Project Development, Wind Power

Vestas To Cut 2,335 Jobs Worldwide; 1,600 U.S. Jobs May Be Next

Denmark-based turbine maker Vestas announced Thursday that it would lay off 2,335 employees worldwide, cease production at one of its 26 facilities, and warned that more cuts could be on the way.

The announcement underscores the difficulty even the largest global companies face as they work to keep pace with sinking prices and uncertain policy.

Perhaps the most uncertainty currently facing the wind industry is in the United States where the Production Tax Credit is set to expire at the end of the year. The credit pays wind producers 2.2 cents per kilowatt hour generated, and is regarded as crucial to maintaining the market’s development and manufacturing momentum. Vestas has recently threatened that such an expiration could cause it to halt its American operations. On Thursday, it hardened that stance, saying that if Congress fails to extend the credit, it is prepared to shut down key U.S. operations, and that doing so could mean an additional 1,600 jobs lost at manufacturing facilities.

”We are now preparing Vestas for the situation where one of our largest single markets, the USA, may be facing a tough 2013,” said President and CEO Ditlev Engel. “This will have a huge impact on our business if we do not act now.”

The savings from its layoff announcement Thursday would be 150 million euro. The company would save more than that if it were to shut down American operations. Of the 2,335 employees to be laid off, about 1,300 will come from Denmark. After the 10 percent reduction in staffing, Vestas will have 20,400 global employees, including 5,300 in Denmark.

It’s the third time Vestas has announced layoffs in three years, including its elimination of 3,000 positions in 2010. That has prompted Engel to address the perceived instability in a release issued by the company.

”I can certainly understand if employees as well as people outside Vestas consider us to be in a state of crisis,” said Engel. The challenges we have faced in the fourth quarter of 2011 have given us a credibility problem. It is not undeserved. We have to work our way out of this situation and the only way we can do that is by proving that we with our global presence, high customer satisfaction and the industry’s best performing wind power systems will come out stronger after the elimination race which is currently taking place within the renewable energy sector.”

Vestas also announced a major reorganization on Thursday. Engel will remain president and CEO; Henrik Nørremark will be manufacturing COO and deputy CEO; Juan Araluce will be sales CSO; Anders Vedel will be turbines CTO; Nørremark will act as finance CFO and Vedel will act as global services and solutions CSSO while the positions remain vacant. Ander Søe-Jensen, Bjarne Ravn Sørensen, Finn Strøm Madsen and Peter
Wenzel Kruse will leave the company following the reorganization.