Industrial wind jobs: “The reality, as evidenced around the world, is that these jobs aren’t permanent and could not exist without extensive ongoing government subsidization”

From Reuters Environment Forum: Why subsidize the surfeit of wind turbines?

With an oversupply of wind turbines, why are governments subsidizing new manufacturing plants?

In recent years, China has ramped up its efforts to become a world leader in manufacturing and installation of wind turbines.

But the other side of the story is that China has also idled 40 percent of its industrial wind turbine manufacturing capacity as a result of oversupply and plummeting prices.

In Europe, the world’s largest turbine manufacturer, Vestas, announced a bond issue of 600 million euros ($807 million). This is the first bond issue in the company’s history and it was due to slow growth.

Even with an oversupply of manufacturing capacity, and falling prices for wind turbines, taxpayer-funded investment in wind turbine manufacturing by foreign companies in North America has been moving ahead with great fanfare.

In Canada, Ontario signed a $7 billion dollar deal with South Korea’s Samsung to manufacture industrial wind turbines and develop wind energy projects in the province — creating 4,000 jobs.

A Chinese and American business consortium announced plans to develop 1,000 jobs with the support of $450 million in taxpayer stimulus funds as part of recovery spending.

Vestas took the unusual step of announcing that it would consider building a manufacturing facility to build turbines for Ontario Trillium Power – a wind farm proponent without the necessary approvals to install turbines, or sell power into the grid.

Last year Vestas cited an oversupply of industrial wind turbines as justification for laying off 1,900 European wind turbine-manufacturing workers.

China idling 40 percent of their wind turbine manufacturing capacity demonstrates the oversupply is severely impacting even the most competitive manufacturing market in the world.

Under normal circumstances, China’s competitive advantage should allow Chinese-manufactured turbines to meet the demands of the global market at the expense of less competitive jurisdictions.

But these procurement decisions are based on politics, not economics.

North American jurisdictions seeking “green” manufacturing jobs are selling the idea to voters as a means of developing a green manufacturing sector as part of an economic recovery.

The reality, as evidenced around the world, is that these jobs aren’t permanent and could not exist without extensive ongoing government subsidization and therefore involvement in the business decisions of this industry.

Until the industry addresses the oversupply and governments address ever growing subsidization rates, real turbine prices will continue to fall, oversupply will continue to grow and subsidization rates will move this industry even further from market principles other sectors follow.

The impact will be felt by jurisdictions that have embraced and financially supported the technology.

They will surely feel the pressure higher electricity prices place on traditional manufacturing sectors, and the eventual loss of these temporary jobs when the wind turbine manufacturer pulls out.

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One Response to Industrial wind jobs: “The reality, as evidenced around the world, is that these jobs aren’t permanent and could not exist without extensive ongoing government subsidization”

  1. Watch how this economic development unfolds using taxes, dreams, and lots of backroom politics and including involving the prince and princess of Denmark.

    Scandinavians have a saying UFFDA…it translates as: “I am overwhelmed.” In other words OUCH or OOPS! Vestas appears to be an a UFFDA company

    March 20, 2007: Project Announced
    “Construction of the factory will begin in the spring of 2007, with the start of production planned for early 2008. At full production, the plant will have a production capacity of approximately 1,200 blades per year and the factory will employ around 400 people.”
    Source: http://www.vestas.com/files//Filer/EN/Press_releases/VWS/2007/070320PMUK03USA.pdf
    http://www.vestas.com/en/media/win%5Bd%5D/article-display.aspx?action=3&NewsID=1761

    March 25, 2008, Ground Breaking Ceremony
    Vestas Wind Systems broke ground Wednesday in Brighton for two new manufacturing plants that eventually will employ 1,350 people. The crown prince and princess of Denmark and Colorado Gov. Bill Ritter attended the ceremony.

