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Germany

Germany

INDUSTRY GIANT BUYS INTO WINE PRODUCTION; A new era of major utility construction foreseen

For the first time a huge industrial group active on the world power plant market has bought a majority share of an established wind turbine manufacturer. The investment in wind energy by German Balcke-Dürr -- owned largely by major power plant constructor Deutsche Babcock -- is being heralded as the start of a new era for wind power.

Until now wind has largely been a niche business occupied by small companies and more or less ignored by the world's major builders of electricity generating capacity. With the purchase of 51% of the German subsidiary of Danish Nordex A/S and the takeover of all sales and production rights to Nordex wind turbines, Balcke-Dürr has taken wind technology into the realms of the big players on the international market for electricity generating capacity.

Nordex is the third Danish wind turbine manufacturer subject to a takeover deal involving foreign capital, following majority purchase of Nordtank by UBS Switzerland and Vestas by Dutch MeesPierson. But this time the takeover partner is an industrial conglomerate rather than a financial institution. Balcke-Dür also intends to take an active part in day-to-day operations, assisting with research, opening doors to new markets and providing strong financial backing.

Nordex Energieanlagen, in Rerik in northern Germany, will be renamed Nordex Balcke-Dürr with effect from June 1, 1996. Having identified a world market for 2000 MW of wind capacity a year, corresponding to an annual sales potential of DEM 2-2.5 billion, Nordex Balcke-Dürr now intends to set its sights directly at major international wind power projects. The backing of its parent, Deutsche Babcock, is expected to prove a valuable asset in a market where contract awards are linked to commercial size and capital strength. The company will also tackle the international wind market from another angle -- by bidding for the financing and operational management of wind stations.

all rights acquired

"Balcke-Dürr has a great deal to contribute to the wind sector," observes the company's Wolfgang Horrighs. Experience in building cooling towers and ventilators has resulted in an accumulation of know-how in the field of ventilators, noise emissions and aerodynamics, all of which will be poured into the new wind subsidiary, he assures. A new research and development programme will be launched to put this expertise to use, concentrating initially on designing a larger turbine and on improving grid compatibility. Hybrid systems will also be developed, linking wind turbines with gas or diesel turbine operation.

In Denmark, Nordex A/S will retain 49% of its former German subsidiary. However, "All sales and production licences as well as the technical service rights of the Nordex group have also been acquired. This means a transfer of the entire Nordex business to Balcke-Dürr. As a consequence, the new Balcke-Dürr subsidiary in Rerik will manage the global marketing and production of wind power plants," states the new German owner. Horrighs adds that it is doubtful whether Nordex will have made a profit this financial year, ending May 31, but he assures this will not be the case next year. Orders for some DEM 60-70 million have already been received, he says.

The role of Nordex A/S will be to concentrate on "the production of special-purpose wind turbines," according to Balcke-Dürr. Horrighs says this means that Nordex A/S will continue to exclusively supply the Danish market and will build the 150 kW, 250 kW and 600 kW units for Balcke-Dürr. The 1 MW turbines will generally be built in Rerik -- only 1 MW turbines ordered by Danish customers will be built in Denmark, he adds. Nordex Balcke-Dürr will expand production facilities as and when they are needed, but these could be set up anywhere in the world.

In Denmark, Nordex's, Jens Pedersen, stresses that the Nordex head office will remain in Denmark, not Germany, where all marketing, administration and technical research will continue. "On a day to day level, business at Nordex will continue as usual," he says. Production capacity in Denmark is considerably larger than at Rerik, he adds.

Balcke-Dürr has 40 subsidiaries worldwide, 5000 employees and an annual turnover for 1995 of DEM 1.7 billion. It has engineering and production facilities in China, India, Indonesia, the USA and is in the process of gaining a foothold in Russia. Latin American and Indonesia are, in particular, seen as growth areas for wind power.

The decision to buy into wind is part of an ongoing strategy started three years ago to develop the German company's activities in decentralised energy generation. It started by buying into a a company building small combined heat and power plant followed more recently with the purchase of a Swiss firm assembling small gas turbines of 1-13 MW. Its hunt for a wind partner included looking at several companies in the sector, "but the chemistry was right with Nordex," says Horrighs.

Balcke-Dürr's new decentralised power generation sector, including Nordex, is expected to achieve annual sales of around DEM 200 million -- roughly 30% of the company's power engineering business.

Balcke-Dürr is owned 60% by the mechanical engineering and power plant construction company, Deutsche Babcock. It regularly rubs shoulders with power industry giants such as Siemens and General Electric in the fight to win orders for power plant around the world. The remaining 40% of Balcke-Dürr is held in widely spread share holdings. Deutsche Babcock is a worldwide operating group with a strong North American division.

On the fringes of the takeover, which took six months to negotiate, the established German agent for Nordex machines, Nordex Planungs und Vertriebsgesellschaft (NPV) of Melle, has signed an exclusive co-operation contract with Balcke-Dürr. NPV will be the marketing agent in all German-speaking European countries -- Germany, Austria, Switzerland, Luxembourg and Belgium -- with Balcke Dürr providing back-up through its close contacts with electricity utilities.

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