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Oerlikon solar is group's shining light

(Oerlikon solar)

The rapid expansion of Oerlikon's solar division has cast a positive light on a disappointing financial performance for the Swiss technology group.

The company opened a new solar panel production plant on Monday, but a day later announced losses of SFr313 million ($285 million) in the first half of 2008 - along with 1,000 job cuts in Europe.

Executives blamed the losses on the rising cost of raw materials and energy but the firm also saw incoming orders drop by 6.7 per cent to SFr2.8 billion. Its textiles division is being restructured to reduce fixed costs by 20 per cent compared with last year.

Oerlikon is the latest Swiss industrial giant to feel the global economic pinch along with such household names as Holcim, Georg Fischer and Rieter.

But Oerlikon chief executive Uwe Krüger insisted that the group's prospects looked positive despite the cyclical downturn in the textiles and semiconductor industries.

The company expects to double sales of its cutting-edge thin film photovoltaic solar panels to SFr700 million by the end of the year and to break the SFr1 billion mark in 2009. Economics Minister Doris Leuthard opened a new production plant in Trübbach, canton St Gallen, on Monday.

In contrast to job cuts in other divisions, Oerlikon Solar plans to create around 350 new positions in the rapidly growing business segment by the end of next year.

Grid parity

Krüger told swissinfo that the thin film technology pioneered by Oerlikon would allow solar powered electricity to be produced as efficiently as by fossil fuels in the next two years – a landmark known as grid parity.

"The breakthrough in cost efficient production of energy out of photovoltaic panels has the potential to change the whole industry," he said.

"We are seeing first evidence of this with our full order books. We are already producing at above capacity and we are running as fast as we can to ramp up production."

The main demand for panels is coming from giant solar parks soon to be erected in Spain, Greece, Italy, China and Malaysia.

Neighbouring Germany has the lead in solar panel production thanks to government subsidies, but Switzerland has the edge in research, according to Krüger. Thin film photovoltaic technology was developed by Oerlikon in partnership with Lausanne's Swiss Federal Institute of Technology and the Institute of Microtechology in Neuchatel.

Government funding

"This has generated a lot of additional interest in the scientific community in Switzerland to enlarge research and development," Krüger told swissinfo.

Oerlikon and other Swiss companies have received limited financial backing from the government. But Krüger believes the future of Swiss solar technology lies in attracting more scientists to the country rather than giving in to calls to increase the size of central funding.

"From an entrepreneurial perspective, funding should only be an initiation. The base load of expenses for research has to come from companies who have an economic interest in making a profit," he said.

Economics Minister Leuthard said the success of Oerlikon Solar should act as a spur for the whole industry in Switzerland.

"We possess the core competence [of] know-how and research plus the politico-economic framework on the one hand, and companies with the necessary technological skills on the other," she said at the Trübbach plant opening.

swissinfo, Matthew Allen in Trübbach

Oerlikon

Oerlikon specialises in solar technology, thin film coating, vacuum systems, textile machines, drive systems and precision components.

Its high-tech applications can be found in cars, satellites, machines, textile products, solar panels, MP3 players and beamers.

The company was founded as a precision tools factory in 1907 with 150 employees on the outskirts of Zurich. It now has some 19,000 staff in 35 countries and generated sales of SFr5.6 billion last year.

The company was floated on the stock exchange under the name Oerlikon-Bührle Holding in 1973. It changed its name to Unaxis after a restructuring in 2000 but was renamed Oerlikon shortly after being bought by Austrian private equity firm Victory in 2005.

Russian billionaire Viktor Vekselberg wrestled control of the group earlier this year through his holding company Renova.

Oerlikon Solar was made an independent business division in 2005 having started production of panels two years earlier.

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