They were living the good life. Solar energy companies were posting impressive stock gains, successfully winning county, state and national grants and securing local and state loans. Money flowed freely.

Then, with little warning, it all changed. The solar industry, with its unlimited growth potential, began to struggle. Local, state, national and international circumstances changed.

European countries failed to renew their solar energy subsidy programs, Asia entered the production process and federal, state and local political party leadership changed.

Global demand dropped and the increase in panel-producing companies and factories glutted the marketplace with efficient solar panels at significantly cheaper prices than just 12 months earlier.

The drop in panel prices globally saw U.S. solar energy company stock prices plummet almost as quickly as they had risen from 2007 through 2008. Companies responded by restructuring their organizations and tweaking their mission statements, CEOs stepped aside or were fired, companies scrambled to expand their traditional markets and cut their workforces, and one company began to introduce new, innovative products using solar energy to power cellphones, campers, boats and military equipment.

Scientists, engineers and technicians in research and development departments pushed their creative limits to develop new, more energy-efficient technologies. They had to increase solar panel gigawatts cheaper and more efficiently.

What happened to the solar energy industry?

Simply speaking, life happened.

Changing technology

As early as May 31, 2009, reports surfaced that the once-rich European market was quickly disappearing. Continued success for solar panel-making corporations meant deciding whether to continue with the traditional 6-inch cell-shaped wafers made of polysilicon — an expensive man-made crystal requiring a time-consuming process — or shift to the thin-film process of applying a thin coating of chemicals to glass or other surfaces.

The four Greater Toledo-area companies were all using the newer thin-film technology methods by 2009.

The thin-film process requires fewer raw materials and is cheaper than traditional wafer panels, which rely on polysilicon. In 2009, the cost of polysilicon, the main raw material in traditional wafer panels, rose as high as $500 a kilogram (about 2.2 pounds).

Although thin-film technology advocates were in agreement that cost prohibited the use of polysilicon, they differed on which chemical coatings would yield the most efficient panels suitable for mass production. One coating First Solar was using, cadmium, caused significant concern among research and development teams. Critics cautioned against using cadmium because it could cause cancer, although officials at firms using the cadmium technology, including First Solar, insisted that their production methods guarded against cancer-causing environments.

Thin-film technology advocates pointed to significant production time advantages of cadmium. The cadmium coating process took much less time and First Solar’s process was much more cost-effective because it used only one percent of the chemical compound used in traditional wafer panels.

By 2011, cost concerns won. The technologies of the Toledo-area solar firms set them apart from all other solar companies globally; First Solar, Willard & Kelsey and Xunlight were all using the thin-film production process, even though, at that time, it was a relatively small segment of the overall industry.

Today, solar industry experts are questioning the wisdom of the Toledo-area firms’ decisions.

In a research note published May 4, Joe Osha, global coordinator for solar power for Bank of America Merrill Lynch, wrote, “A year ago, the question was when the inevitable recovery in thin-film would occur. Now it’s whether thin-film solar is viable as a business at all.”

China’s response

First Solar, the global leader in the newer thin-film production process, faced another challenge when China entered the solar industry business. In December 2011, Mike Ahearn, First Solar’s then-interim CEO, offered his observations about the supply of solar panels in a conference call with investors.

“Global production has effectively tripled over the last three years, as you know,” Ahearn said. “Two factors have enabled this to occur. First, entry barriers for manufacturing [the traditional 6-inch cell-shaped wafers made of polysilicon] evaporated several years ago when equipment suppliers effectively integrated process technology into turnkey production equipment. This enabled relatively inexperienced and unskilled operators to quickly enter the supply chain and led to an explosion of production capacity in China and elsewhere.”

China’s labor costs nosedived because, unlike First Solar, it did not need skilled labor to produce its product, which has traditionally been more energy efficient than thin-film panels. Before China’s introduction of what Ahearn called “turnkey production equipment,” consumers had to choose between energy efficiency and cost, and cost (thin-film technology) usually won.

China could now produce the more energy-efficient traditional wafers as cheaply as First Solar could produce solar panels using the thin-film process.

