Vestas cuts hundreds of U.S. wind power jobs with production tax credit in limbo

Special to E&E • Posted: Friday, August 24, 2012

Vestas Wind Systems, the world’s largest maker of wind turbines, said it would cut an additional 540 jobs in the Americas by the end of the year as it prepares for lower demand next year while the renewal of the production tax credit (PTC) remains in limbo.

The cuts are part of 1,400 jobs being eliminated at Vestas worldwide this year in addition to the 2,335 jobs the company cut in January. The new cuts will lead to savings of €250 million ($313 million) in fixed costs per year, the Danish company said.

Vestas, which earlier this month announced it would cut 90 jobs at a tower factory in Pueblo, Colo., and 30 jobs at a nacelle factory in Brighton, Colo., declined to specify where the jobs will be lost in the United States. The company has about 3,000 workers in the United States and Canada, including 1,700 at four plants in Colorado. About 3,300 other people are employed in the wind industry in Colorado, working for companies that supply components to Vestas.

The workforce reductions will primarily affect salaried employees, the company said, adding it would give more details once negotiations with unions are finalized.

“We are preparing for a very tough 2013 because of regulatory uncertainty,” Vestas CEO Ditlev Engel said in a conference call with analysts. “There is no doubt the global wind market is very challenged now because of uncertainty in the United States. It means that orders are not being placed.”

Vestas received orders for turbines totaling 945 megawatts in the second quarter, compared with 2,265 MW in the same period a year ago.

Engel said he could not rule out additional job cuts in the United States later in the year. The company has said previously that it could lay off as many as 1,600 U.S. workers if the PTC is not renewed.

2013 will be ‘toughest year’

“We see positively what has been passed by the Finance Committee in the Senate about the extension of the PTC, but we will have to wait and see how it goes, if it’s turned into law as we make our decisions about manufacturing in the United States,” Engel said.

The PTC is worth about $22 per megawatt-hour and goes to wind farm operators, not turbine makers. It expires Dec. 31, and the Senate Finance Committee voted earlier this month to extend it for another year.

The company expects to ship 5 gigawatts’ worth of turbines in 2013, which means it would use 55 percent of its current global manufacturing capacity of 9 GW per year.

“We will evaluate our manufacturing footprint in the second half of the year,” Engel said. “We are dependent on how the market evolves. This is like going down the highway at very high speed and slamming the brakes. It’s not pleasant. 2013 will be the toughest year the wind industry has seen for some time.

Other wind companies are also cutting jobs in the United States. Clipper Windpower LLC, which has a turbine plant in Cedar Rapids, Iowa, said Monday it would cut 174 positions out of a total U.S. workforce of 550.

“Over 1,000 American workers have already been laid off and 36,000 more in the wind industry will be if politics are not put aside and the Production Tax Credit is not renewed,” Mark Schauer, the BlueGreen Alliance’s Jobs21 national co-chairman, said in a statement.