Vestas sells six factories for one euro

DENMARK: Vestas has agreed a deal to sell its casting and machining factories to German industrial group VTC for EUR 1.

Under the agreement, VTC will take on ownership of the plant and continue to supply the components to Vestas as part of a long-term deal.

The deal is part of a strategy announced by Vestas in March this year to offload factories involved in machining or producing raw materials.

Around 1,000 employees are involved in the sale, which covers factories in China, Germany, Norway, Sweden and Denmark. Vestas said the sale would give it greater flexibility in terms of supply and saved costs.

Speaking about the deal, Vestas chief operating officer Jean-Marc Lechêne said the company had signed a long-term supply agreement with VTC. In the next two years Vestas expects to save EUR 30 million as it will source the parts at a lower price than if it owned the factories.

Asked how the savings will be achieved, Lechêne said: "[It could be done by] combining factories and activities, specialise; maybe they [VTC] have seen ways to reduce costs. That industry is very much volume-sensitive, and by putting things together you get the opportunity to reduce costs.

"We wanted someone who shared our approach to safety, quality and reliability of supply, which is why we embarked on a process of contacting 67 potential buyers, in Europe, North America and China. VTC is privately owned and has five lines of business, with one of them being casting, andit was already a supplier to Vestas."

There were rumours earlier in the year that Vestas was looking to sell its only tower factory in Pueblo, Colorado. However, Lechêne said Vestas was keeping the plant.

The offloading of staff to VTC takes Vestas closer to its aim of bringing its staff count down from around 17,000 at present to 16,000 by the end of 2012. Although Lechêne said the company was on track to hit this target, he said Vestas had no plans to sell any further factories.

This is not the first time Vestas has sold a plant to a supplier. Last year it divested its tower manufacturing plant in Varde, Denmark, to Chinese manufacturer Titan Wind Energy. The plant had around 120 employees and can produce onshore and offshore towers.