First Solar had lost its pricing advantage, and China’s model was easily replicated.

“If you look at polysilicon manufacturers (of traditional solar panels), they’re a dime a dozen out there,” said Mike Koralewski, First Solar vice president and site manager for the Perrysburg plant. “That just tells you that it’s the level of competency and education you have to have to get [First Solar’s] technology to work.

“Right now, if you wanted to make a polysilicon wafer PV plant, you can go to various vendors around the globe and actually buy an entire plant from them, and they’ll install it for you.”

Changes in demand

The issue of which company had the best technology took on increased importance as many panel producers were struggled with a supply glut and an international credit crisis that prompted customers to cancel orders and delay construction of solar farms.

“Globally, there’s been a kind of softening of demand,” said Monique Hanis, Solar Energy Industries Association spokesperson in Washington, D.C.

In addition to other developments, Germany, First Solar’s primary customer, reduced subsidies for converting energy systems from fossil fuel to solar power.

On Sept. 25, 2011, it was reported that although solar experts were saying the domestic market for thin-film panels was growing, Toledo-area solar firms were struggling to overcome hurdles at state, federal and global levels. In addition to the U.S. recession and an increasing number of global competitors, First Solar, Willard & Kelsey and Xunlight had to adjust production schedules as a result of Germany’s decision to abandon its renewable-energy policies and subsidies that had been helping drive U.S. sales.

Ahearn said the cut in subsidies was troubling for First Solar.

“Going forward, our goal is not just to survive the current environment but to transcend it by creating and expanding markets worldwide that do not depend on today’s subsidy programs,” Ahearn said. “This requires that we refocus our strategy and commit our resources to solving the pressing energy needs that exist in much of the world.”

Alan Bernheimer, First Solar’s public relations director, said, “The company is starting to make progress in these new markets, recently announcing 159 megawatts in Australian projects, in addition to a 10 megawatt project already under construction.”

Additionally, Bernheimer said in 2011 that 8 percent of First Solar sales were in India, another developing sustainable market.

A second Toledo-based company, SSOE, a privately held international engineering, architecture and construction management firm, gained notoriety for its work in the solar industry.

In its September 2009 issue, Inc. Magazine ranked SSOE among the country’s fastest-growing firms based on revenue from 2005-08. CEO Tony Damon cited three contributing factors for SSOE’s success: global expansions into high-growth markets; increased focus on delivering engineering, procurement and construction management services; and, most importantly, growing sections such as alternative energy.

However, predictions about fluctuating market demands caused additional concerns.

In December 2011, Tom Kimbis, vice president of strategy and external affairs for the Solar Energy Industries Association, said the intense competition among solar industry firms would produce four things: failures, mergers, acquisitions and bankruptcies.

Kimbis suggested the biggest problem firms faced was the loss of subsidies to finance large solar projects. Germany and Italy, the two largest European solar panel customers, had curtailed subsidies for new projects, thereby creating a glut of solar panels that resulted in the lowest solar panel prices ever.

Ahearn said First Solar adopted a five-point strategy to prevent potential failure: pursue new markets; improve its technology; adapt to customer needs; form better relationships with policy makers and regulators to promote large-scale solar deployment; and price its panels to drive demand without need for subsidies.

First Solar also planned to target five new growth markets: Australia, India, the Middle East, North Africa and the United States.

Analysts saw wisdom in First Solar’s strategy, suggesting that it was the best positioned of the Toledo-area companies to survive a fundamental restructuring of the global solar energy industry.

Bernheimer said First Solar has been successful in pursuing new markets. Just last month, First Solar announced three significant projects. It had been retained to build Australia’s two largest thin-film solar energy projects, to construct a 106-megawatt and a 53-megawatt project in New South Wales for power distributor AGL Energy Ltd. and to continue construction on Solar Ranch One power plant, a California project that is predicted to generate enough electricity to power 75,000 homes.

And when Fitch Ratings Ltd. reported in January that solar power companies were likely to encounter tough conditions for their public stock, First Solar responded by saying its competitors were “desperate” to sell inventory after adding too much factory capacity, leading to the current supply glut.

