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Analysis – Vestas puts ‘for sale’ sign on factories 

Credit:  18 March 2013 by James Quilter, windpowermonthly.com ~~

Over the last year Vestas has been engaged in a substantial restructuring programme to cut costs and overcapacity.

The staffing figures tell how far this has come. In 2010, Vestas employed around 25,000 people around the globe. Last year, chief executive Ditlev Engel said he wanted to shave this figure to around 16,000.

It could come down even more. In what is described as building “flexibility” into the manufacturing process, Vestas has signalled it is looking to offload some of its factories involved in machining or producing raw materials. However, included in this list is the company’s only tower factory in Pueblo, in the US state of Colorado, which recently won a multi-million dollar supply deal from an unnamed third-party manufacturer.

Speaking to Windpower Monthly, the man handling the programme, Vestas chief operating officer Jean-Marc Lechêne, referred to last year’s sale of its tower factory in Varde, Denmark, to Chinese firm Titan Energy as a template for future deals. As part of the deal, Vestas agreed to continue sourcing from the plant.

Cynics would assume this was just a way to free up cash and reduce the payroll. But Lechêne denied this is the case. “No, the goal of the ongoing cost-out initiatives in manufacturing is to create a lighter, more flexible company that is able to swiftly scale up or down our production capacity to meet customer and market demands,” he said.

“Staff reductions are only one part of the equation. In adjusting the manufacturing footprint, one approach we’re taking is to share production capacity, such as with the third-party deal announced for the towers factory in Colorado. There are also smaller arrangements of a similar nature for other factories. Another approach is to sell factories and then source from them.

“We want to find buyers who will become long-term partners. Vestas would become a major customer to the new owners of any factory we might sell.”

Lechêne was clear that Vestas is reluctant to relinquish control of some parts of the process, such as blades.

Asked whether the company would consider selling off its blade plants, Lechêne said: “Some aspects of our manufacturing base are core to our business, such as blades, control systems or assembly. It’s important to the business that we control these processes.”

Undoubtedly, Vestas is putting the ‘For Sale’ sign up outside the lower end of its manufacturing business . The bigger question is, who will buy? Although the Pueblo factory has secured a big order, and US tower competitor Broadwind has also pulled in contracts, it is arguable that this is also down to fewer US factories and sanctions against Chinese and Vietnamese manufacturers.

Last year a number of tower factories in the US were either closed, sold off or adapted to other industries. Texas-based tower manufacturer Trinity Structural Towers, for example, is moving some of its production away from wind into the manufacturing of railcars.

The other question is the long-term effect of these moves. If Vestas does not consider towers “core” to its business, competitors such as Enercon and Siemens seem to disagree. Both are investing in towers, with the latter taking the installation height above 200-metres, while Siemens has produced a steel “shell” tower that can be easily transported in parts.

There can be no doubt that Vestas is focused on cost-saving across the board, with many of the plants to be affected located in China, Germany, Norway and Sweden, as well as the US. Lechêne said: “Vestas is a global company with a global manufacturing footprint, and we are taking a broad perspective in terms of possible divestments. We will take the time required to find buyers who will become long-term partners and who will continue producing to the same high standards for quality, reliability and safety.”

Source:  18 March 2013 by James Quilter, windpowermonthly.com

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

The copyright of this article resides with the author or publisher indicated. As part of its noncommercial educational effort to present the environmental, social, scientific, and economic issues of large-scale wind power development to a global audience seeking such information, National Wind Watch endeavors to observe “fair use” as provided for in section 107 of U.S. Copyright Law and similar “fair dealing” provisions of the copyright laws of other nations. Send requests to excerpt, general inquiries, and comments via e-mail.

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