"Energy Conversion Devices is pausing, not stopping, our aggressive production and expansion schedule," Mark Trinske, vice president for investor relations, said. "We are building our company on a demand-driven expansion basis, so, since demand has temporarily slowed, we are temporarily slowing production."
Construction of the $220 million Battle Creek plant began in late November and is nearly complete. When it is finished, activity will pause for awhile.
"When basic construction at Battle Creek is complete, we will not be hiring for that facility or ordering equipment until demand improves," Trinske said.
United Solar's parent, Energy Conversion Devices Inc. [Nasdaq: ENER] of Rochester Hills, a global manufacturer of thin-film flexible solar-laminate building product, announced last week it is slowing the pace of its demand-driven production and expansion to reflect the impact of credit availability on project flow in the global pipeline. It revised its third-quarter and full fiscal-year guidance, and projected its third-quarter -- which matches the first calendar quarter -- will approximate last year's.
Battle Creek and Calhoun County had welcomed United Solar's announcement last October that it had selected Fort Custer Industrial Park for its expansion.
The Michigan Strategic Fund board approved creation of a 155-acre Renaissance Zone in the park and approved a $10 million Community Development Block Grant to support United Solar Ovonic's planned advanced solar-cell manufacturing facility in Battle Creek. The company announced its plan to buy 45 acres in the Renaissance Zone.
Energy Conversion Devices said it wanted to start production in Battle Creek by the end of 2009. It projected up to 350 jobs would be created within three years.
The Renaissance Zone designation and the CDBG money were granted a week after the Michigan Economic Growth Authority approved a state tax credit valued at $17.3 million over 17 years to encourage the company to expand in Battle Creek, rather than competing sites in New York and Malaysia. Property-tax abatements worth an additional $67 million were included in the package.
Delay wouldn't affect overall development plans in Battle Creek. Dehn took a longer view, based on the two-year and five-year provisions of incentives in the complex package United Solar received.
"We haven't envisioned there wouldn't be people added in the next two years," Dehn said. "I haven't heard anything that would question the development's happening."
Trinske acknowledged a 70-person reduction at Auburn Hills due to consolidation of the company's two plants there. He pointed out that 800 people had been added at all the United Solar facilities over the past year. It presently employs 2,400.
For those who wonder if United Solar could take the incentive money and run, Dehn offered reassurance.
"A lot of the value of those incentives were based on the value of investment put in by the company," he said. "These are not cash incentives. The fact they've slowed their investment, they don't receive benefits until they actually make the investment. There's no equipment in place, so they're not receiving tax benefits for that until it is in place. This is a situation where the incentives are based on cost-avoidance of what their property-tax liability would have been."