The week of July 16, Bernheimer suggested that “desperation” was still a problem because “there is still a supply and demand imbalance in the PV panel market.”

Bernheimer said this “desperation” has had a significant impact on the firm’s production workers, who make up the greatest percentage of First Solar employees.

“The supply/demand imbalance in Europe has affected our production associates in Europe, since we have announced the closure by year end of our manufacturing operations in Germany, with the elimination of about 1200 factory jobs there. In Perrysburg, by contrast, almost no positions were affected by First Solar’s restructuring,” Bernheimer said.

Xunlight has taken a completely different approach in dealing with changes in market demand. Rather than pursuing new markets, Xunlight is working to find practical applications for its technology.

On May 19, Dennis Kebrdle, Xunlight’s chief transition officer, introduced flexible solar panels for use on campers and boats as well as the roofs of buildings that can’t support heavier panels.

Kebrdle also announced that Xunlight obtained a $600,000 contract from the U.S. Navy.

On June 8, Xunlight introduced its go-anywhere power, a design Kebrdle called ideal for military personnel in remote locations who need power. The four flexible solar panels contained in the bag can be secured to the ground with stakes or fastened to another object through eyelets.

Xunlight’s strategy is to market its signature flexible solar panels to campers, boaters, the military and developing nations.

Fallout from Solyndra

After President Barack Obama beat John McCain in 2008, he set out to begin to repair the beleaguered economy. One of his solutions was The American Recovery and Reinvestment Act of 2009, a federal program that pumped $787 billion into the economy.

Opponents of the federal stimulus package criticized how money was distributed, and one business, the solar energy firm Solyndra Inc., became the poster child for critics determined to focus on the stimulus package’s faults.

Solyndra, which had received $535 million in federal loans, filed for bankruptcy in September 2011. As a result, the California solar energy company faces a U.S. Justice Department investigation, a congressional probe, and a mostly Republican contingent of lawmakers contesting any federal aid for other solar manufacturers. By Dec. 4, 2011, two other large U.S. solar companies, Evergreen Solar and SpectraWatt, joined Solyndra in bankruptcy, and a fourth, BP Solar, stopped manufacturing in the spring of 2011.

Republican presidential candidate Mitt Romney has turned Solyndra’s failure into a campaign issue.

In a speech given in front of Solyndra’s headquarters May 31, Romney said he intends to make “crony capitalism” a major theme in his campaign as well as a counter-attack to the Democratic Party’s emphasis on the worst-performing investments of Bain Capital during Romney’s time there.

A Romney ad uses First Solar as an example of Solyndra-like failure, and First Solar employees at all levels take exception to that portrayal.

Of First Solar, the ad states: “$3 billion in taxpayer-backed loan guarantees. Now they’re cutting jobs and their stock is near all-time lows.”

First Solar spokesman Ted Meyer acknowledges that jobs have been eliminated, but emphasizes that more than 90 percent of staff reductions were outside the U.S. First Solar has laid off 2,000 workers and closed its factory in Germany as well as closing down some production in Malaysia.

Meyer concedes that First Solar stock is “near all-time lows,” its price lower than it has been in more than six years. But it is not down to $4 per share, as a graphic in the Romney ad suggests. As of July 20, it was trading at $14.83 a share, down from its high of $301.30 in July 2008.

Meyer released a company statement about the ad.

“It’s surprising a candidate that claims to support U.S. economic growth would criticize a great American success story like First Solar. First Solar has proven that an American company can compete and win in renewable energy globally, and our success supports almost 10,000 American jobs, more than $1 billion in U.S. purchasing, tens of millions of dollars in exports, and record-setting innovation that reduces pollution and enhances U.S. energy security.”

Increased competition

Although solar experts said the domestic market for thin-film panels was growing in September 2011, Toledo-area solar firms were working to overcome hurdles at state, national and global levels. First Solar, Willard & Kelsey Solar Group and Xunlight faced serious issues in competition, including the economic uncertainty of the U.S. recession, an increase in worldwide competitors and the potential end of European renewable-energy policies and subsidies.

