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Wind-Power Giant Keeps to Its Course

by Paul Glader
Wall Street Journal, May 6, 2009

Danish wind-power giant Vestas Wind Systems A/S is hoping that a greener U.S. economy will translate into more green in the bank.

Alternative-energy projects have been scaled back in recent months as oil prices have dropped and developers have struggled to secure financing. Texas oilman T. Boone Pickens delayed his $10 billion wind farm in Texas, and solar-power suppliers have laid off workers.

But Vestas is proceeding with a $1 billion plan to build six factories in Colorado and a research center in Houston that could create 4,000 U.S. jobs by the end of next year. Vestas, the world's largest maker of turbines but a distant second to General Electric Co. in the U.S., is laying off workers in Europe and shifting production to the U.S. to better compete with GE. It hired 650 workers at its new blade factory in Windsor, Colo., and is recruiting 500 for a tower factory in Pueblo, Colo.

Vestas's push is part of a scramble among wind-power companies to better position themselves in the U.S., in the hope that President Barack Obama's administration will make good on pledges to back alternative-energy production. The $787 billion economic-stimulus bill enacted in February contains modest new tax breaks.

GE and Germany's Siemens AG, which is No. 3 in the U.S., also are adding production capacity and hiring workers. Siemens on Tuesday plans to announce that it will open a $50 million factory in Kansas to make turbine parts. Companies from Spain and India are also developing a presence.

Vestas Chief Executive Ditlev Engel is particularly bullish on the U.S., calling the corridor from North Dakota to Texas the "Saudi Arabia of wind." He says Vestas is picking up talented engineers and quality specialists being laid off by auto makers and other manufacturers.

SOS Staffing, which is recruiting for Vestas in Colorado, says some new hires are moving from hard-hit manufacturing states like Michigan. And small parts makers that used to supply the auto industry are now retooling their equipment to make the thousands of metal parts that go into a wind turbine.

The American Wind Energy Association estimates the U.S. will add 5,000 megawatts of new capacity this year, down from 8,500 last year. That made the U.S. the global leader in wind-power capacity, surpassing Germany with 25,300 megawatts -- enough to power seven million homes.

Analysts say wind's short-term prospects are better than those for solar energy because it is cheaper and easier to deploy. Gordon L. Johnson II, head of alternative-energy research at Hapoalim Securities in New York, says wind power can generate electricity at 30% to 40% lower cost than solar panels.

Vestas, which posted revenue of (euro)6 billion ($8 billion) last year, claimed 19.8% of the roughly $48 billion global wind-turbine market in 2008, down from 22.8% in 2007, according to BTM Consult APS, of Denmark. GE was second, with 18.6% market share in 2008, up from 16.6% a year earlier. But GE, of Fairfield, Conn., dominates the U.S.; GE's 2008 market share was 43%, compared with Vestas's 13%.

GE's wind-turbine business, acquired from Enron Corp. in 2002, recorded $6 billion in revenue last year. The company's seven plants world-wide can build 3,600 turbines a year and are sold out through 2011, says Victor Abate, vice president of GE's renewable-energy business, though some customers are postponing deliveries. A plant in Pensacola, Fla., will make the company's new 2.5-gigawatt turbines in North America.

Siemens projects that its new factory in Hutchinson, Kan., and an adjacent service facility will employ about 400 workers by the end of 2010. It reports no order cancellations and says it is seeing more bid requests. But Andreas Nauen, president and chief executive of Siemens Wind Power, says "new orders are not coming in as quickly as we expected."

The companies say building facilities in the Midwest's Wind Belt will reduce costs for transporting the equipment -- blades larger than a 747 wingspan and towers as high as a football field is long -- to wind farms going up in the Great Plains states.

Paul Glader
Wind-Power Giant Keeps to Its Course
Wall Street Journal, May 6, 2009

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