The wind energy production tax credit (PTC) may have been extended, but companies across the wind power supply chain are still suffering from the uncertainty resulting from the incentive's near lapse.
Nonetheless, many firms are doing their best to mitigate the effects of the precarious market situation. For instance, wind turbine manufacturer Vestas - which was forced to lay off thousands of employees as well as shutter all three of its U.S. research and development facilities last year - has developed a work-share program that reduces employees' hours but preserves their jobs, company spokesperson Andrew Longeteig tells NAW.
Like many other wind energy companies, Vestas has been affected by the market slowdown and reduction in orders resulting from last year’s policy uncertainty. However, under the new work-share program, which was recently approved by Colorado’s Department of Labor and Employment, employees receive wages for the lost hours on a pro-rated basis from the unemployment insurance trust fund.
The benefits of this program are available for up to 18 weeks, compared to 26 weeks for laid-off workers, Longeteig explains. Hourly employees at Vestas’ Brighton and Windsor blade manufacturing facilities are working 32-hour work weeks and participating in the work-share program, while a recently approved program for the company’s tower factory in Pueblo will allow for 24-hour work weeks.
Longeteig says the work-share plan not only helps the employees keep their jobs, but also allows the company to retain these experienced industry professionals. Another benefit of the program is that if wind turbine demand were to pick up again this year - especially now that the PTC has been extended - Vestas would avoid the costs associated with rehiring and training new workers, Longeteig notes.
Some industry analysts warned earlier this year that widespread layoffs could hurt not only wind energy companies, but the industry as a whole, by stalling research and development efforts. If more companies throughout the industry were to adopt similar programs, these ramifications could potentially be avoided, says Pedro Guillen, a partner at clean energy advisory firm Kinetik Partners.
According to Dan Shreve, director and partner at MAKE Consulting, work-share programs are especially beneficial to companies with highly skilled workers.
"A work-share program is a costly approach but can increase the competitiveness of [a manufacturer] by allowing retention of key employees and demonstrating loyalty to those employees," he explains. "The cost of hiring and firing those types of specialized resources must be taken into account as well. Work-share arrangements are more critical to companies with highly skilled workers, such as tower welders and heavy-haul drivers."
However, work sharing may not be the right approach for every company, Shreve adds.
"In terms of the usefulness of the program, companies need to take an honest look at what their manpower needs may be in the next up-cycle and what their long-term demand is likely to be following that upturn," he advises. "Maintaining an inflated payroll, even under a workshare plan, that is fundamentally out of sync with regional-market demand can doom a company, especially smaller companies with limited financial resources."
The work-share model has been used widely in Europe, Guillen notes. But despite a provision enacted in February 2012 as part of the Middle Class Relief and Job Creation Act that requires the federal government to pay for the benefits of work sharing, not all U.S. states have these programs in place.
According to the U.S. Department of Labor (DOL), 25 states and the District of Columbia currently have some type of work-sharing program established: Arizona, Arkansas, California, Colorado, Connecticut, the District of Columbia, Florida, Iowa, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island, Texas, Vermont and Washington.
Notably, this list includes several important wind energy states, such as Iowa and Texas. More states are likely to follow: In August, the DOL awarded a total of $100 million to states to develop or improve their work-share programs, so wind energy employers in other states eventually may be able to take advantage of these programs and, potentially, reduce painful layoffs.