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Major European move into America -- Vestas' largest factory yet

A two year federal production tax credit (PTC) extension and another huge order from FPL Energy is apparently enough commitment to encourage the wind industry leader, Vestas Wind Systems A/S of Denmark, to at last move ahead on plans to build a US manufacturing plant, its largest yet. Vestas announced in early April it was entering final negotiations with local governments in Oregon to place the plant on 113 acres of industrial zoned land at the Port of Portland. It plans to be churning out turbines by mid-2003 and to be at the plant's full capacity of 300 turbines a year by 2004.

"For the coming years, we have very positive expectations to the American market," says Vestas' Johannes Poulsen, managing director until his retirement on April 18. "The placing in Portland is optimal for our activities in the Pacific Northwest region. As well it has been important to us that the area is characterised by a good infrastructure and by having a skilled labour force available."

For the past two years, Vestas has been considering moving its North American base from Palm Springs, California, where it has been for 19 years, and adding a manufacturing facility. Last year, the City of Pueblo in Colorado announced it was in talks with Vestas to host a facility (Windpower Monthly, March 2001). Yet at the same time Vestas was talking with Portland officials, who say they have been wooing the company for almost two years.

The extension of the PTC, which expires end 2003, was a factor in the decision to go ahead, although in March Poulsen said the extra two years alone would not be enough. Tipping the scales in favour of the plant was an order from FPL Energy for 175, 660 kW turbines with an option for 650 more, all by the end of 2003. Vestas values the order at about EUR 67.1 million, or up to EUR 308.5 million if FPL Energy exercises its option.

Portland ecstatic

With a diversified economy that includes natural resources and high technology, Oregon was one of the last areas of the country to be hit by the recent economic recession. Now, with US-high unemployment of 7.9% and the promise of up to 1000 new skilled jobs, the Vestas decision has Portland officials ecstatic.

"This is great news for Portlanders and Oregonians who have been hardest hit by the recession," says Portland Mayor Vera Katz. "Vestas is our kind of company. The reasons they gave for choosing Portland over other American cities were the quality of life and the availability of a skilled work force." The jobs, she adds, could not come to Portland at a better time. "These are exactly the types of jobs we want to attract -- family wage jobs in sustainable industries."

But bringing the world's largest wind turbine manufacturer to Portland could also cost area governments dearly in taxes and fees, all a part of the bidding frenzy that US cities go through to attract clean industry and jobs. Because the proposed location of the plant is in an enterprise zone, a local property tax break could drop tax revenues by as much as $7-10 million a year, according to the Portland Development Commission's Martha Richmond. To get the benefit, however, Vestas will have to apply for it after inking all other agreements. It would also be subject to certain conditions, such as hiring workers from the local area and submitting periodic reports.

In addition, the city is expected to give the company $800,000 in reduced permit and development fees, while the State of Oregon has proposed adding another $750,000 in education benefits at a local community college to train workers specifically for jobs at the factory, such as welders, skilled fibreglass workers and electricians.

Site benefits

Vestas is negotiating a lease agreement with the Port of Portland. It plans to build a 65,000 square metre facility consisting of several buildings for manufacture and storage, plus yards and offices. The benefits of the site, says the company, are its size, access to local transportation, such as rail connections, and Portland's shipping container and barge facilities, and its access to a large workforce. About 200 of the expected 1000 employees will come from the Vestas North American sales and installation group, now located in Palm Springs.

The Port of Portland is a major regional shipping port, located 160 kilometres inland of the Pacific Ocean on the Columbia River. The port not only has access to ocean cargo ships, it is also tied to river traffic that is capable of delivering goods eastward through the heart of the Northwest's best wind areas and as far upstream as Idaho.

Vestas employs about 5000 people worldwide. Of the 1000 jobs coming to Portland, about 200-300 will be office jobs, some of which will be filled by existing Vestas employees who would relocate from Palm Springs, Denmark and around the world.

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