The combined turnover of Vestas and NEG Micon in 1998 was DKK 5.85 billion (EUR 788 million), with combined profits of DKK 252 million (EUR 34 million). This year turnover is projected to increase by 30-40% to give total sales of around DKK 8 billion. Both companies, but particularly NEG Micon, were under strain last year from extraordinary expenditure. NEG Micon, with a turnover of DKK 3.02 billion, bought no less than six component suppliers, competing wind turbine manufacturers and developers (table page 31); it also set up several new production facilities abroad. Vestas, with a turnover of DKK 2.83 billion, lists the purchase of two new production facilities in Denmark, both former shipyards, as its major investments for 1998.
From this point the ring tactics of the two players start to differ. Vestas scored a profit of DKK 188 million, while NEG Micon's was DKK 64 million. The challenge now, particularly for NEG Micon, is to prove it can stay off the ropes by getting its head down and its guard up-and not just by buying up titles.
NEG Micon's main problem is that it accounts for its disappointing year-end results by listing a series of problems acknowledged by the company's management for several years, but which nonetheless have been allowed to grow, first with the merger of Micon and Nordtank in 1997, and then with a rate of growth so fast that NEG Micon has had difficulty keeping it under control, company officials admit. It was under these circumstances that a series of Denmark's major wind turbine manufacturers went under in the mid 1980s, including Vestas.
"We did not have control of the infrastructure, and that cost us," admits NEG Micon's director, Jens Erik Kristensen, referring to the 1998 accounts. Kristensen has taken over the problems of his predecessor, Ole Bøgelund Nielsen, who several years ago admitted it was difficult to control a company that doubled its turnover every year. A critical problem was-and apparently still is-the poor lines of communication between the company's many divisions. Standard parts and components for NEG Micon turbines are renown for taking too long to move from one division to another-costing time and money.
Meantime, NEG Micon customers say that attempts to report problems with their wind turbines have left them with the impression the company is indifferent to their woes. Tracking the responsible person in the company is a never ending game of telephone tag, say many, while others tell stories of written enquiries that are never answered.
NEG Micon's exports were also problematic in 1998. Anticipated exports to Spain and Germany failed to reach their expected levels, says Kristensen. Therefore, he explains, "We took in the American projects to cover our costs." The indication is that machines were sold to the US at extremely low prices with little, if any, profits to the company. The approach closely resembles the tactics of much of the wind industry in the ill-fated 1980s, particularly those trying to enter the Indian market.
NEG Micon's view of the export market stands in sharp contrast to that of Vestas. It attributes its positive 1998 results to the growth of the global market, which, it says, has relieved the competitive pressure on wind turbine prices, giving room for greater earnings.
Technical failures involving gear boxes have also loomed large at both companies (next story) and NEG Micon was haunted last year by the infamous "edgewise vibration" blade problem, which goes back to 1997 with cracks found in the large blades supplied by LM Glasfiber (Windpower Monthly, May 1997). A major retrofit on turbines with these blades was conducted in Denmark and Germany in late 1997 and early 1998.