Vestas Institutes Reorganization, Braces for Wind Market Slowdown

Vestas, the world’s largest wind turbine manufacturer, plans to lay off 2,355 employees (about 10% of its workforce), reduce its fixed costs by more than €150 million ($192 million), reorganize management, and close one of its 26 factories in preparation for a potential slowdown in the U.S. wind market in case the production tax credit is not extended at the end of 2012, the Danish firm said on Thursday.

The company’s reorganization through streamlining of support functions and closing of factories is expected to “align capacity with market demand,” it said in a statement. “The reorganisation will make Vestas an even more inclusive organisation.”

Vestas’ reorganization will mean that its executive management will be extended to six members “to allow greater functional focus on all key parts of the value chain and to drive a stronger performance management,” it said. A Global Solution and Services unit will contribute to improving the performance of both existing and upcoming wind power plants and accelerate development of the services and solution business. Manufacturing will be consolidated “to capture cost synergies and reduce capital required for future growth as well as to increase flexibility in case of a prolonged industry slowdown.”

The move comes as the economic slowdown has forced governments in the European Union and the U.S. to rein in subsidies to renewables. Meanwhile, competition among the world’s wind turbine makers has stiffened, stemming in part from lowered prices and a wind turbine supply glut from Chinese manufacturers.

Chinese news agency Xinhua reported that more and more Chinese wind turbine makers are looking at the world market prompted by domestic surplus production capacity. Citing the China Wind Energy Association, the agency says Chinese wind turbines are quoted at prices that are 20% to 30% lower than those of foreign counterparts in the world market.

Sources: POWERnews, Vestas, Xinhua

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