Vestas, one of the world's largest turbine makers, is continuing its strong push into the North American market, but construction of its new Oregon headquarters will have to wait. The global economic meltdown has not been kind to the Danish company, which reported a 34% drop in second-quarter profits compared with last year. This year Vestas laid off 1150 Danish workers and closed a blade plant in the UK, costing another 425 jobs.
The company's main focus still includes four Colorado factories - two for blades and one for nacelles in upstate Weld County, along with one for towers in Pueblo, roughly two hours away. All are likely to be up and running by next year, at a cost of $1 billion, and the company expects them to produce 4000 blades, 1400 nacelles and 900 towers annually.
But ambitious plans are now on hold regarding a $250 million headquarters on the waterfront in Portland, Oregon. The plans, announced late last year, included a 46,000-square-metre building that Vestas had intended to occupy by the end of 2011. "The world was very different that many months ago," says Roby Roberts, senior vice president of external relations for Vestas Americas. "We've slowed the Portland project down and decided that the best thing to do is to focus on our manufacturing and supply chain. We believe in the US market and are confident ... (it) will come back. But right now we're sort of hunkering down and getting all of our expenses down low during this lean time."
So while last year the company had expressed a desire to maintain or grow its 2007 US market share of 21-22%, that goal is no longer the main priority. "Market share is always important and it's something that we keep our eye on," Roberts says. "But being profitable, manufacturing a good product and making sales is our big focus."
Vestas maintains 30 North American service centres, along with sales offices in Denver, Colorado, and Toronto, Canada. The company is also opening research and development facilities in Texas, Massachusetts and Wisconsin, while a supply hub in Chicago is busy putting together a chain of suitable component makers.
"There are 8000 components in a wind turbine and we want to have as many of those as possible be North American based," Roberts says. "So we're being very aggressive about working with qualifying sub-suppliers as component manufacturers. There's a lot of interest both nationally and internationally because the world recognises that North America is a great market and there's going to be a lot of growth here."
Vestas is already responsible for some supply chain growth, according to Larry Burkhardt, director of Upstate Colorado Economic Development, a non-profit organisation that worked with the company to locate the Weld County facilities. Burkhardt points to three component makers that have already announced plans to set up shop nearby, including Bach Composite Industry, a Danish manufacturer that announced plans in September for its first North American facility. Bach is set to employ 100 to 150 workers and begin production in a pre-existing building early next year. "And there are others that are knocking on the door," Burkhardt says. "We're at the front end of this and the supply chain is going to develop."
Burkhardt explains that, after looking at more than 70 locations, Vestas chose Weld County, about an hour's drive north of Denver, because of a plentiful college-educated workforce, access to significant rail transportation and the state's location in the centre of North America. More than 30,000 hopefuls applied for 2000 jobs at the three Weld County factories, says Burkhardt. Another 500 people will work at the tower factory, which Vestas believes will be the world's largest. Overall, the firm plans to employ 4000 workers across North America by some point during 2010 and, beyond that, more factories could eventually be part of the picture.
"As the market grows, it's possible that we will keep expanding," Roberts says. "We certainly have to keep evaluating and see how things go. But everyone has to do their own math and we see that this is a robust market, so we're going to make sure that we have the manufacturing capacity to be successful here."
Roberts believes that the American Recovery and Reinvestment Act (Windpower Monthly, October 2009) grant rules released over the summer are certain to help the market along, although he is clearly among those who would also like to see an ambitious federal energy policy. "So our next focus is (encouraging and helping the government to get) a renewable energy standard and transmission legislation well crafted and passed and signed," he says. "But right now we're really optimistic about the third and fourth quarters. The market is taking off again and the phones are ringing."
Vestas entered the North American market in 1981 and has installed more than 11,000 turbines in the US and Canada. Meanwhile, the company is still based in a handful of Portland buildings it has used for training, warehousing, administrative and IT purposes since it moved its base to Oregon from California in 2002. But despite the inertia so far, the vision of getting everything under one roof has not been abandoned. Yet Vestas may settle for an existing building or constructing something considerably more modest than originally planned.
"None of that is a reflection on our commitment to Portland," Roberts says. "It reflects that our priorities have to begin with manufacturing. In these lean economic times, you can only do so much. And as the market grows, we'll make sure our needs are met in Portland - it'll be full speed ahead for us."