—but as Michael Graham Richard at Treehugger points out, solar panel manufacturing is far from the first burgeoning industry to be hit by this type of problem. Quoting Warren Buffet, Richard points out that there have been over 2,000 automakers and around 300 producers of aircraft in history, with a very small portion still operating today. Similarly, 129 airlines have filed for bankruptcy in the last 20 years alone. While all industries have faced major issues, none of the industries have wholesale failed—rather, successful companies have emerged, survived and generally beat out the competition.
Of course, the solar industry has its own financial peculiarities that have led Suntech and others to collapse. In the case of the Chinese solar giant, Suntech was plagued by not only a global glut of solar panels, but also by Western tariffs on their products. Other large solar panel companies in China may also find themselves struggling in coming years; the New York Times notes that as prices fell, “Chinese manufacturers lost as much as $1 for every $3 of sales last year,” and the Chinese government is considering axing subsidies to larger companies in favor of smaller start-ups and projects that serve rural areas with power shortages.
In the meantime, Suntech is continuing production, and while Chinese banks may be pushing the company into bankruptcy over their substantial debt, it is still possible that the company will emerge.
Images courtesy of Suntech
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