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Employment - Factory shuts down in capacity freeze

SPAIN: A government freeze on new wind farm licenses has been blamed for a factory closure that has caused public uproar.

Spanish lawmakers placed a freeze on new wind licenses between May and November last year. The freeze was only lifted when the government allocated 6.4GW of new capacity in 2009-2012, an average of 1.6GW per year. This is well below the industry's 2.1GW annual output between 2004 and 2008. The move has brought turbine orders to a crawl.

Homegrown turbine maker Gamesa says it is a casualty of the decision. It has closed its Fiberblade facility, a blade-manufacturing affiliate in the Alsasua district of the Navarra region. Organised street protests by the Fiberblade workforce and sympathisers have taken place outside Gamesa's offices but Gamesa insists the closure is unavoidable.

Gamesa, the world's third-largest turbine maker, says its production over-capacity, especially for Fiberblade's small 50-metre blades for Gamesa's 850kW machine, has left it no alternative but to close the Navarra facility.

The closure, affecting 150 workers, is the most drastic measure of an overall emergency plan, including temporarily laying off 212 workers for up to 180 days. Those plans cover four of Gamesa's 23 Spanish factories, which employ over 4,000 workers, until business picks up again, which the company expects to begin in the second half of 2010.

Gamesa has cited the overriding need to adjust production to accommodate the considerable shrinkage in Europe. Indeed, the company recently registered net profits of just EUR115 million, 64% below the figure for 2008. Even accounting for the EUR143 million extraordinary profit in 2008 from Gamesa's sale of its solar division, the drop in net profits from ongoing turbine and developing business was 35%. Similarly, sales were reduced by 16% to EUR3,222 million.

By March this year, Asociacion Empresarial Eolica (AEE) calculated that 6,000 jobs were lost across the national sector. Wind industry majors like US turbine giant GE and Denmark's LM have shut down production in Spain.

Even so, according to the Fiberblade workers' committee, the factory was working at 95% of it notional capacity as recently as January this year. Not so says Gamesa management, which puts the figure at 60%, or 11 of a potential 17 blades per day. Even that reduced activity was swollen by lagging orders made before the 2009 freeze, says the factory's management.

The workers' committee, however, has won cross-party support from the regional parliament and the conservative regional government. The politicians are calling on Gamesa management to find an alternative solution to closure.

But Gamesa says that the factory is too small for the 43-metre blades it is making for its biggest-selling 2MW machine, let alone the even larger blades of its new 4.5MW turbine, which is yet to enter series production. The workers' committee argues it could make part of Gamesa's 4.5MW sectional blade or, at worst, provide repair services for existing blades.

"It is a matter of corporate will," says Samuel Caro of the Navarra region's opposition Socialist Party. He points out that Gamesa profited from regional government subsidies during the national economic boom that covered most of the last decade. "Now, when the going gets tough, it simply pulls out," he says. Yet, unlike Danish turbine competitor Vestas' plant closure on England's Isle of Wight, local politicians are putting heavy pressure on Gamesa to prove there is no alternative to closing the factory gates.

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