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Analysis: US manufacturing hit despite capacity increase

UNITED STATES: There is something strange happening in the US wind industry. Installations are on the increase, yet the domestic supply chain for wind components has contracted.

President Obama's 2009 visit to Gamesa's Fairless Hills plant - now only staffed by five employees
President Obama's 2009 visit to Gamesa's Fairless Hills plant - now only staffed by five employees

According to the American Wind Energy Association (AWEA), the number of US-based wind components factories dropped from 550 in 2013 to 500 this year.

Meanwhile, the top-tier turbine makers — GE, Siemens and Vestas — have vastly increased their hold on the US market in the past 12 to 18 months.

"There is nothing that suggests this is changing, or will change," said Dan Shreve, an analyst at Make Consulting. Make estimates that the leading three OEMs accounted for about 90% of the US's nearly 13GW of firm and non-firm orders since the start of 2013. This is at the expense of second-tier firms such as Gamesa, Nordex and Suzlon. In 2012, the top tier comprised around 72% of US turbine orders based on grid-connected capacity.

Figures from AWEA reveal the US installed 835MW in the first half of 2014, compared with just 1.6MW in the same period last year.

Even so, GE is closing wind turbine manufacturing in Tehachapi, California, by the end of November and consolidating all US assembly in Pensacola, Florida, where it produces hubs and nacelles. The US market leader — which outsources almost all wind components — had already closed assembly operations in Greenville, North Carolina, confirmed a spokeswoman. GE declined to disclose the exact size of its US wind manufacturing workforce.

Over the past two years, Vestas has cut hundreds of jobs at its plants making blades, nacelles and towers in Colorado. Vestas has hired people this year, but it would not comment on losses or gains in Colorado overall, only saying it hopes to have 2,800 permanent manufacturing jobs by year-end 2014. At the end of the third quarter, it had 2,050 such employees there, a spokesman said.

Vestas has exported blades, nacelles and towers from Colorado as far afield as Chile, Guatemala, Mexico, Nicaragua and Uruguay. It has also made components for third parties, reportedly including towers for GE.

Factory closures

The last two years have also seen US plant closures or job cuts by Gamesa, Nordex, Suzlon and Acciona. This is in addition to Mitsubishi's decision to mothball its turbine assembly plant in Arkansas because of its fight with GE over intellectual property. Equipment was never installed in the plant, a Mitsubishi spokesman said, and the company has yet to decide on the building's fate.

Gamesa has cut almost 900 jobs in Pennsylvania in the last two or so years, said Lou Dopson of District 10 of the United Steelworkers Union. The company's blade plant in Ebensburg, founded in 2006, has closed and Gamesa is sourcing blades for its G114 turbine from TPI Composites' factory in Juarez, Mexico. The Ebensburg plant is empty, said Dopson. "They were taking stuff out of there and getting rid of it," he added.

Gamesa's nacelle assembly factory in Fairless Hills remains open, according to Gamesa's website. But there are only five union manufacturing staff left, said Dopson. In 2009, it employed 709 people. Gamesa is leasing out two of the factory's three bays to Skyline Steel, for non-wind components, and is sourcing nacelles from Spain and China, he added. The company was unable to respond to enquiries about the factories' situation.

Nordex ended US assembly with the closure of nacelle manufacturing in Jonesboro, Arkansas, in 2013, a move that cost 40 jobs. Nacelles are now produced in Rostock, Germany. Blades are made in Rostock or by one of Nordex' partners in Europe. And towers are sometimes sourced from the US region, said Nordex.

Decisions to locate manufacturing in the US were often made between 2006 and 2009 when there was "enduring optimism" about the domestic wind sector, says Ryan Wiser, deputy group leader in the electricity markets and policy group at the Lawrence Berkeley National Laboratory. At that time, Congress was considering carbon cap-and-trade, new energy policy seemed possible, and a wind-friendly president, Barack Obama, had taken office in 2009.

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