Vestas to decide on American layoffs in 3rd quarter

Source: E&E • Posted: Friday, May 4, 2012

Vestas will decide on whether it will lay off 1,600 U.S. employees in the third quarter this year, CEO Ditlev Engel said yesterday in a conference call with analysts.

Vestas, the world’s largest wind turbine maker, has said several times it would cut the jobs if the U.S. government does not renew the production tax credit, which supports renewable energy.

“In the third quarter, we have to decide whether we believe the PTC is extended or not,” Engel said.

Vestas already eliminated 182 U.S. jobs earlier this year as part of a plan to cut 2,335 jobs worldwide and save €150 million ($197 million) per year. The company reported yesterday a net loss of €162 million on sales of €1.1 billion for the first quarter as it battled lower wind turbine prices, increased competition from low-cost Chinese manufacturers, and rising maintenance and warranty costs. Shares in the company fell in Copenhagen, Denmark, to a nine-year low.

Denmark-based Vestas has more than 3,000 workers in the United States and has spent €1 billion to build four factories in Colorado as part of its strategy to manufacture wind turbines close to the markets where they are sold.

The U.S. production tax credit benefits utilities that produce electricity from renewable resources, such as wind, solar and geothermal. The wind industry employs 75,000 people in the United States, according to the American Wind Energy Association. In 2004, the last time the tax credit expired, the wind market shrank in the United States to 397 megawatts of new turbine installations, compared to 1,670 MW the previous year, AWEA said.

Vestas also said it was slowing down the development of its new behemoth 7 MW offshore turbine because of market uncertainty. The prototype will be installed on land in Denmark in 2014 instead of later this year. The company also said it talked with potential undisclosed partners about collaborating in making the turbine.

The turbine’s most fearsome competitor, a Siemens 6 MW machine, is already being tested on land in Denmark, and an offshore test with two additional machines is scheduled to start in the North Sea in November.

The stakes are high in the race to produce the offshore turbine of the future. The offshore wind industry may grow sixteenfold by 2020, with capacity of 52.1 gigawatts representing 7.1 percent of the global wind market, GlobalData forecast in a new report yesterday.