REC Silicon lays off estimated 70 employees

MOSES LAKE — The indications were there in July when REC Silicon scaled back operations at the Moses Lake facility. On Wednesday, it took cost-cutting measures to the next level, laying off an estimated 70 employees. Qualified employees were offered an optional early retirement incentive, others were laid off. According to a company statement, the ongoing trade dispute between the United States and China, restricting REC Silicon’s access to polysilicon markets in China, primarily led to lower third quarter revenues. “We offered early retirement incentives to employees that qualified last week, before we did any layoffs,” Director of Investor Relations and Global Sourcing Chris Bowes said in a telephone interview from London. “If market conditions change and we do start (Silane IV plant) back up, we could do a call back.” The company had reduced its Fluidized Bed Reactor (FBR) technology at its facility in Moses Lake last July by 2,000 metric tons annually, and warned in late September it would be forced to shut down FBR production entirely if Chinese duties on U.S. polysilicon were not lifted. REC Silicon reduced its production capacity utilization to about 50 percent, stopping production at the Silane IV plant in October, according to its third quarter revenues report. The Silane III plant is continuing to operate. “The Moses Lake facility is a world-class facility and we can compete with anybody in the world because of the technology we use. Really, this is about access to all markets,” Bowes said. “We don’t have access to the Chinese market because of the trade war and that has essentially shut us out. So it is imperative to get that resolved.” The Chinese government imposed duties in 2013 in response to the American tariffs imposed the previous year on imported solar panels. The negotiations between the countries have been ongoing ever since. It is not known when the dispute might be resolved, according to company officials. With the ongoing trade war, access to the world’s biggest consumer of polysilicon for US-based producers, primarily Hemlock Semiconductor and REC Silicon, is effectively closed. The dispute, combined with a drop in the price for Chinese-produced polysilicon, hurts the company’s ability to sell its products to new markets. "We have been successful in maintaining sufficient liquidity during this period of market disruption. Because of our efforts to control costs, I expect REC Silicon to remain a low-cost leader in the polysilicon industry, even at reduced production rates." said Tore Torvund, CEO. Moving to demand forecasts in 2017, the situation becomes increasingly disconnected, with polysilicon supply markedly below end-market demand to the tune of an estimated 28,000 metric tons.