In December 2011, Ohio’s solar-panel industry experts predicted the industry would undergo a major shake-up that would break all but a handful of solar panel producers worldwide. The forecast raised questions about the future of the Toledo area’s three current panel makers, and the viability of a fourth one, Isofoton, coming in 2012.

Each area firm, First Solar, Isofoton North America, Willard & Kelsey and Xunlight, contended it would survive any shake-up because it made a particular type of panel that was both in demand and competitively priced.

Jifan Gao, chief executive of China’s Trina Solar Ltd., the world’s fifth-largest solar panel maker, predicted in late 2011 that by 2015, two-thirds of the industry’s solar-related companies would face either a merger, an acquisition or bankruptcy.

Gao also predicted that, by 2020, just 15 solar firms will be left worldwide, five in each one of three major segments: photovoltaic (solar) panels, solar energy, absorbing wafers and ingots, and production of raw materials such as polysilicon.

Ahearn of First Solar said his firm is prepared for any change, no matter how drastic.

“First Solar is transitioning from serving subsidized markets, such as Europe, to focus on sustainable markets, where high solar resource and strong demand for new generation make solar competitive with fossil fuel generation,” he said.

However, global industry pressures have affected First Solar, which responded by cutting its sales and margin forecasts to reflect slower demand growth and stiffer competition.

Xunlight responded to those same pressures by laying off 30 employees in May 2011, after an Italian firm delayed payment on its order.

Xunming Deng, then Xunlight CEO, was not disheartened, predicting that “We will be one of those survivors. Our products are unique and different and we’re starting at a much more premium price.”

Executives at Willard & Kelsey, who had planned to have two production lines and 250 workers by December 2011, said the U.S.’s poor economy and slow solar panel demand hindered the financing for its second line.

Mike Cicak, Willard & Kelsey’s chairman and CEO, remained optimistic as well. Cicak said the goal for his firm “is to get very, very low on cost and see what happens.”

Michael Peck, chairman of Isofoton North America, suggested that the lack of preparation in three key areas would be the downfall of most companies.

“Casualties will be those companies who have not introduced new technologies in a timely manner, whose cost structures are not competitive, and who have taken on too much debt to finance past performance due to sector challenges,” Peck said.

Peck said Isofoton North America, a Spanish company, chose to build its plant in the Toledo area because of the city’s cluster of solar firms and the research under way at the University of Toledo.

In addition to the disarray the U.S. industry faced with Solyndra, Evergreen Solar and SpectraWatt’s well-publicized bankruptcies, U.S. solar industry companies had filed a joint complaint in 2011 that China was dumping low-cost panels into the United States. The Federal Trade Commission ruled, Dec. 2 2011, that solar-equipment makers are being harmed by imports from China. The commission announced it would proceed with a full investigation, which, depending on its findings, might result in imposing added tariffs on China’s imports.

Asian competition

Few experts saw it coming.

The United States had been the leader in solar panel production in the beginning but by 2009, a Breakthrough Institute study indicated that China, Japan and South Korea were on the brink of outspending the United States 3-to-1 in all clean-energy investment through 2014. That same study also indicated that those three Asian nations had already passed the United States in “virtually all clean energy technologies.”

U.S. companies also complained that solar panel prices had been negatively affected by China’s flooding the world market with solar panels priced below production costs.

In mid-December 2011, First Solar’s Ahearn, then interim CEO, explained his firm’s position concerning the supply of solar panels in a conference call with First Solar investors.

“Global production has effectively tripled over the last three years,” Ahearn said. “Two factors have enabled this to occur.

“First, entry barriers for manufacturing polysilicon wafers and cells evaporated … when equipment suppliers effectively integrated process technology into turnkey production equipment. This enabled relatively inexperienced and unskilled operators to quickly enter the supply chain and led to an explosion of production capacity in China and elsewhere.

