SunPower on Monday announced a pause on its global manufacturing and work cutbacks for all other employees, while further reducing executive salaries.
A filing with the Securities and Exchange Commission detailing the changes did not mention the coronavirus, but after similar — though less drastic — measures in March, CEO Tom Werner acknowledged that the distributed solar and storage company was girding for a protracted financial fight with the pandemic, which as of Sunday had infected more than 160,000 in the U.S. and has ravaged the global economy.
A SunPower spokesperson said the latest moves are a recognition of the company’s reduced demand and workload due to the disease's spread.
The company halted manufacturing in the U.S., France, Malaysia, Mexico and the Philippines, with plans to restart production in “the coming weeks.” Different plants will resume operations at different times, depending on what they produce, the company told Greentech Media. The cutbacks will not impact SunPower's plans to spin off its manufacturing arm, called Maxeon Solar Technologies, by the end of Q2 2020.
SunPower employed about 5,300 people in its global manufacturing operations as of December 2019. Its workers are not unionized.
All other employees were switched to a four-day workweek, a move that affects about 3,000 workers worldwide. Salaried and hourly employees will see a commensurate reduction in compensation, the company told GTM.
SunPower’s latest move also reduces pay for its two CEOs by 50 percent and drops pay for its three executive vice presidents by 35 percent, from the respective 30 percent and 25 percent announced less than a month ago. SunPower plans to keep salaries at that level until “the achievement of certain financial milestones” or a volatile 2020 turns into 2021.
Like many residential solar companies, SunPower is coping with a looming decline in demand as jurisdictional shutdowns place some restrictions on solar installers and U.S. citizens not deemed “essential workers” remain at home. In March, SunPower said “leading indicators” showed a decline in demand between 5 and 30 percent across the U.S.
The company was already in a precarious financial position prior to the coronavirus crisis. Current measures aim to help the company “prudently manage through the pandemic,” the company said, so it can restart work quickly when able. SunPower said it had enough financing to finish all its projects in 2020, and about $500 million in liquidity.
Coping with a health crisis and an economy on the precipice of a recession, some solar players have acknowledged that few homeowners are likely to be considering going solar at present (that opinion is not universal, however). Along with SunPower’s moves to shore up its finances, Sungevity recently laid off about 400 employees, and Sunrun — the national leader in residential installations — let go at least 100 employees.
Meanwhile, companies are hoping to stem the damage through innovation. Last week Sunrun started offering home solar-plus-storage systems for $1 a month for the first six months of a customer contract. SunPower told GTM it has sold 95 percent of its residential systems online over the past several weeks and said it’s seeing interest in reducing expenses from commercial customers.