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Recap: U.S. Wind Energy Layoffs Continue in Colorado, Iowa as Federal Policy Uncertainty Continues

More jobs in American wind power were lost this week, this time in manufacturing facilities in Colorado and Iowa, in the absence of a policy signal only Congress can provide: extension of the Production Tax Credit, the policy driver behind the rapid growth in U.S. jobs and manufacturing since 2005.

Layoffs announced so far this week include:

  • In Cedar Rapids, IA, Clipper Wind Power downsized its operations in reducing the company’s staff by 32%, from 550 employees to 376.
  • In Brighton, CO, Vestas Wind Systems cut about 30 workers on Monday, leaving about 200 still  employed. These cuts follow more than 90 layoffs at the company's tower plant in Pueblo, announced last week.
  • Walker Component Group, a Denver-based cable supplier for Vestas Wind Systems, has also had to cut a portion of its workforce, reducing its staff by 15 workers to 24.

Confirming that the layoffs at Walker Component Group were directly tied to Congress’ inaction to extend tax relief for wind power, company President Craig Walker told the Denver Post, “[T]he thing that distresses me is that there is so much controversy about it in Washington.

“Not here,” Walker continued, “not at other energy companies.”

Immediately responding to the layoffs at Clipper Wind power, the Cedar Rapids Gazette in Iowa editorialized that “the tax credit is a necessary tool, although it shouldn’t live forever. But Congress keeps playing games with this tax break, and the uncertainty has helped feed a boom-bust cycle in this industry over the past decade.”

This continues the drumbeat of support in Iowa, from opinion articles and recent editorials in the Des Moines Register and Denver Post to repeated statements by Sen. Chuck Grassley (R-IA), Govs. Terry Branstad (R-IA) and Sam Brownback (R-KS), and other leading Republicans.

“This week, once again, we are seeing the effects of policy uncertainty hit hard,” said Denise Bode, CEO of the American Wind Energy Association. “The people of Colorado and Iowa understand the importance of wind energy to their states and to America, and that’s why they and their representatives in Washington strongly support extending the PTC.  But unfortunately, jobs in Iowa, Colorado, and across the country will continue to be at risk until Congress acts.”

Among recent newspaper editorials supporting the PTC and noting the threat to jobs are:

Denver: “The industry has previously said that wind energy will soon be able to compete on the open market without the tax credit, and we think a short-term extension will help them get to that point. But we're also aware that early on in the next Congress, the nation's entire tax system will need review and overhaul if we are to get a handle on the federal debt…The wind association estimates that failure to extend the tax credit would result in the loss of 5,000 jobs in Colorado and tens of thousands more across the country. Given the state of the economy, we hope to see the Senate and the House rally around this bipartisan issue in short order.” (Denver Post, 8/6/12)

Des Moines: “Mitt Romney, the presumptive Republican presidential nominee, may have tilted at the wrong windmills when he said he would allow wind energy tax credits to expire… Gov. Terry Branstad and the entire congressional delegation heartily support the wind production tax credit and want it extended…there are good reasons why the tax credit should be extended for as long as necessary to get wind energy production to the point where it is competitive with other forms of energy.” (Des Moines Register, 8/5/12)

Bakersfield, Calif.: “[A} level playing field doesn't exist in the energy sector. Almost every form of energy receives subsidies of some sort, in the form of tax breaks, credits or direct investment. And in the case of fossil fuels, those subsidies have been around much longer than renewable energy credits, and many don't have expiration dates…Just the talk of expiring tax credits has some companies that manufacture wind turbines and other parts halting production and laying off workers.”  (Bakersfield Californian, 8/11/12)

This week’s layoffs add to a long list announced so far this year. Those include:

  • The largest wind tower manufacturer in the U.S., DMI Industries, announced 167 workers will be unemployed by November (August 7,Bloomberg News)
  • DMI Industries also announced that 216 jobs stand at risk in their plant in West Fargo, North Dakota (August 7, Bloomberg News)
  • LM Wind Power announced job reductions that will impact 94 full-time employees and 140 temporary workers and contractors (August 6, North American Wind Power)
  • Trinity Structural Towers said it will shift resources away from wind turbine tower manufacturing (August 14, Wind Power Monthly
  • Wind turbine manufacturer Gamesa furloughed 165 of its Pennsylvania-based workers (July 5, Bloomberg)
  • Wind measurement technology manufacturer NRG Systems laid off 18 Vermont-based employees in May, and an additional 12 in July– the first time in 30 years the firm has had to make any layoffs (May 22,Windpower Monthly and July 18, Burlington Free Press)
  • Wind turbine manufacturer Vestas plans to lay off 182 employees (January 12, Huffington Post)
  • Wind project developer Iberdrola Renewables laid off 50 U.S. employees, about half of whom were based in Oregon (January 25,North American Windpower)
  • Wind pattern analysis company Windlogics cut 10 of their Minnesota-based employees (July 2, Minnesota Public Radio)

 

These are just the tip of the iceberg of job losses expected throughout the wind energy supply chain. According to Navigant Consulting  37,000 Americans stand to lose their jobs by the end of the first quarter of 2013 if Congress does not extend the PTC. As seen here, Navigant projects that turbine deliveries will peak right now, in the third quarter of 2012, and then begin to steadily decline.

With that decline, employees at these factories will be let go at a rapid pace. According to a study on the historical impact of the PTC expiration on annual wind installation, the job-loss rate was between 73% and 93% when the tax credit was allowed to expire

“I’m deeply distressed that our wind industry colleagues are facing furloughs and layoffs due to lack of stable tax policy,” Bode said. “Unfortunately, the industry has begun letting workers go up and down our American manufacturing supply chain, which the industry has so proudly built up in support of the U.S. economy and made-in-the-USA manufacturing. Congress must act now to give wind energy a stable business environment to keep building this new industry and save 37,000 American jobs by the first quarter of next year.”   

Extending the Production Tax Credit (PTC) enjoys bipartisan support. Examples of Republican endorsements:

Gov. Sam Brownback (R-KS) and Sen. Jerry Moran (R-KS): “If we expect the wind-energy industry to provide for our country’s future energy needs and make long-term investments in their businesses, Congress must reauthorize the wind-production tax credit that expires this year.  By extending the wind PTC, Congress will allow the wind industry to complete its transformation from being a high-tech startup to becoming cost-competitive in the energy marketplace.” (Op-ed in The Wichita Eagle, 3/18/12)

Sen. Charles Grassley (R-IA): “Grassley said extending the Production Tax Credit is a "no-brainer for many of us," and noted he has introduced legislation that would do that. “The stakes for the wind industry and the country in general will only get worse with delay. It's time to act, not politick," he said.” (Wall Street Journal, 5/24/12)

Karl Rove, GOP strategist: “My hope is that after the election people say, look, let’s start making some priorities and find some things that we can agree on, and maybe one of them is the production tax credit.  It is a market mechanism, you don’t get paid unless you produce the power, and we’re not picking winners and losers, we’re simply saying for some period of time we will provide this incentive as we scale up and get improvements in technology.” (Associated Press, 6/5/12)

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