“Second, silicon feedstock constraints … were alleviated in recent years as additional feedstock capacity was brought on line by … suppliers. Feedstock availability brought down prices and enabled higher utilization rates for the nameplate production capacity. … The essential point is that the polysilicon supply chain has undergone a fundamental structural change.

“In a supply chain without structural entry barriers, several things occur. First, production volumes increase so long as capital is available to fund it, and we’ve seen over the past several years that U.S. equity markets and more recently, Chinese governmental entities have been willing to provide the capital needed to fund a massive production expansion.”

On May 18, 2012, the federal trade commission released a preliminary ruling that would add a 31 percent penalty on China’s imports. If the preliminary ruling is upheld, the 31 percent tariff could be imposed on Chinese solar-panel imports. A final decision is expected in October.

The tariffs would be in addition to fees ranging from 2.9 percent to 4.73 percent imposed in March after the Commerce Department found that China was improperly subsidizing its solar manufacturers.

Although U.S. solar panel-producing companies either support or maintain a neutral position on the tariffs, the majority of U.S. solar panel installers oppose them, arguing that less expensive imports have helped make solar panels more affordable for U.S. customers.

The ruling “will re-establish a natural balance in pricing that does need to occur in the global marketplace,” said SolarWorld President Gordon Brinser. He contends that the U.S. solar market has been harmed by cheap Chinese imports.

Jigar Shah, the leader of a coalition of solar companies that oppose U.S. tariffs, said he fears that additional tariffs will lead to the loss of thousands of U.S. jobs.

Brinser dismissed Shah’s forecast as “doomsday” talk.

Changes in leadership

As solar companies struggled to remain solvent, some organizations decided to make a change at the top.

On Oct. 25, 2011, First Solar’s CEO Rob Gillette resigned with no advance notice, and the company’s stock nosedived. First Solar stock had opened the trading day at $58.11 per share. It closed at $43.27 a share, a 25 percent drop in one day and the biggest single-day decline since the company’s initial public offering in November 2006. At $43.27, the stock was at its lowest level since 2007.

Ahearn, one of the company’s founders and its chairman, was tapped to serve as interim CEO. The extent of the shakeup became clear that day, as only one of First Solar’s top six corporate officers listed in the firm’s 2008 annual report remained with the company.

In a news release dated April 26, 2011, Ahearn explained the executive reshuffling.

“The board of directors believes First Solar needed a leadership change to navigate through the industry turmoil and achieve our long-term goals,” Ahearn wrote.

On March 8, 2012, Deng, co-founder of Xunlight, resigned as the firm’s president, CEO and chairman of the board.

In an email, Deng wrote that he would continue on as an adviser to Xunlightas needed by the board of directors. Deng also said he would continue as chairman and CEO of Xunlight 26 Solar, as well as chairman and legal representative of Xunlight Kunshan and its plant in Kunshan, China.

First Solar made another change May 3, 2012, when it announced that James Hughes, the firm’s chief commercial officer, would become CEO, replacing Ahearn, the interim CEO and company founder. Ahearn took CEO position after Gillette left the position.

“Jim [Hughes] has been instrumental in developing the strategic plan that will enable us to compete and win in this new era for the solar industry, and it became clear he is the right person to lead the execution of that plan,” Ahearn said. “Jim brings a wide range of experience that will be invaluable in leading our organization, having owned and operated utilities, built power projects, cultivated partnerships and led profitable growth in a wide array of key markets around the world.”

Willard & Kelsey’s replacement of CEO William Mitchell in 2009 was much less cordial.

Mitchell was fired. After being fired, Mitchell copied the firm’s records onto what he said was his computer’s external hard drive, including months of financial transactions, banking records and detailed expense reports Mitchell claimed showed Willard & Kelsey’s travel and entertainment expenses.

Mitchell hired a lawyer to facilitate using that information to pressure Willard & Kelsey executives into paying him more than $1 million he claimed he was owed as CEO and part owner. Mitchell told his lawyer he had been instructed by Cicak, current CEO and chairman of Willard & Kelsey, to make payments to company executives from money advanced by group of Italian investors.

Mitchell died in July 2011.

