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) -- U.S solar company



is laying off 85 employees, or 2% of its workforce, as it restructures during a difficult period for solar companies.

The U.S. solar company -- 60% of which was acquired by French energy giant


(TOT) - Get Total SA Report

earlier this year -- announced last week concurrent to its quarterly earnings that it would be restructuring, though it provided no details on job losses.

In its quarterly report filed on Thursday after the market close, SunPower said that in "response to reductions in European government incentives, primarily in Italy, which have had a significant impact on the global solar market, on June 13, 2011 , the Company's Board of Directors approved a restructuring plan to realign the Company's resources."

In addition to the layoffs, SunPower will consolidate or close some facilities in Europe. The Company expects to record restructuring charges of up to $22 million related to its large-scale solar project segment in the twelve months following the approval and implementation of the plan. It expects the restructuring plan to cut 2012 costs by as much as 10%.

SunPower bought a large pipeline of projects in Italy last year before unexpected changes by the Italian government reduced the attractiveness of the utility-scale solar market in Italy.

SunPower sold a majority stake to Total as it attempts to shore up global financing for a capital intensive solar business and access to global opportunities as massive overcapacity and reduction in European subsidies have combined to create a bust period for the solar industry.

Several U.S. solar companies have entered or are expected to ultimately

enter bankruptcy

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. Both Intel-funded Spectrawatt and

Evergreen Solar

went bankrupt this summer, while

Energy Conversion Devices


announced this week an idling of all of its manufacturing capacity and plans to restructure terms with existing bondholders. Bankrupt and federally funded Solyndra had more than 1,000 employees when it announced its demise at the end of August.

The initial blow to U.S. solar jobs came much earlier, when oil giant


(BP) - Get BP Plc Report

shut down its Maryland plant in March 2010.

Leading U.S. solar company

First Solar

(FSLR) - Get First Solar, Inc. Report

recently fired its CEO and said the times required a change in leadership as the solar industry goes through a transitional period. First Solar is also

looking at ways

to reduce its spending.

SunPower previously laid off 60 employees in early 2009, when the solar industry was suffering the ill effects of the financial crisis and the lack of financing for projects. The current solar industry woes are more systemic and solar-specific than the financial crisis impact -- though that 2009 period also included the crushing effects of European solar subsidy reductions when Spain, which had been an explosive growth market, placed a hard stop on solar installations. Unprofitable conditions are expected to remain for many solar companies at least until the middle of 2012.

This week, a trade "dumping" challenge against Chinese solar companies submitted to the U.S. Department of Commerce by sevenU.S. solar companies, and led by German-based SolarWorld, cleared its first hurdle. The Commerce Department said it would consider the trade complaint. SolarWorld says thousands of U.S. manufacturing jobs hang in the balance. It has 1,000-plus employees at an Oregon facility.

Even the Chinese solar companies are currently finding it difficult to eke out profits and have recently released a rash of not surprising negative earnings preannouncements.

-- Written by Eric Rosenbaum from New York.


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