The world’s biggest wind turbine maker will cut 3000 jobs and close five factories after falling demand prompted a plunge in profits.
Vestas, which closed Britain’s only wind turbine factory at Newport on the Isle of Wight last year, blamed the downturn on weaker demand in Europe and continued uncertainty over America’s renewable energy policy.
Ditlev Engel, chief executive of the Danish company, said that Vestas had far more employees “than orders and work can justify”. Vestas had to act independently to protect its market position, he said.
The company controls about 12.5 per cent of the global market for turbines, just ahead of General Electric, the American conglomerate, at 12.4 per cent.
“We are doing this to ourselves so that others won’t do it to us,” Mr Engel said.
As part of a sweeping restructuring, Vestas plans to close four plants in Denmark and a fifth in Sweden, with the loss of 1240 jobs. A further 1660 jobs will go from other plants elsewhere in the world that will, however, stay open.
Vestas aims to reduce its overall headcount by 13 per cent to 20,800.
“No matter where on Earth we sell our products, we have got to be competitive,” Mr Engel said as he announced that profits for the three months to September 30 had fallen 24 per cent to €126 million ($128m).
The company said that it had sold 719 turbines in the third quarter, 27 per cent fewer than in the same period a year ago. It said that indebted European governments were holding back from investing in new wind farms.
The industry is facing a slowdown in orders from Spain, previously one of the world’s best markets, after the administration in Madrid threatened swinging cuts to future renewable energy incentives.
“There is stagnation in the European wind industry,” Birger T. Madsen, a partner at the Danish wind energy research group BTM Consult, said.
Nick Hyslop, renewable energy analyst at RBC Capital Markets, said that the market in North America was also sluggish. Unlike the European Union, the US has not imposed federal targets for renewable energy. The mandates were expected as part of a climate Bill that has been been held up in the Senate.
“Despite warm words from President Obama about the US moving to a low-carbon economy, the policies have never materialised,” Mr Hyslop said.
Britain remains one of the few strong markets in Europe after the government reaffirmed its commitment to build thousands of offshore wind turbines. However, Vestas faces growing competition from Chinese and Indian manufacturers.
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