Gone with the wind.
Bloomberg reports,
Vestas Wind Systems A/S (VWS), the world’s biggest wind turbine maker, said it will halt production at one factory and cut 2,335 jobs, or 10 percent of its staff, to become more competitive with Chinese suppliers.
The changes are aimed at saving more than 150 million euros ($191 million) by the end of 2012, the company based in Aarhus, Denmark, said today in a statement. Vestas said another 1,600 jobs in the U.S. are at risk as a tax credit supporting the industry expires at year-end…
At a news conference today in Copenhagen with European Commission President Jose Manuel Barroso, Danish Prime Minister Helle Thorning-Schmidt called the job losses an “enormous setback” to European Union efforts to promote green growth.
“This is a very, very sad day for Denmark as this is one of the things we think Denmark should be doing in the future,” Thorning-Schmidt said. “I still think this is the way forward, investing in new ways of doing things and new technologies, and despite this enormous setback, we’re on the right path”…
Vestas slashed 3,000 jobs in October 2010 and 1,900 in April 2009. After the latest round of cuts, its workforce will number about 20,400.
A total of 1,749 of the jobs to be lost will be in Europe, including 1,300 in Denmark, the statement said…
“The redundancies are happening in an industry which ought to experience progress due to the massive climate problems that both Denmark and the world are facing,” Frida Frost, who chairs the Danish Society of Engineers, which has 550 Vestas members, said in an e-mail. “We risk that knowledge and know-how about wind technology now disappears, and that is not what Denmark needs in the current economic situation.”
Danish Metal Workers Union chairman Thorkild E. Jensen said in a statement that the announcement creates “great uncertainty” in the Vestas work force and is a “hard blow” to those who’ll lose their jobs.
In the U.S., 182 workers will lose their jobs, and 404 in China and the rest of the world. Vestas will stop producing at its tower factory in Varde, western Denmark, the company said.
“Vestas has one of the highest costs of all its peers and will therefore have to take these painful steps in order to remain profitable in the future,” Justin Wu, a Hong Kong-based analyst with Bloomberg New Energy Finance, said in an e-mail. “Turbine manufacturing margins have plummeted while competition has become increasingly fierce”…
In the U.S., a further 1,600 jobs may be cut if lawmakers don’t extend the so-called production tax credit beyond 2012, Vestas’s chief said. A decision will be made no later than the fourth quarter, he said. The credit gives an incentive of 2.2 cents a kilowatt-hour of wind power.
“The expected layoffs are one of many steps that we now take in order to bring down costs,” Engel said. The changes are necessary “in order to prepare for a market with low growth and increased competition.”
Vestas has spent more than $1 billion building four plants in Colorado. About 900 work at plants making nacelles and blades in Brighton, Colorado. The company has hired almost 700 people in the U.S. and Canada the past eight months. Vestas said it will decide the size of the U.S. staff later this year.
“We are now preparing Vestas for the situation where one of our largest single markets, the U.S.A., may be facing a tough 2013,” Engel said. “This will have a huge impact on our business if we do not act now.”
This is the fate of any business model based on government subsidies rather than an actual need by consumers willing to pay.