    The two factories in Brighton — a wind turbine blade factory and a nacelle assembly plant valued at $290 million — were announced in August 2008. The plants are expected to be fully operational in 2010. The blade factory will employ about 650 people and the nacelle plant will have about 700 employees, Vestas said.
    Source:
    http://denver.bizjournals.com/denver/stories/2009/03/23/daily35.html
    http://www.vestas.com/files//Filer/EN/Press_releases/Local/2009/AM_090325_LPMUK_02.pdf

    Feb 11, 2009: One Year Latter…
    Vestas may have to cut jobs, spending as orders come to standstill

    Danish company Vestas is catching some head wind. The world’s largest wind-turbine maker on Wednesday said it might reduce jobs and scale back capital spending in Colorado and the United States, unless orders pick up, according to Bloomberg News. Vestas CEO Ditlev Engel said orders from the U.S. “came to a standstill” after the collapse of Lehman Brothers Holdings Inc. in September tightened credit for wind energy developers.

    Source:
    http://www.windaction.org/news/19956 http://www.rockymountainnews.com/news/2009/feb/12/vestas-may-have-to-cut-jobs-spending-in-colorado/

    Oct 27, 2009: Whoops a weak market:
    Wind-turbine maker Vestas to slow Colorado job growth
    A weak market for wind turbines in the U.S. will slow job growth at Vestas Wind Systems’ four Colorado plants, Ditlev Engel, the company’s chief executive, said Tuesday. “When the world’s biggest market takes a breather for a year, it’s tough,” Engel said in a telephone interview.
    Source: http://www.windaction.org/news/23895

    December 08, 2009: Announce Layoffs
    Vestas to furlough 500 at Windsor plant next year. Reason for furlough: “Due to the credit crisis, the upgrading in the U.S.A. is not progressing as quickly as planned,” he said.
    Evan Dreyer, a spokesman for Gov. Bill Ritter, who has promoted a “New Energy Economy” for the state, said, “Vestas is fully committed to Colorado for the short term, medium term and the long haul.”
    Ron Lehr, Western representative for the American Wind Energy Association, a trade group, said Vestas’ announcement was “not a surprise.”
    Wind-farm projects are capital intensive and require financing.
    “There’s been a complete turnover in the financing situation,” Lehr said. “The private-market financing disappeared and now we have the government providing financing.”
    Source: http://www.denverpost.com/business/ci_13947586#ixzz0jlofR7bD

    December 09, 2009: State to the Rescue:
    Vestas Wind Systems to receive incentive money amid worker furloughs. Vestas Wind Systems is in line to receive about $6 million in state and local incentives at the plants where it plans furloughs or a hiring freeze, according to state and federal reports.

    The Windsor factory received about a $4 million incentive package from state and local agencies, according to a U.S. Department of Energy report. The package includes grants, tax rebates and job-training funds.

    Weld County provided a $792,000 personal property- tax rebate over 10 years, according to county-commission meeting minutes.

    Source: http://www.denverpost.com/business/ci_13955791?source=pkg

    December 10, 2009: It Christmas, spread the wealth
    Vestas workers to remain on the job. Employees at the Vestas wind-turbine plant in Windsor will continue to report to work despite reports earlier this week of furloughs at the facility.

    Vestas officials said Wednesday that although production of turbine blades is being temporarily halted, the plant’s 500 workers will continue to draw paychecks as they are assigned to training, facility maintenance and other nonproduction jobs.

    Vestas official said that the furlough reports stemmed from miscommunication between the company and media outlets.
    Source: http://www.denverpost.com/business/ci_13964331?source=pkg

    January 12, 2010:
    Vestas gains $97 million wind-turbine order
    Vestas Wind Energy Systems — which temporarily halted turbine production at its Windsor plant in December — said Monday it had received an order for 18 turbines from Canadian utility TransAlta Corp.
    The turbines will expand an existing wind farm in New Brunswick. Cost of the project is estimated at $97 million, according to a TransAlta statement.

    Vestas officials did not respond to a question as to whether the sale would affect production at the Windsor factory

    Source: http://www.denverpost.com/business/ci_14169306?source=pkg and
    http://www.windaction.org/news/25099

    UFFDA….Yes Big Industrial Wind represents high costs with little social benefits.

    Promise jobs…because the tax payers will foot the bill, now that UFFDA…

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