08 December 2011
MEMC Electronic Materials, Inc. today announced a series of actions to be taken during the fourth quarter of 2011 and the first quarter of 2012 that will reduce the company's global workforce, right size its production capacity and accelerate operating cost reductions in 2012 and beyond.
The actions better align the business to current and expected market conditions in the semiconductor and solar markets and are expected to improve the company's overall cost competitiveness and increase cash flow generation across all segments.
As a result of market conditions and the actions announced today, MEMC expects to take a charge in the fourth quarter of 2011 of approximately $700 million, of which approximately $520 million is expected to be non-cash. Cash use associated with the restructuring is expected to be approximately $180 million, more than half of which is expected to occur after 2012. The company projects annualized cash flow benefits to exceed $200 million by the end of 2012 through labor productivity, procurement savings, and a more efficient asset base.
Restructuring actions to improve the cash flow outlook for the company are broad based, covering all segments and impacting a substantial number of employees and production assets. The company expects these actions to result in a leaner and more focused business serving semiconductor wafer and solar energy systems customers. These actions are expected to reduce operating expenses by over 15% versus the company's current run rate.
- As part of this restructuring, MEMC will reduce its total workforce by over 1,300 persons worldwide, approximately 20% of the company's employees. Of the reductions, approximately 250 positions are in the United States, and an estimated 41% are in the Semiconductor Materials segment and 47% are in the Solar Materials segment;
- Having substantially completed a multi-year realignment of our global semiconductor crystal and wafer manufacturing footprint, the company is undertaking more aggressive productivity initiatives to implement best practices across sites;
- The company intends to idle its Merano, Italy polysilicon facility, up to 6,000 metric tons of annual capacity, and may close it unless dramatic feedstock, power, and other cost reductions are achieved in the near term. The company is working with the province and key suppliers to determine the feasibility of such reductions;
- To improve costs and alignment with current market conditions, the company will reduce production capacity at its Portland, Oregon crystal facility to allow us to optimize the technology utilized at this facility, and will limit the ramp of the Kuching, Malaysia wafering facility to 300MW; and
- To focus on providing our downstream solar customers the highest quality and lowest cost systems and achieve improved operating efficiencies, the Solar Materials and SunEdison business units will be consolidated into a single Solar Energy business unit, effective 1 January, 2012.