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Denmark picked for global headquarters -- India's Suzlon takes major step into international wind market

India's Suzlon, which at the end of 2003 ranked as the world's ninth largest wind turbine manufacturer, is currently establishing its international headquarters in Denmark. The Danish division will function as the holding company for all Suzlon's foreign subsidiaries and activities in the wind power business.

"The timing could have been worse," admits the new managing director of Suzlon Energi A/S, Per Hornung Pedersen. From his residence on the outskirts of the Danish town of Aarhus, the country's second largest city, he is currently establishing the international headquarters of Indian company Suzlon, which at the end of 2003 ranked as the world's ninth largest wind turbine manufacturer. The Danish division will function as the holding company for all Suzlon's foreign subsidiaries and activities in the wind power business.

The short term goal is to employ 20-25 key employees before the end of the year. Last month Suzlon launched a major advertising campaign in the Danish press, including a full page colour advertisement in the business section of the country's largest national daily naming a series of key leading positions it is seeking to fill. With its strategy to tap the Danish wind know-how bank, Suzlon is following on the heels of Spain's Gamesa, the fourth largest wind turbine supplier. Last year it established a technology development subsidiary in the town of Silkeborg, not far from Aarhus (Windpower Monthly, December 2003), which today employs 30-40 people. They all came from Danish wind turbine companies or their component suppliers.

This is one reason why Hornung Nielsen, formerly financial director at NEG Micon, has not been in a hurry to find office facilities in Aarhus. He says there has been a "reasonable and broad interest" for the jobs Suzlon is advertising. Among a series of positions it is seeking to fill are chief operating officer, a financial officer to take care of project equity and debt management, a group finance manager, a project manager and an operations and maintenance manager. Many currently employed in the Danish wind industry will have a three month resignation clause in their contracts. But by January 1, Hornung Nielsen expects to have the first 15 employees in place.

"Suzlon could have chosen to place its international headquarters in the Netherlands or in London, but after a thorough analysis chose Denmark because of the availability of the skills and competence it is seeking in future employees and because of Suzlon's international reputation. That is strengthened by Denmark's position internationally in wind power know-how," says Hornung Pedersen.

The task for Suzlon's international headquarters is to create revenues outside the Indian home market. In the next five years the aim is to be among the world's five largest wind turbine companies. Already firmly established as Asia's leading turbine supplier and with an existing base of around 625 MW of wind capacity installed -- all but 23 MW of it in India -- Suzlon now plans to focus its energies on the North American, European, Chinese and Australian markets. It has offices in each region, but until now a 23 MW project built last year in Minnesota using its 950 kW turbine remains its sole overseas development.

The market in Denmark is not of primary interest, on land or offshore. For the time being Suzlon is content to let others bear the cost of early learning-curve development of offshore technology. Nevertheless, Suzlon's 2 MW turbine could be a competitor on the Danish repowering market, which new legislation opens the gates of from 2005, "if the opportunity presents itself," as Hornung Pedersen puts it.

Financially he believes Suzlon is well prepared for tough competition. With the production of blades and nacelles in India, where most of the overheads of the Suzlon concern are also located, relatively low wages will secure "very sensible earnings margins" and provide a good basis for Suzlon's products to be cost competitive, he says.

The company, owned by Girish Tanti and his three brothers, diversified into wind less than ten years ago from the textile industry, which it has since sold out of. Within five years it made the top ten list of wind companies (in 2001) and has remained there ever since. With its eye firmly on achieving its top five ambition, the Tanti family invited two major American investment funds as co-owners, City Group and Chryscapital, each of whom has injected $25 million into the concern.

Timing

Hornung Pedersen's comment on the timing of Suzlon's start-up in Denmark is a reference to both the staff lay-offs associated with this year's merger of Vestas and NEG Micon, and to the wind market stagnation being felt by many component suppliers. Most recently Danish steel company Bladt Industries in Aalborg, a major supplier for wind turbine towers, has said it is having to fire 130 workers.

The tough conditions for the traditional component suppliers has prompted 30 of them in Denmark to be more than passive observers when wind turbine manufacturers decide to source components in-house, or dispense with an external supplier. They are now offering "the world's best expertise" in wind turbine component production and seeing a project through to completion, says Peter Aarø Rasmussen at the Center for Component supply to business newspaper Børsen.

He points out that from the viewpoint of a component supplier, the wind turbine manufacturer is no more than a link in the project chain. The Danish industry's many sub-suppliers possess a wide range of competence in all aspects of wind power station development and construction that it is difficult to ignore, also internationally.

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