Based on rapidly falling prices of competitors’
photovoltaic modules used in the production of
solar panels, General Electric (GE) announced
in July 2012 that it was stopping production on
what was supposed to be the largest solar factory
in the United States. In a Forbes article,
Danielle Merfeld, GE’s general manager for solar
technologies, is quoted as saying: “The good news
is we are keeping our factory in place in the sense
of the equipment and the tools that are there. But
ultimately we expect the new improvements in
technology will require some modifications to
that plant design.” Discuss GE’s decision to stop
production as it relates to uncertainty and irreversible
investment. What trade-off did GE face
in making its decision to halt production of this
factory?