Just days after wind turbine manufacturer Vestas announced a round of layoffs at its Pueblo, Colo., tower manufacturing facility, the company has eliminated positions at its Brighton, Colo., nacelles plant, and its Denmark-based parent company has announced it will lay off an additional 1,400 employees globally by year-end.
Once again, Vestas blamed the uncertainty surrounding the production tax credit (PTC) and a general market slowdown for the Colorado workforce reductions. According to Vestas Americas spokesperson Andrew Longeteig, the Brighton layoffs represent about 1% of the company's total workforce in the U.S. and Canada.
However, ‘Vestas will continue to export turbine components from its U.S. factories to its customers in Canada, Mexico, and Central and South America,’ he said in an emailed statement to NAW.
Sen. Mark Udall, D-Colo., one of the most ardent congressional supporters of the PTC, said Vestas' latest wave of layoffs is "another painful reminder of the real-life consequences of congressional inaction on the wind production tax credit."
"This latest round of layoffs – the second this month hitting Colorado families – should be a wake-up call to Congress and those who have attempted to politicize the PTC," Udall said in a statement. "I will continue to lead the push in the U.S. Senate to extend the PTC and remind my colleagues of what is at stake.
"We need to redouble our efforts and extend the PTC ASAP," he continued. "Congress' inaction has real-life consequences for families in Colorado and across our nation. Our inaction is hurting Colorado families and ceding our leadership on wind energy to China."
Tip of the iceberg
The recent layoffs in Colorado represent just a fraction of Vestas' planned workforce reductions. In January, the company announced it would eliminate 2,335 positions by the end of the year. However, in releasing its financial results for the second quarter, Vestas said it would lay off 1,400 more employees than it had originally anticipated.
Of those 1,400 additional layoffs, 1,100 positions will be made redundant by the end of September, and the rest will come by the end of the year.
About 20% of the eliminated positions will be in the Americas; 55% in Europe, the Middle East and Africa; and 25% in the Asia Pacific region. The company said more details on the locations of the layoffs would be released once negotiations with unions were finalized.
These workforce reductions will save the company more than 250 million euros – 100 million euros more than would have been gained if the additional layoffs had not been made, Vestas said.
Of course, facing a downturn in the U.S. market as a result of policy uncertainty, the company is preparing for a slower 2013. In its second-quarter interim financial report, Vestas said it expects about 5 GW in shipments next year, compared to the 6.3 GW forecasted for this year. (The company originally anticipated 7 GW in shipments for this year but has since revised the number to 6.3 GW.)
As a result of the layoffs and other cost-reduction measures, Vestas CEO Ditlev Engel expects the company to be profitable in 2013.
"The further reduction in the workforce is part of the continued cost-saving plans which Vestas has been working on since November 2011," he said in a statement. "It is always unfortunate to have to say goodbye to good colleagues in Vestas, but we have said before that 2012 will be tough and 2013 will be even tougher for Vestas. And, in order to reach our target of making 2013 profitable, it is, unfortunately, a necessity."
Vestas reported revenues of 1.611 billion euros in the second quarter, which represents a 15% increase over the second quarter of 2011. Earnings before interest and taxes (EBIT) before special items, however, dropped 48% to 40 million euros, and the EBIT margin after special items was 18 million euros.
Notably, Vestas reported a combined backlog of turbine orders and service agreements of 14.4 billion euros as of the end of June – the highest level ever recorded.
The company said it would also investigate outsourcing opportunities and increase the involvement of its suppliers.
