Danish wind turbine maker Vestas to lay off at least 2,300 workers

Source: Associated Press • Washington Post • Posted: Thursday, January 12, 2012

COPENHAGEN, Denmark — Vestas A/S, the world’s biggest maker of wind turbines in terms of revenues, said Thursday it will lay off around 2,300 employees, mainly in Denmark, because of a market downturn caused by the financial crisis.

The company, headquartered in Aarhus, Denmark, said a potential slowdown in the United States could also result in the layoff of an additional 1,600 employees there.

It said the U.S. layoff plans would mainly depend on whether the Production Tax Credit — which gives a favorable low tax rate to makers of renewable energy — would be extended or not. In 2010, Vestas was awarded about $51 million in tax credits through the U.S. federal stimulus program.

Although its U.S. operations are headquartered in Portland, Ore., Vestas has invested more than $1 billion in four facilities in Colorado.

In this first round of the savings measures, Vestas said it will reduce its fixed costs by more than €150 million ($190.1 million) a year, with full effect expected already by the end of this year. That will include streamlining support functions and by shutting down a factory to align capacity with market demand.

Aside from having already cut its 2012 sales forecasts, it has also abandoned its 2015 sales target of €15 billion ($19.1 million) and the aim of reaching a profit margin of 15 percent.

Sluggish sales have already forced the company to slash its forecasts for 2012 twice.

The Vestas share fell nearly 5 percent to 60 kroner ($10.3) in early trading on the stock exchange in Copenhagen.

“I am truly sorry that we have to say goodbye to so many skilled and loyal Vestas colleagues,” CEO Ditlev Engel said in a statement, but noted the changes were necessary “in order to prepare for a market with low growth and increased competition.”

Last year, Vestas laid off 3,000 workers after posting a 24 percent drop in the third quarter.

Sydbank analyst Jacob Pedersen said the cutbacks are “a very, very big step in the right direction” for a company that has faced increasing pressure. He said more layoffs in the U.S. are likely.

After the cutbacks, Vestas said it will have around 20,400 staff worldwide.