FuelCell cutting 17% of workforce

Matt Pilon A FuelCell employee at the company's manufacturing plant in Torrington earlier this year.

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By Matt Pilon

Danbury’s FuelCell Energy said Thursday that it will eliminate 96 positions.

The company said in a U.S. Securities & Exchange Commission filing that the move was necessary to reduce costs and align its production levels with demand. FuelCell bid a number of projects into two recent state-run power procurements, none of which were selected.

The largest proposal was a 63.3-megawatt fuel-cell park in Beacon Falls, which could have brought an estimated $500 million in revenue to FuelCell, according to one analyst’s estimate.

Since Oct. 25, the company’s stock price has fallen from $5.20 to a $1.98 as of Thursday afternoon.

South Windsor’s Doosan Fuel Cell and California’s Bloom Energy also struck out in the procurements, with state officials saying they had asked for rates that were too high compared to solar and other projects.

FuelCell said the layoffs would affect its headquarters as well as its manufacturing plant in Torrington, to which the state has pledged incentives worth as much as $30 million to expand and add jobs.

That plant had a production rate of approximately 70 megawatts in 2015, but that number has since fallen to 50 megawatts and will be further reduced to 25 megawatts in order to position for delays in anticipated order flow, FuelCell said.

The company said it anticipates the reduced production rate will be temporary and could change with new orders.

"We are streamlining our business and cost structure as we reduce our production levels to meet the backlog we have today while positioning the company for long term success,” CEO Chip Bottone said in a statement. “Our employees are our most valued assets so the decision to reduce our workforce was not made lightly.”

FuelCell could still hit the job benchmarks it agreed upon with the Department of Economic and Community Development, which has issued a $10 million loan to the company and pledged as much as $20 million more in incentives. FuelCell will receive $5 million in loan forgiveness if it can retain 538 jobs and create 165 more by Oct. 2017, then maintain an average of 703 jobs for two consecutive years. DECD will audit the jobs numbers in late 2019 or early 2020. If FuelCell doesn't meet the goals, it could be subject to penalties, according to DECD spokesman Jim Watson.

“Companies regularly experience ebbs and flows in workforce levels based on market conditions," Watson said. "It is unfortunate the company had to make this difficult business decision, but we continue to believe that FuelCell and the state’s green energy sector have a promising future. FuelCell Energy has been a great and cooperative partner with DECD and we have every confidence they will be able to recover and reach their job creation benchmarks.”

FuelCell reported having 596 full-time workers as of Oct. 31, 2015. Of that number, 279 were in Torrington and 273 were in Danbury or field offices. A smaller number were in foreign locations.

Editor's note: An earlier version of this story has been edited to include comment from DECD

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