Gamesa hopes the PTC will be extended after November's presidential election, making the layoffs temporary and returning US wind development to the growth of recent years. But the Spanish turbine maker - and the American industry at large - fear that ongoing political turmoil will cause the subsidy to lapse, resulting in a protracted downturn as development lags, original equipment manufacturers (OEMs) struggle and supply chains shrivel.
"Gamesa's announcement is indicative of what's happening to most of the domestic suppliers and wind-turbine manufacturers in the US, said Matt Kaplan, a senior analyst at IHS Emerging Energy Research. "These companies have to find ways of dealing with the lack of orders for the next year and, in a lot of cases, that does mean laying off staff or reducing investments."
Boom before bust
Despite the gloom, US development is headed for record installations in 2012 as developers scramble to finish wind farms in time to beat the PTC deadline and factories work overtime to get enough equipment out the door. But a rash of layoffs is likely to begin in the fourth quarter when 2012 orders are complete and 2013 order books remain empty.
Vestas, the world's leading turbine maker, has warned of 1,600 US layoffs without a PTC extension, while Mitsubishi's new Arkansas factory sits idle until demand picks up. Top developers NextEra and Iberdrola are among many to announce a dearth of US activity for 2013. "We expect about 12GW to be built in the US in 2012," Kaplan said. "But 2013 could see as few as 1.2GW or so. We do expect the pain to really be felt in Q4 this year and moving into next year."
Gamesa, meanwhile, is eyeing foreign markets. The company already plans to reinstate many employees roughly ten weeks after September's layoffs as it fills orders for a 50MW project in Uruguay next year. Other Latin American deals are pending.
"We don't expect exports to compensate for the loss of the US market," said David Rosenberg, vice-president of marketing and communications. "But we're hoping that those projects carry us through until the PTC would be passed and developers have time to get their projects rolling again."
At full capacity, Gamesa employs about 900 workers in the US who produce roughly 1GW per year. The company expects to install 1.3GW in 2012, including projects started last year.
But regardless of the timing of a PTC extension - or lack of one - a considerable amount of damage will be done to a domestic supply chain that has emerged during the unprecedented US wind boom of recent years. "We know that our supply chain is already feeling the impact," Rosenberg said. "Some of them will be shutting down or having layoffs in the near future."
That notion is reinforced by Pedro Guillen, managing partner of Kinetik Partners, a Michigan-based supply-chain consultancy. "Whether or not there is a PTC next year, the massive layoffs are going to happen," said Guillen, who attributes more than 2,000 supply-chain companies to the sector. "The stronger companies - the multinationals - those are the ones that are going to be taking over a lot of the market share."