The top executive of a Warren-based wind-turbine blade maker said the decision to build a new manufacturing facility in Iowa, rather than in Rhode Island, was based on that state’s proximity to the market in which the blades will be used.
The blades made by TPI Composites are typically 35 meters to 40 meters long, and can weigh 10,000 to 20,000 pounds each, said Steven C. Lockard, chief executive officer of the company.
Transportation costs for these blades, which are typically shipped by truck, can run into the “tens of thousands” of dollars, he said in a telephone interview Wednesday.
“In this case, there really wasn’t an option for this particular factory to be located in Rhode Island,” he said.
On Monday, TPI said it had reached an agreement to supply wind-turbine blades to GE Energy, one of the largest suppliers of wind turbines. As part of the agreement, TPI said it would build a 316,000-square-foot manufacturing facility in Newton, Iowa. The plant is expected to create 500 jobs there.
The facility will expand TPI’s capacity to produce blades for GE’s 1.5- megawatt wind turbines. GE intends to sell the turbines to customers within about a 500-mile radius of the blade-making facility in Iowa, Lockard said.
That whole central region, Lockard said, is a rapidly growing market for wind energy.
TPI designs and manufactures parts and structures out of fiberglass, resins and other materials for the transportation, energy and military-vehicle industries. The company once was a major manufacturer of sailboats and yachts, such as the J Boat. But in 2004, it spun off its marine business into a separate company, Pearson Composites.
This year, TPI has greatly expanded its wind-turbine blade business. In April, the company began construction of a 190,000-square-foot turbine-blade manufacturing facility in the Taicang Port Development Zone of China. TPI said it expected to employ about 450 people there, with production to begin in the first quarter of next year.
Last month, VienTek LLC, a company TPI jointly owns with Mitsubishi Power Systems, opened a second manufacturing plant, in Juarez, Mexico, which tripled its capacity. VienTek now has two facilities on a 45-acre campus totaling about 477,000 square feet of manufacturing space. TPI said VienTek employs more than 900 people, compared with 400 last spring.
In Warren, TPI employs about 100 people at its 250,000-square-foot facility, which is primarily used for research and development, and some limited production.
The company also has a manufacturing facility in Springfield, Ohio.
Lockard said he couldn’t provide figures for how much it costs to transport turbine blades. But in 2003, the company did a study for the Sandia National Laboratories that examined the costs of producing wind turbines, including transportation.
The study said there were several components to the cost of moving the blades: freight, over-dimension charges, escort charges, state permits and return freight.
It estimated the cost per truck to ship two 30-meter blades from Warren to Burlington, Vt., to be $1,670. Shipping to Buffalo, N.Y., was expected to cost $2,714 per truck, and to Morgantown, W.Va., $3,469. Two 30-meter blades can fit on one truck, while only one 45-meter blade can fit. Each wind turbine needs three blades.
The study found that transportation accounted for about 7 percent of the total cost of a wind-turbine blade. Labor accounted for 36 percent; materials, 31 percent; profit and overhead, 22 percent; and other, 4 percent.
Transportation costs probably have risen since the study was published 4 ½ years ago. The year before publication, the average price of gasoline was about $1.54 a gallon. Today, the average price is about double that amount.
Another important factor in TPI’s decision to expand in Iowa was the economic incentives offered by the state’s economic development officials, Lockard said.
State and local officials there have agreed to provide nearly $5 million in incentives, with the possibility of even more.
In addition, there was a large pool of potential employees in Newton because of the closure of Maytag’s international headquarters, which once employed 4,000 people, said Craig Hamilton, executive director of the Jasper County Economic Development Corporation. Nearly 1,000 people were laid off this year, leaving only 25 to 30 employees to run a parts warehouse operation, he said.
Asked whether TPI would consider building a manufacturing facility in Rhode Island if there was a wind farm in the region, Lockard said it would take more than one project to establish the need for such a facility.
“It can’t be one wind farm, per se,” he said. “One project isn’t enough to justify a factory.”
But as the wind-energy market grows in the Northeastern United States, “hopefully that will justify the need” for a new facility, he said.
Would it be in Rhode Island?
“That would be a real natural for us,” he said, since the company is based in Warren. But he said the company has no specific plans. “We continue to be interested in any logical place for our business. Rhode Island would be a logical place for us, if we have a business plan that would justify it.”
TPI has had discussions with state officials about building a wind-turbine manufacturing facility at the state-owned Quonset Business Park in North Kingstown.
But the company has long said it would not invest in the state until the prospects of offshore wind farms on the East Coast become more certain, according to Michael McMahon, managing director of Placeholder Partners and the former head of the Rhode Island Economic Development Corporation.
“It’s very geographic specific,” McMahon said. “It comes down to logistics. If the Northeast and Mid-Atlantic become viable locations for wind turbines, then Quonset is a perfect location for TPI.”
For now, McMahon said, wind-energy projects have a greater chance of success in Texas and the Great Plains states, where wide expanses of open space are available with few neighbors to complain about cluttered views.
There are a handful of wind turbines and small wind farms operating around New England. There have been various proposals for large-scale wind farms in Rhode Island and elsewhere in New England, although none has yet been constructed. The project furthest along the regulatory approval process is Cape Wind, a proposal by a private developer to build a 130-turbine wind farm in Nantucket Sound. Cape Wind Associates still needs several approvals and is awaiting the results of an environmental impact study conducted by the Minerals Management Service, the lead federal agency for regulatory oversight of offshore wind projects in federal waters. That project was first proposed in 2001.
In Rhode Island, Governor Carcieri has proposed building a power-generating facility on the scale of the proposed Cape Wind project that would be large enough to generate 15 percent of the state’s electricity. Depending on where it is situated, it could cost $900 million to $1.9 billion to build. A study prepared for the state identified 10 potential offshore sites for the project.
Most recently, Allco Renewable Energy Group Limited, a New York investment company, said it was considering erecting 235 to 338 large wind turbines in state waters just off Watch Hill, Block Island and Little Compton. The company said it proposes to start construction in the first quarter of 2009 and go into commercial service a year later.
By Timothy C. Barmann
Journal Staff Writer
With reports from Journal staff writer Benjamin N. Gedan
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