Cicak said he could not discuss the situation because Willard & Kelsey has litigation pending against Mitchell’s estate, with the intention of recouping money he said Mitchell owed the company. He framed his discussion of the situation with the claim that all of Mitchell’s accusations were the work of a disgruntled employee fired for just cause.

Workforce issues

Leaders of Toledo-area solar panel companies say they recognize how important it is to both the economy and workforce morale to be able to offer members of the region’s extensive displaced workforce a job.

In that spirit, Willard & Kelsey executives said in February 2011 that the firm expected to hire 600 to 700 employees in 2012 and 2013. Cicak and Mossie Murphy, the firm’s chief financial officer, said the company hoped to generate 3,000 to 4,000 jobs between 2012 and 2017 and open a second factory three times the size of the one on Progress Drive in Perrysburg.

Despite its optimism, Willard & Kelsey has not been able to meet its hiring goals. Cicak said he remains hopeful that his firm will begin a full production schedule sooner rather than later.

In August 2011, First Solar faced workforce concerns when it was forced to rearrange about 60 jobs in its Perrysburg manufacturing complex because of what a news release called “a shift in our production processes.” First Solar, which has more than 1,200 employees at its Perrysburg facility, “redeployed” about 5 percent of its employees at one production site, assigning the “redeployed” workers to different production site at the same Perrysburg facility. Matt Dills, vice president in human resources, emphasized that “no jobs were eliminated and no salaries were affected.”

Since then, Deng said, Xunlight has slowly climbed back, securing new customers and pursuing a partnership with another solar firm that could lead Xunlight to expand its production beyond traditional solar panels.

On Dec. 4, 2011, Toledo media took stock of the area’s solar industry employment records, reporting that First Solar was the biggest solar industry presence in Toledo area with 1,200 employees. Willard & Kelsey had 72 employees, and 40 of those 72 were laid off in January 2012. Xunlight, which had promised 181 jobs, employed 50. Isofoton North America, which is building a plant in Napoleon, plans to open at the end of July with 330 jobs.

In March 2012, First Solar announced it would fire about 2,000 workers worldwide. The firm promised no layoffs would occur among production employees at the Perrysburg plant, although about 30 members of what it called Perrysburg’s “corporate administrative staff” would be laid off.

Although company officials said Perrysburg facility workers are not included in First Solar’s plans to reduce global production throughout 2012, industry analysts suggest Perrysburg facility employees might have reason to worry.

The Perrysburg facility faces the risk of downsizing later in 2012, according to Gordon Johnson, managing director and head of equity research at Axiom Capital Management Inc.

Johnson suggested that delayed and/or canceled projects could result in layoffs in Perrysburg.

Bernheimer, First Solar’s public relations director, said the firm would decrease operations at facilities in Germany and Malaysia, delay plans to open a second U.S. facility in Mesa, Ariz., and abandon a plan for a facility in Vietnam before it would downsize at the Perrysburg plant.

Bernheimer said the Perrysburg facility was spared this time because “demand in the U.S. remains strong and we have 2.7 gigawatts of projects under contract with utilities.”

Money issues

First Solar reported $664 million in profit in 2010 on sales of nearly $2.6 billion for global operations. The firm does not provide figures for the U.S. market. Financial figures are not available on Willard & Kelsey or Xunlight because they are privately owned and are not traded on the stock market.

All three Toledo-area firms have benefited from federal and state money and tax breaks.

First Solar’s Perrysburg facility was approved in September 2011 for $455.7 million loan from Export-Import Bank of USA. First Solar also received $16.3 million in federal tax credits for expansions at the Perrysburg plant.

Willard & Kelsey has secured at least $19.5 million in aid while Xunlight has received nearly $50 million in aid.

The biggest expense in a solar project is the interest on financing, according to Jeffrey Pichel, industry analyst at Jefferies & Co. Given what Pichel called First Solar’s “excellent balance sheet,” Pichel said First Solar is in good shape to finance future projects.

Todd Nein, interim executive director of Ohio Air Quality Development Authority (OAQDA), said solar companies are struggling because of the global economic downturn, the loss of European subsidies and the overabundance of unrealistically inexpensive Chinese solar panels.

