World’s largest wind turbine manufacturer says 4 U.S. plants argue for tax credit renewal

Source: Special to E&E • Posted: Tuesday, June 12, 2012

The four Vestas wind turbine factories located in the United States are the best argument for Congress to renew the production tax credit supporting renewable energy, said Ditlev Engel, the Danish company’s CEO.

“I’m convinced that if all wind turbines were produced in Europe, the PTC wouldn’t be renewed,” Engel said in a meeting with financial analysts. “Having factories in the U.S. is a strong argument for the PTC to be renewed and save American jobs.”

Vestas, the world’s largest wind turbine maker, has said several times it will cut 1,600 American jobs if the U.S. government does not renew the PTC, which supports renewable energy and expires at the end of this year. The company will decide on the jobs in the third quarter, Engel said last month.

Vestas has more than 3,000 workers in the United States and has spent €1 billion ($1.25 billion) to build four factories in Colorado as part of its strategy to manufacture wind turbines close to the markets where they are sold.

“We are busier than ever before right now,” Engel said. “We are working at full capacity in the U.S.”

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 with 1,670 MW the previous year, AWEA said.

“The U.S. market will come back again, even if the PTC is not renewed,” Engel said. “So the question is whether we should dial our U.S. activities all the way down in 2013 or not.”

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 per year. The company lost a net €162 million in the first quarter on sales of €1.1 billion as it struggled with lower wind turbine prices, increased competition from low-cost Chinese manufacturers, and rising maintenance and warranty costs.

“Our product and production costs on new platforms are too high,” Engel said. “Our fixed costs are too high compared to the current market environment. And we are seeing more and more NIMBY-ism,” he added, referring to the “not in my backyard” opposition to wind turbines from some community groups.

However, he said he wasn’t overly concerned by competition from Chinese manufacturers.

“Don’t underestimate freight costs,” he said. “For the Chinese companies to push all of us out, they would need to globalize their business totally.”