National Wind Watch: Wind Energy News Industrial Wind Energy/Wind Power News

April 23, 2012

Project deflates: No wind turbine plant

Filed under: Montana — National Wind Watch @ 8:16 am

Two years ago, Butte was abuzz after a German wind turbine manufacturer said it would build a $25 million plant in the Mining City, providing a jolt for both the local and state economy.

Joachim Fuhrländer, chairman of Fuhrländer AG, gathered economic development officials at the Butte-Silver Bow Chamber of Commerce to say that his company was “here to promise again (we will come) to Butte.”

Gov. Brian Schweitzer led a tour of the 40-acre site in the Butte TIFID west of town, where the factory was planned to be built. Schweitzer explained the workforce training grants for which Fuhrländer would qualify and hosted the contingent that evening at his Georgetown Lake home.

The factory would have been an incredible coup for Montana, as Fuhrländer had considered locating its first North American manufacturing plant in a number of Midwest states as well. It would have brought hundreds of well-paid, steady jobs to the local economy and may have spurred hundreds more in off-shoot and supply businesses.

Two years later, Fuhrländer has disappeared from the Butte radar screen. The company never built a factory in North America as a worldwide recession and a sharp decline in the wind energy industry, especially in the United States, doomed the company’s expansion plans for the continent.

“(Fuhrländer) needed to ink a contract to economically justify the investment,” said Evan Barrett, chief business development officer for Gov. Schweitzer’s office of economic development. “They never got that.”

A number of factors combined to keep Fuhrländer from landing that “anchor customer” and expanding to Montana. According to industry analysts, about half as many turbines were installed in the United States in 2010 compared to 2009, causing prices to tumble just as the company was making promises to Butte. Yet, demand for wind turbines in North America had been stagnate as early as 2008 and Barrett said federal polices “led a number of manufacturers to conclude that the boom-and-bust cycles in the U.S. are too risky.”

THE BOOM

In 2007, Montana first began to make headway with Fuhrländer, a family-owned wind turbine manufacturer based in the small town

of Waigandshain, Germany. The company, successful in Europe, was looking to expand across the Atlantic Ocean.

At that time turbines were on back order, with many manufac-turers having sold their inventory long before they had been built.

The industry was expanding, and Montana, with its ample wind resources and business-friendly

climate, was well positioned to be a major player. Fuhrländer took note.

Then came the mortgage crisis, the housing crisis, the crisis on

Wall Street and economic crises in numerous countries in the European Union. Some of the tax credits available to wind energy companies dried up and so, too, did large investors.

The Fuhrländer project hit the skids. And coming to that realization was a tough blow to those in the economic development game, both locally and in the state office.

“Anytime you put a lot of effort into something that doesn’t come through it’s disappointing,” said Karen Byrnes, director of community development for Butte-Silver Bow.

Yet, projects with great promise falling through are a natural part their jobs.

“In economic development, (if you land) one out of every eight or 10 projects you get involved in, you’re doing great,” said Jim Smitham, director of the Butte Local Development Corp. “Some of them take a long, long time.”

But most of them aren’t sporadically splashed across the front page for a couple of years. Smitham said the public nature of Fuhrländer’s wooing showed why the Butte development community often plays things close to the vest.

He said Fuhrländer is “a caustic example of a project that was announced too early.”

“People were very excited about it and rightfully so, because it would have been a huge hit for us,” Smitham said. “But when it doesn’t come through there is huge disappointment and people are left wondering what happened.”

Butte-Silver Bow Chief Executive Paul Babb agreed.

“It’s always disappointing when a project is announced (and it doesn’t happen),” said Babb. “Butte has had too many false hopes.”

According to Barrett, Fuhrländer’s plans for Butte became public in the early stages because that is what the small, privately held company wanted.

“That’s unusual,” he said. “And having done this for 25 years, you never want to be too public on the front end. Economic development is not for the impatient or the fainthearted.”

NO BLAME GAME

The package that Montana and Butte-Silver Bow put together has not been faulted for failing to land the company.

“We put together a good proposal,” said Smitham. “We stretched our incentives as far as we could.”

From the state perspective, Barrett agreed.

“It was a very good package,” said Barrett. “Obviously they liked the package and it was rewarded with the site decision.”

Out of control economic realities put the kibosh on the project, at least for now.

But no one is prepared to give up. The passage of time is not kind to a project of this size, but Barrett said Montana and Butte-Silver Bow now “have a sharpened tool and package on the shelf that is ready to be dusted off and modified.”

Smitham, too, is not ready to close the book.

“It could very well resurrect its head,” he said. “We are still open to welcoming Fuhrländer here in Butte. They may still have views to get into the U.S. market and if they do, I hope they still remember what they told us.”

FUHRLANDER TODAY

Yet, it seems that North America is no longer in the company’s plans, at least in the short term. Phones are disconnected at the former office of Fuhrländer NA, the company’s base of operations for the continent.

However, it has decided to expand elsewhere. South of the Panama Canal, Fuhrländer has invested millions of dollars and signed contracts worth millions more.

In February, Fuhrländer agreed to sell $524 million in wind turbines in Brazil, according to Forbes Magazine. Later this spring, they plan to break ground on a multi-million wind turbine manufacturing plant, similar to what they had planned for Butte, in Brazil’s northeastern-most state.

Fuhrländer has also looked to breaking into the energy market in Eastern Europe, namely Ukraine and Romania, according to German media reports.

COUNTY DIDN’T LOSE MUCH

Butte-Silver Bow spent about $15,000 to help finance a business plan and feasibility study for the company, small potatoes compared to the economic benefit it would have brought to the area.

Babb said it is “bad business” to not invest a small amount of initial money in order to get a better idea of the viability of the project.

“It not like the old days when we’d just roll out the red carpet and not do our homework,” he said. “We were very aggressive with this, but sometimes you’re not successful just because the timing isn’t right.”

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