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First Solar, Inc. (NASDAQ:FSLR) has decide to lay off 2000 workers in its operations world wide as the company sees demand for its products decreasing. The move was announced by the company today and has seen a very positive reaction from the market the company’s stock is up by over 8% at time of writing to 22.53.

That figure will give little solace to investors who bought at the 52 week high of 145.16 but it does show approval for the company’s engagement with the reality of their situation and the cost cutting measures to be undertaken in future.

Those measures include the closure of a plant in Frankfurt Germany that employs 1200 people and layoffs in Malaysia as well as others throughout Europe and the United States. The company estimates the plan will save it between $30 and $60 million this year and between $100 and $120 million next year. The company faces a restructuring cost of between $245 and $300 million, that will be mostly covered this year, in order to put the plan into action.

The company was infamously shorted by Jim Chanos last year along with other alternative energy companies. Chanos believed those companies were overvalued and their earnings projections would be very inaccurate.

He was mathematically brief on the cost of Solar power in contrast to natural gas and that perspective earned him dividends when the company announced in december that it was cutting its 2012 forecasted income by 25%. The firm’s shares fell by 20% that day alone.

The drop in First Solar, Inc. (NASDAQ:FSLR), a primary world solar energy product manufacturer has been seen by many as a signal of the future decline in the industry. The European market has fallen and a recovery may not be in sight as of yet. The company’s measures today do not bode well for the reestablishment of the boom that inflated its stock.

First Solar, Inc. (NASDAQ:FSLR) is a company whose main avenue of production is the manufacture and development of thin film solar cells. There are many challenges in the sector and the company’s high cost base was adversely affecting its business in a rather severe way.

They have been undercut by panels manufactured in China and other low wage countries and their new plan is clearly set to off put their high cost problems. If the plan goes as expected the company may be able to recover but solar panel technology is a very competitive market and new technologies as well as design have a huge impact on the types of panel consumers want to buy.