Mitsubishi Heavy Industries Ltd. (7011), a Japanese maker of heavy machinery, will suspend construction of its wind turbine manufacturing plant in Fort Smith, Arkansas because of sluggish demand in the U.S.
The decision came after the company’s board of directors approved an inventory writedown and related measures regarding its onshore wind-turbine business on March 29, Hideo Ikuno, a spokesman for Mitsubishi Heavy, said by phone today.
“We are putting the factory on hold for now,” he said. The company may resume construction once there are signs of a recovery in demand, Ikuno said.
The price of wind turbines fell 4 percent in the second half of last year from the previous six months to 910,000 euros ($1.2 million) a megawatt, the lowest since at least 2008, according to Bloomberg New Energy Finance. “Since the 2008 banking crisis, demand for wind turbines in the North American market has stagnated, and the commercialization of cheap oil- shale gas and other matters have had a further dampening effect,” the company said in a statement March 29.
The factory was due to originally start operations in the second half of 2011 with an initial capacity of 600 megawatts a year. Mitsubishi Heavy expects to book a one-time extraordinary loss of 20 billion yen ($241 million) from its onshore wind- turbine business for the year ended March, according to the statement.