In a stunning setback for the clean energy industry, Fremont-based solar panel manufacturer Solyndra abruptly shut its doors Wednesday, despite more than $500 million in backing from the federal government, throwing all 1,100 of its workers out of their jobs immediately.
Once named by the Massachusetts Institute of Technology as one of the world's most innovative companies, Solyndra was seen as so promising that President Barack Obama traveled to its headquarters to tout its prospects and his administration's plans to create more green jobs.
At one point, Solyndra planned to operate two factories in Fremont that together would have employed 2,000.
Yet weeks after the president's visit, Solyndra scuttled a planned IPO. In November, it jettisoned the plans for a second factory in Fremont and decided to cap employment at 1,000. And then, on Wednesday, it announced it was filing for bankruptcy.
"No one thought things would unravel this quickly for Solyndra," said Shyam Mehta, senior analyst with GTM Research, which tracks the green energy sector. "This points to how brutally competitive things are for the solar industry."
Solyndra landed $535 million in loan guarantees from the U.S. Department of Energy. It also got $1.1 billion in private venture capital.
"We have always recognized that not every one of the innovative companies supported by our loans and loan guarantees would succeed," said Dan Leistikow, an Energy Department spokesman. "But we can't stop investing in game-changing technologies."
Solyndra dismissed its workers Wednesday without layoff packages.
"They are getting no severance," said Dave Miller, a company spokesman. "They are getting nothing."
A stream of workers lugged boxes packed with their belongings as they filed out of the Solyndra complex.
"It's devastating," said Matthew Henry, a Campbell resident. "There was no compassion."
Henry had just bought a car and leased a new apartment. He worked at Solyndra for three years.
"It hurts," said Angel Poma, who lives in Woodside. "I was happy working for this company. I learned a lot."
Benjamin Pham, a San Jose resident, was left to ponder the loss of his health insurance, along with his job. Pham, his wife and their child were all on a Solyndra health insurance program, which also expired Wednesday.
"They cut off everything," Pham said.
In previous layoffs, Solyndra allowed dismissed workers to retain their health insurance.
"This is really disappointing," said Christina Briggs, Fremont's economic development manager. "Manufacturing is still struggling in this economy." In 2010, the NUMMI auto factory shutdown jolted Fremont, although Tesla Motors (TSLA) plans to make electric vehicles there.
Solyndra used Department of Energy funding to build and equip a just-finished solar factory. Solyndra had borrowed $527 million of the $535 million from the DOE for the project.
"We had just installed the new tools," Miller said. "We were starting to ramp up production."
Solyndra will file a Chapter 11 bankruptcy in a Delaware federal court next week.
"We will try to sell the company or reorganize its finances," Miller said.
Solyndra could not achieve full-scale operations rapidly enough to compete in the near term with bigger foreign rivals, the company said in a statement.
Founded in 2005, Solyndra rocketed to prominence with its cutting-edge creation of solar modules shaped like tubes. The DOE noted that MIT once named Solyndra as one of the world's most innovative companies.
In late 2009, the company filed papers for an IPO.
Solyndra's fortunes appeared to sparkle even more brightly in May 2010, with Obama's visit.
"Companies like Solyndra are leading the way toward a brighter and more prosperous future," Obama said at the time.
Weeks later, Solyndra scuttled its IPO. The company's once-bright fortunes dimmed. Questions surfaced about the wisdom of the loan guarantees.
Two House Republicans, Rep. Fred Upton, R-Mich., chairman of the Energy and Commerce Committee, and Rep. Cliff Stearns R-Fla., chairman of the Oversight and Investigations Subcommittee, used Solyndra's shutdown to criticize the Obama administration.
"It is clear that Solyndra was a dubious investment," Upton and Stearns said in a prepared release.
Low-cost Chinese manufacturers are building massive factories that have rapidly driven down the price of solar panels and shifted more than 50 percent of production to China.
Still, analysts say Solyndra couldn't tame the cost to make its solar modules.
"It's not a question of U.S. vs. China manufacturing costs," said Aaron Chew, an analyst with Maxim Group. "Solyndra's manufacturing approach was simply not competitive."
Solyndra's products still cost two to three times the standard expense for solar equipment in the United States, analysts estimated. First Solar can produce panels for about 75 cents a watt. Analysts believe Solyndra's costs, per panel, are still in the $2 to $3 range.
The company's final products sold to end users were at competitive prices. But that meant the retail costs weren't able to cover Solyndra's manufacturing expenses.
"Solyndra was losing money on every panel they sold," Chew said. "They couldn't continue that way."
Staff writer Matt Artz contributed to this report. Contact George Avalos at 925-977-8477.
Follow him at Twitter.com/george_avalos.
2005: Former Applied Materials executive and Stanford University doctoral program graduate Chris Gronet founds company.
September 2009: The Department of Energy agrees to provide $535 million in loan guarantees to bankroll Solyndra's expansion. Then at 600 employees, the company says the financing will allow it to hire 2,000 more people.
December 2009: Solyndra files papers for an initial public offering that would raise $300 million.
May 2010: President Barack Obama visits Solyndra in Fremont, praising the company.
June 2010: Solyndra cancels its IPO.
July 2010: Former Intel executive Brian Harrison takes reins as CEO.
November 2010: Solyndra scraps plans to build a second
factory and says it will cap Fremont employment at 1,000.
Aug. 19: Gronet becomes a consultant for Solyndra
Aug. 31: Solyndra ceases operations, lays off 1,100 workers and says it will file for bankruptcy
Sources: Bloomberg News, company reports