August 29, 2012
General News

Troubled Vestas in partnership talks with Mitsubishi

By BusinessGreen Staff | 28 August 2012

Vestas has announced it is in talks with Mitsubishi Heavy Industries over a possible “strategic cooperation” as the embattled wind turbine manufacturer looks to restructure following its latest round of job cuts.

Shares in the Danish wind turbine manufacturer have dropped 44 per cent since the turn of the year, as the company suffers in the face of low-cost Chinese competition and cuts to government subsidies across the globe.

However, its share price bounced back to its highest level since May on the back of a statement published on the company website yesterday, confirming “there is an on-going dialogue” with Mitsubishi “regarding a potential strategic cooperation”.

“If the dialogue results in an agreement, Vestas will make a company announcement on the issue immediately thereafter,” it added.

Speculation is mounting that Vestas may be an acquisition target after newspaper reports claimed the company was considering putting itself up for sale as part of debt restructuring talks.

The company’s difficult past year coincides with a push by the Japanese government to encourage more renewable energy through a system of feed-in tariffs – a fact which could make Vestas’ significant manufacturing capacity attractive to Japanese investors.

Vestas said last week it would trim an additional 1,400 jobs on top of 2,335 previously announced cuts as it looks to lower costs by more than €250m to cope with a predicted decline in wind turbine installations next year.

In July it also scrapped plans for a wind turbine factory at a 70-acre site in Sheerness, Kent, which was expected to employ 2,000 people.

However, the company is by no means the only turbine manufacturer looking to lower costs in response to changing market conditions.

Clipper Windpower’s new owners, Platinum Equity, last week announced it was halving the company’s workforce, while engineering giant Siemens yesterday confirmed it was stepping up a programme of redundancies that will see 500 jobs cut by 2016 following prolonged slow demand for wind energy components.

“The reason for the changes is the lasting weakness in demand for wind mills, which should be compensated by demand for drives from other industries in the long term,” Siemens said in a statement.

The reductions come on top of thousands of job cuts already announced by Siemens this year across its various businesses. Chief executive Peter Loescher has cut the company’s profit target once this year already, and said last month the new goal could also prove difficult to achieve in the face of declining demand from China and the eurozone debt crisis.

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