In October 2011, First Solar reported net sales of $1 billion in the third quarter, an increase of $473 million from the second quarter of 2011, and up from $798 million in the third quarter of 2010.

Third quarter net income per fully diluted share for 2011 was $2.25, up from $0.70 in the second quarter of 2011 and $2.04 in the third quarter of 2010.

In December 2011, First Solar forecast 2011 net sales in the range of $2.8 billion to $2.9 billion, down from its previous range for net sales of $3 billion to $3.3 billion.

For 2012, First Solar forecast net sales from $3.7 billion to $4 billion, including approximately $1.7 billion from its systems business. Diluted earnings per share were expected to be between $3.75 and $4.25 with consolidated income.

First Solar reported in 2012 that it expected to generate nearly $1 billion of operating cash flow and had plans for approximately $375 million to $425 million in capital investments.

On Feb. 29, First Solar reported fourth-quarter losses of $413 million, or $4.74 per share, compared with profit of $155.9 million, or $1.80 per share, in February of 2011.

On May 4, First Solar acknowledged its enormous cost advantage over its competition had disappeared. As a result, First Solar stock fell to about $18 per share, down from $140 per share in 2011.

Also, since the cost of raw materials for crystalline silicon panels had taken a nosedive, it became easier for these traditional, more energy efficient panels to compete on price with First Solar’s thin-film panels.

Xunlight got a financial reprieve on May 19 when it was awarded a one-year deferment in repaying its state loans. Xunlight owed the OAQDA payments of a little more than $193,000 in both February and May. However, it made an interest-only payment in February and failed to make its May payment, said Nein.

Although the missed and partial payments violate the terms of Xunlight’s loan agreement, the company was allowed to defer loan repayments for a year because of the progress it is making, Nein said.

In January, the state took notice that Willard & Kelsey had failed to live up to production and staffing goals its executive leadership had set when it was formed in 2008. Willard & Kelsey had been conditionally approved for more than $3 million in state tax breaks, but has not generated enough jobs to remain eligible for those breaks, according to Daryl Hennessy, assistant chief of business services at the Ohio Department of Development (ODD).

Cicak said his firm had laid off employees because Willard & Kelsey’s only assembly line was undergoing changes to produce more efficient solar panels.

Nein of the OAQDA said his agency has confidence in Willard & Kelsey because its executives have experience with First Solar.

Willard & Kelsey faced additional scrutiny earlier this year because it had also reduced payments on a five-year $5 million loan from the ODD. The firm was only paying about $7,800 a month to cover the interest on the loan, Hennessy said.

Cicak said he is looking into financial options, including finding another investor, to fund Willard & Kelsey’s operations.

“No, I’m not closing,” Cicak said Jan. 18. “I’m going to try and work my way out of it.”

Cicak said investors have sunk more than $100 million into Willard & Kelsey and he is determined to keep the firm afloat.

Stock prices

First Solar has ridden a stock market roller coaster since it went public Nov. 17, 2006. In opening-day trading, the stock closed at $28.30, a 41 percent increase on the opening price of $20 a share. The stock peaked 20 months later, when, on July 31, 2008, it closed at $301.30 a share.

First Solar’s closing price history, as reported by Market Watch, shows rapid growth from November 2006 to July 2008, and then a precipitous fall of $185.75 per share in just four months. It closed at $115.55 per share on Nov. 17, 2008, the two-year anniversary of its first public offering.

Since then, prices have fluctuated, all the while declining, closing at $123.99 on Nov. 17, 2009; $122.83 on Nov. 17, 2010; $45.61 on Nov. 17, 2011; and $14.83 on July 20.

Isofoton, like Willard & Kelsey and Xunlight, is privately held. None of the three are traded on the stock market or release their financial information.

Since July 2010, Isofoton has been part of the Affirma Business Group, which holds 80 percent of the firm’s ownership). Affirma’s expertise is in the development of solar projects. The other 20 percent ownership belongs to TOPTEC, a South Korean company that specializes in industrial automation.

