Repower shakeout signals major overhaul

GERMANY: When a small wind turbine manufacturer like Repower Systems poaches the boss of the wind division at the mighty Siemens to head up its business, as it did in March, plenty of eyebrows are raised.

Repower chief executive Andreas Nauen
Repower chief executive Andreas Nauen

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Andreas Nauen's move from being chief executive of Siemens to leading respected but small turbine builder Repower attracted far more attention than Repower's hiring of chief financial officer Derrick Noe a month earlier. But taken together, the shake-out of the two top heads of the company signals a major overhaul in the company's course ahead. That overhaul could explain Nauen's shock move.

Tulsi Tanti, chairman of Repower's supervisory board, is the driving force behind the choice of new management. Tanti's family is major stakeholder of Indian company Suzlon, which owns 91% of Repower.

He is particularly pleased with Nauen. "Andreas has an incredibly impressive record," says Tanti. "Indeed, the Siemens business he ran is worth about EUR3 billion. He is deeply passionate about renewables and has the experience, energy and vision to take Repower through its next stage of growth."

For Nauen, it will be an interesting change with new corporate and cultural challenges. He has grown the Siemens wind business from modest beginnings after the conglomerate acquired the small Danish privately owned wind turbine builder Bonus Energy in 2004.

With annual volume of EUR3 billion, Siemens Wind is now on a par with Germany's independent turbine builder Enercon, and about two-thirds of the size of GE Wind's business, which had a turnover of EUR4.5 billion in 2009.

But it's still a small cog in the big Siemens operation. As Siemens Wind is part of Siemens Renewables - in turn, part of Siemens Energy, which reports to the Siemens overall board - Nauen found himself in the fourth tier of management at the Siemens conglomerate.

Starting again

At Repower, Nauen appears to be starting over again, preparing to grow another small turbine builder, this time acting in the second tier of management in a much smaller operation and reporting to Suzlon and its largely family-owned Indian parent company. Repower operates as an independent firm that Suzlon is likely to want to completely control. Back in mid-2008, Suzlon moved to sign a domination contract.

A domination contract is an option allowed under Germany's public companies act, in which the management control of one stock company is subordinated to the management of another stock-holding company. But Nauen's tasks may be considerably weightier than just growing Repower, explaining his interest in moving from a whale of a company with a worldwide blue-chip reputation to a minnow in the wind business. Comparing the recent progress and development of Suzlon's and Repower's turbine business, it seems possible and likely that Repower will take the dominant role in Suzlon's future business. Nauen could then be responsible for integrating Repower with Suzlon's own wind turbine manufacturing business, with the cultural and corporate intricacies this will involve, but also looking after all of Suzlon's other, considerable, turbine component manufacturing businesses.

When Suzlon acquired Repower in mid-2007, the German company was tiny. But the tables are clearly turning. Suzlon's financial performance has taken a dramatic dive, with Repower's a picture of health. In the last quarter of 2009, the sales figures of Suzlon's turbine generator division were virtually identical with Repower's, but Repower's operating income was more than twice that of its Indian parent.

And looking at Suzlon's operation as a whole, Nauen would be back in charge of an operation similar in size to the one he left at Siemens, and enjoy more personal clout. Noe will be Nauen's right-hand man.

He brings expertise for a potential merger of Repower with Suzlon. At Noe's appointment, Tanti praised him for his experience, in particular as financial advisor and turnaround manager for several international firms.

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