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From out of nowhere to the top of Spain

Gamesa Eólica started from scratch just six years ago in its joint venture with Danish Vestas. Today it dominates the Spanish wind market. Much of its success is thanks to its parent company, which has all the right connections

For the vast majority of Spaniards, the name Gamesa might only just ring a bell -- possibly from having seen a Gamesa Eólica logo on any of the nearly 2000 Gamesa wind turbines installed around Spain. Yet the company sits on about 60% of the fast evolving Spanish wind power market and earlier this year notched up the largest order for turbines in the history of the wind industry. Throughout its meteoric growth, Gamesa has held an extraordinarily low public profile. Now, however, that is expected to change: the wind division's parent has put 30% of its capital on the stock market.

Much of Gamesa Eólica's domination of the Spanish wind scene can be attributed to the influence and structure of its parent. Grupo Auxiliar Metalurgico SA (Gamesa) was founded in 1976 by Tornusa, a private investment company. The main driver behind the group is IBV, a joint venture between Spain's second largest utility, Iberdrola, and financial institution Banco Bilboa Vizcaya Argentaria. In the 1980s, IBV took over 91% of the Gamesa Group, leaving Tornusa with 9%.

With the support of the Basque regional government, Gamesa proceeded to put Spain on the world map of aeronautical component and instrument manufacturing, especially following its participation in the Airbus project in 1986. Today, Gamesa holds 28% of the country's aeronautical manufacturing sector as well as a sizeable chunk of the automobile component market. The group, which employs about 3400 people, has nine manufacturing plants in five regions.

The renewable energies section, Gamesa Energía, is dedicated to making and supplying wind turbines, developing wind plant and providing back-up services for these main areas of activity. Gamesa is more than capable of providing turnkey projects if required to do so. Its joint venture with Denmark's leading wind turbine maker, Vestas, was formed in 1994 to build Vestas' turbines in Spain. That firm, Gamesa Eólica, consists of Gamesa Energía (51%), Vestas (40%) and the industrial holding company of Navarra's regional government, Sodena (9%).

To the market

Gamesa's decision to go public goes back to 1995. With the group's aeronautical strength consolidated, the board anticipated Spain's wind boom. The partnership with Vestas put Gamesa Energía in an ideal position for an intensive run of growth and the potential to land on the investment market in a strong position. The strategic plan shifted the lion's share of business to renewable energies.

By 1997 Gamesa Eólica controlled 70% of the Spanish wind turbine market. Other Spanish turbine suppliers such as MADE, Ecotècnia and Bazan, have taken back some of this ground, but Gamesa Eólica remains the country's largest wind turbine manufacturer today with 52% of the market -- 62.5% in terms of installed capacity. Globally, the company has an estimated market share of 13%. It expects to turn over $474.86 million this year, compared to last year's $328 million. In June, Gamesa Eólica estimated its accumulated installed capacity worldwide to stand at 1270 MW, with 949 MW in Spain. It employs 1150 people, compared to 168 in 1995.

In 1999 Gamesa Energía was responsible for 53% of the group's overall turnover, which stood at ESP 97 billion -- nearly three times higher than 1995. The aeronautical section still experienced growth in 1999, moving to second place and bringing in 34% of the group's turnover.

Prior to the recent bourse entry, Gamesa restructured into five areas: aeronautical components, aeronautical structures, and the three renewable energy sections including Fabricatión Aerogeneradores (the turbine manufacturing and supply activities of Gamesa Eólica), developer Generación Energías Renovables, and service sector Servicios Avanzados.

We're not Vestas

The joint venture with Vestas landed Gamesa exclusive rights to manufacture, assemble and sell Vestas technology in Spain. While other domestic turbine competitors proudly claim their technology to be 100% Spanish, Lopez Gandasegui, the chief executive officer of Gamesa, asks: "Why reinvent the wheel? Vestas' world market leadership is the result of verified performance, and Gamesa's aim is to offer precisely that." Nevertheless, Gandasegui cannot help but raise an eyebrow when Gamesa is described as the manufacturer of Vestas technology in Spain. "This is only half true," he says, adding that such a description "understates the real depth of Gamesa."

Gamesa Eólica's own R&D department is continually developing the technology it has inherited from Vestas, insists Juan Ramon Jimenez, Gamesa Eólicas director. In 1997, for instance, Gamesa Eólica introduced the Ingecon variable speed system to its turbines, which, the company claims, increases nominal capacity by approximately 6%. The system has been widely applied to Gamesa Eólicas biggest seller, the 660 kW G47 turbine, based on the Vestas V47.

This year Gamesa Eólica is remodelling its G47 factory to turn out its new 850 kW G52 unit and large scale production is expected to be underway by January, according to the company's Ignacio Llorent. The G52 is expected to be the mainstay of turbine sales in the next year, and a new version of it will be able to operate under low wind speeds. Gamesa Eólica also plans to launch its 1.65 MW G66 unit in 2000, following favourable results from the two prototypes up and running in Aragón and from the Vestas V66 in Tarifa (Windpower Monthly, September 1999). Furthermore, the company is expecting soon to launch the 2 MW G80 turbine -- Gamesa's version of the Vestas V80 -- fitted with 80 metre blades and with a hub height of 100 metres.

History's largest wind turbine order went to Gamesa Eólica in January 2000 from Spanish utility Energía Hidroeléctrica de Navarra (EHN). It ordered 1800 Gamesa turbines for a combined capacity of 1400 MW (Windpower Monthly, February 2000). The contract did not come out of thin air: Iberdrola owns 37% of EHN, and Sodena owns 38%. All of EHN's operative wind plant -- around 650 MW as of May, according to Gamesa -- use Gamesa technology. Most of this is located in Navarra.

Gamesa's wind plant development company, Gamesa Energía Ibérica, has also done steady business, bringing 224 MW on-line. "Gamesa Eólica's giant order with EHN only represents about half of the megawatts we plan to supply to external clients and Gamesa Energía Ibérica's own developments in the next few years," Jimenez claims. The company's main areas of development activity are the regions of Galicia, Castile and León, Castilla la Mancha and Aragón.

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