Construction problems

In February, First Solar faced financial uncertainty when a construction delay threatened to cancel the sale of a large solar power plant it was building for Exelon.

In a filing with the Securities and Exchange Commission, First Solar said it has been unable to resolve a construction permit issue at the 230-megawatt Antelope Valley Solar Ranch One plant in Los Angeles County, Calif. The issue was blocking the distribution of funds from a $646 million federal loan guarantee intended to pay for the construction project.

First Solar sold the California project to Exelon for $75 million in September 2011. Under the terms of the sale, First Solar was obligated to buy the solar power plant back from Exelon if the funding for the loan was unavailable.

First Solar, which is in the business of constructing, not operating, solar plants, said that if it were required to purchase the solar power plant from Exelon it would still have enough cash to operate its business while the firm looked for another buyer.

First Solar is the only area solar firm in the business of building solar energy fields. Bernheimer said First Solar is “very much the (global) leader in building and developing these large, utility-scale solar generating plants, or solar projects.”

Bernheimer also said First Solar has seen an increase in domestic demand for solar energy field construction. First Solar has 25 construction projects, totaling 2.7 gigawatts of utility-scale solar projects, in various stages of development and construction in North America, all with long-term contracts to deliver power to utilities.

Twelve of the projects are in the “In Operation” stage: four in California, three in New Mexico, one in Arizona and four in Ontario, Canada.

Seven are in the “Under Construction” stage: five in California and two in Arizona.

Six are in the “In Development” stage: three in California and three in Ontario, Canada.

Drastic drop in prices

In 2000, the United States produced about 40 percent of thin-film solar panels worldwide. Ten years later, in 2010, the U.S. was producing less than 10 percent of said panels.

Decreased production was accompanied by an unexpected drop in panel prices. In September 2011, the solar association reported that the price of solar panels had declined 30 percent since 2010, the result of increased solar competition and falling silicon prices.

Despite the decline in price, Bernheimer said First Solar experienced sales growth in 2010 because it made what he called the most affordable panels in the world.

In 2011, solar panel prices decreased another 50 percent amid the global glut of panels, increased competition and governments’ reduced incentives for renewable energy.

As early as April 14, the average selling prices for solar panels had dropped another 10 percent from the record-low levels recorded in 2011. The drop in prices helped boost global sales and made solar power less dependent on subsidies to compete against fossil fuels. However, lower prices erased any profit among the region’s three manufacturers.

Analysts’ observations

In June 2008, solar industry analysts suggested that new competitors and high stock prices would cause First Solar problems.

Mehdi Hosseini, an analyst with FBR Capital Markets, lowered the rating on First Solar shares from hold to sell. First Solar’s stock was trading at almost $300 a share then, and Hosseini argued the price reflected unrealistic expectations about the firm’s future profit margins. He also expressed concern that First Solar could be forced to lower its prices to achieve its goal of selling plant-size solar-energy installations to U.S. utilities, and lower prices could hurt profit margins.

In 2009, stock analysts at Deutsche Bank Securities in New York predicted that panels made with cadmium would account for 13 percent of global production that year, up from 10 percent just a year earlier. Analysts attributed most of that to growth at First Solar.

Steve O’Rourke, a Deutsche Bank Securities analyst, said he expected the excess supply of panels to lead to industry competition that would benefit First Solar, a company that he called the “industry leader” with “sustainable competitive advantages.”

In his report, O’Rourke suggested that First Solar “offer[ed] the most compelling value proposition in the industry.” He predicted that First Solar would “do the most to define and advance the solar panel industry in years to come.”

Two years later, on Dec. 4, 2011, Jeffrey Pichel, an industry analyst at Jefferies & Co., forecast solar industry consolidation for 2012 to 2014, citing the bankruptcies of Solyndra, Evergreen Solar and SpectraWatt, and BP Solar’s halt in manufacturing as the primary reasons for consolidation.

Pichel said First Solar avoiding becoming a victim of industry consolidation “all [comes] down to how they can improve their efficiency.”