Siemens announces 615 layoffs in US wind power operations
Siemens on Tuesday said it will reduce its US wind energy workforce by about 38%, citing adverse market conditions caused by federal policy uncertainties, price competition from natural gas and sluggish growth in electricity demand.
The move will affect 615 workers as follows: 407 at a rotor blade plant in Fort Madison, Iowa; 146 at a nacelle plant in Hutchinson, Kansas; and 62 more in Orlando, Florida. After the move is completed, about 220 workers will remain in the Iowa facility, 152 in Kansas and 150 in Florida.
Siemens also has a wind research and development center in Boulder, Colorado; two gearbox manufacturing sites in Elgin, Illinois; an offshore wind office in Boston, and nationwide service, parts and components supply operations.
The company has invested $100m since 2007 to build a US manufacturing presence that enabled it to become a strong number-three wind turbine supplier there, behind General Electric and Vestas. Siemens in 2011 delivered 534 turbines in the US, a 15.4% market share, according to the American Wind Energy Association.
It also has dominated the fledgling offshore turbine market, with commitments from Cape Wind and developer Deepwater Wind for its pilot project in Rhode Island state waters, and interest from Lake Erie Economic Development Corporation for a demonstration project in Lake Erie facing Cleveland.
The German-owned company reaffirmed its commitment to the US wind market and to retaining both manufacturing plants.
In a statement, the company says a workforce adjustment is necessary until market demand for turbines revives. Analysts forecast US turbine installations could reach 12GW this year but plunge to between 1.5GW and 3GW in 2013, as developers freeze projects and orders to await a decision by Congress on whether to extend the federal production tax credit (PTC).
"As a result, following the rapid ramp-up of the wind power industry over the past five years, the industry is facing a significant drop in new orders, and this has an unfortunate consequence on employment in this segment of the power industry," the statement says. "Now, we have had to make the difficult decision to adjust the manufacturing, projects and administrative support functions of our wind power operations to reflect the current and projected business volume."
Siemens officials had earlier told Recharge that they hope to boost export business to Canada, Latin America and the Caribbean, which would help utilize manufacturing capacity at the US blade and nacelle plants. Acciona, Gamesa, Vestas and other competitors have the same strategy as their own US plants wind down activity.
In response to the Siemens announcement, Kansas Governor Sam Brownback issued a statement saying that he supports the federal wind PTC, set to expire on 31 December.
“I have been and will remain a strong advocate for the wind industry. While the federal government struggles with its effort to create a balanced energy policy, my administration will do everything we can to support the industry at the state level moving forward. – and to assist those Kansans affected by this announcement," he says.
Hutchinson City Manager John Deardoff in August had expressed concern in an interview with Recharge that Siemens could slash its payroll if its order book grew thin, and over the economic impact this could have on the city. Siemens chose Hutchinson for its nacelle plant after looking at 80 possible locations across the US.
Published: Wednesday, September 19 2012
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