United States and Canadian Duties on Solar Modules Imported from The Peoples Republic of China and Taiwan
March 06 2015 - 7:05PM
Business Wire
On March 5, 2015 Canada Border Services Agency released its
preliminary ruling under Canada’s Special Import Measures Act
concerning alleged dumping and subsidizing of certain photovoltaic
modules and laminates originating in the Peoples Republic of China.
The preliminary ruling concludes that these modules have been
dumped and subsidized and all such modules imported from March 5,
2015 will be subject to the collection of provisional duties
pending the final outcome of the investigation. The specific
provisional duty rates on these imports is 281%.
On January 31, 2015, the US Department of Commerce made a final
ruling that photovoltaic cells from the Peoples Republic of China
and Taiwan have also been dumped and are subsidized. As a result,
the US International Trade Commission has imposed countervailing
duties. Those products or components within the scope of the ruling
are now subject to duties of 91%.
The Company currently imports photovoltaic modules, some of
which are subject to countervailing duties in the United States and
some of which are subject to Canada’s provisional duties. This
release is to discuss the impact of these measures on Carmanah
Technologies Corporation’s (TSX:CMH) (Pink Sheets:CMHXF) (the
“Company”) business.
Overall the impact of these measures on Carmanah’s business is
expected to be very limited. A specific discussion of each of the
Company’s Divisions and the rationale for this statement
follows:
- Power Division – The Company’s Solar
EPC business operates only in Canada and has, up until now,
purchased solar PV modules manufactured under Canadian content
guidelines for the Ontario Feed-in Tariff Program. However, the
Ontario program has relaxed future Canadian content requirements
and the solar developers, for whom Carmanah completes projects,
were anticipating the use of lower cost PV modules.
Canadian module manufacturers and non-Chinese foreign suppliers
are active competitors in the market and the Company believes there
will still be abundant competition which will prevent significant
increases in module cost. As well, the Company will suffer no
profit margin losses as, by contract, all component costs are
passed along to solar developers.
The Company’s Mobile Power business imports flexible solar
panels, solar power modules and solar power portable kits into both
the United States and Canada. Historically the modules and kits
have been obtained from Chinese suppliers, but there are abundant
manufacturers of non-Chinese origin. The Company is actively
evaluating modules from these suppliers and expects that it can
alter its supply chain with little or no impact on cost.
However, this is not the case for flexible solar panels which
are only available in reliable form from Chinese suppliers. In
order to preserve reasonable profit margins on these products, the
Company has increased its prices on the products that use flexible
components by approximately 15%. While such increase will not
impact the Company’s competitive standing, the increase may cause
some reduction in sales which is impossible to quantify at this
time. Given that flexible panel based products are only about 2.5%
of overall sales, the Company expects no meaningful financial
impact.
- Illumination Division – The Company’s
Illumination Division utilizes modules from a variety of countries
of origin including the Peoples Republic of China. The Company’s
supply management is content that it can obtain modules at
competitive prices and quality levels from sources that are not
subject to Canadian and US duties described herein for its US and
Canadian customers. Sales made to the rest of the world, where the
Company expects growth, are unaffected by the duties. Accordingly,
the Company expects these measures to have virtually no impact on
Carmanah’s Illumination Division.
- Signals Division – Carmanah’s signals
products manufactured in the United States utilize solar cells that
attract import duty in accordance with the rulings. The solar PV
component represents a very small part of the overall manufacturing
cost and the duty on these components will add approximately 1% to
the overall cost of manufacturing in the United States.Prior to the
duty issue, the Company made the strategic decision to transition a
significant portion of its Signals manufacturing to Canada. Given
that the solar PV components are under the power threshold in the
scope of the Canadian ruling, there is no duty impact on these
products. The Company’s Canadian-based contract manufacturer has
commenced production and the transition to Canada is expected to be
complete by mid-year, thereby eliminating the small impact the US
import duty has on Signals cost when manufactured in Canada.
Overall, the imposition of duties in Canada and the United
States will have limited overall impact on Carmanah’s business once
all supply chain adjustments described herein are fully in place.
For a short period of time the Company may incur some additional
costs resulting from duties that will be absorbed in order to
continue service to customers without interruption. The Company
expects its total unbudgeted cost exposure in the adjustment period
to be approximately $150,000.
About Carmanah Technologies Corporation
Since its founding in 1996, Carmanah has become one of the most
trusted names in solar technology, delivering reliable and
cost-effective solar powered products and systems for industrial
applications worldwide. To date, Carmanah's solutions for marine
navigation, airfield ground lighting, aviation obstruction, roadway
illumination, parking lot lighting, as well as on and off-grid
power generation, have been successfully deployed in over 400,000
installations in 110 countries with proven performance in
conditions ranging from desert heat to arctic cold.
In 2013, through shareholder led initiatives, the company was
restructured under the leadership of CEO John Simmons, while the
Company’s largest shareholder, Michael W. Sonnenfeldt, became
non-executive Chairman. Carmanah’s current board members
demonstrate their belief in Carmanah's future by having been the
largest investors in each financing since
the restructuring and now, as a group, own the majority
of Carmanah's issued and outstanding shares.
This release may contain forward-looking statements. Often, but
not always, forward-looking statements can be identified by the use
of words such as “expects,” “plans,” “estimates,” “intends,”
“believes,” “could,” “might,” “will” or variations of such words
and phrases. Forward-looking statements involve known and unknown
risks, uncertainties, and other factors which may cause the actual
results, performance, or achievements of Carmanah to be materially
different from any future results, performance, or achievements
expressed or implied by the forward-looking statements. These
statements are based on management’s current expectations and
beliefs and are subject to a number of risks and uncertainties.
Examples of forward-looking information in this news release
include, but are not limited to, statements with respect to the
Company’s backlog and the ability to deliver these orders, and
estimates of revenue for the period. For additional information on
these risks and uncertainties, see Carmanah’s most recently filed
Annual Information Form (AIF) and Annual MD&A, which are
available on SEDAR at www.sedar.com and on the Company’s website at
www.carmanah.com. The risk factors identified in Carmanah’s AIF and
MD&A are not intended to represent a complete list of factors
that could affect Carmanah. Accordingly, readers should not place
undue reliance on forward-looking statements. Carmanah does not
assume any obligation to update the forward-looking information
contained in this press release.
Carmanah Technologies CorporationStuart Williams, (250)
380-0052Chief Financial Officer/Corporate
Secretarystuart.williams@carmanah.com
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