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Investors still feel uneasy about the low share prices of Kenetech Corp following blade failures on the 33M-VS turbines. The information from Kenetech's blade suppliers regarding replacement and repair has been confusing. Meanwhile Kenetech is proposing installation in West


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As the share price of Kenetech Corp closed at a new low of 13 on September 28, other disturbing news about the world's leading wind company was emerging. Investors reacting to confirmation this summer of faulty Kenetech blade manufacturing and negative reports of the publicly-traded $1 billion company by a securities analyst and specialised investment research firm (Windpower Monthly, September 1994) appeared shaken. Some 4% of the company's stock was being sold short in August, or 1.4 million of almost 36 million shares. The late September share price compares with the year's high so far of 29 1/2 and a previous low of 13 1/2.

"I don't think we're that happy with their comments to the industry," says Nicole Schmidt, equities analyst with Hudson Capital of New York, a money manager with some $850 million in assets that has owned as much as 200,000 shares of Kenetech. "They have not been that forthcoming," she said in mid-September.

Kenetech has not divulged everything its management has been aware of, she says. "Things don't go perfectly in business all the time -- but when something goes wrong that is major, you should say something. If it's a good product, people will notice it again." Schmidt says she believes the Model 33M-VS is a good product but is not sure what her firm will do with its Kenetech shares. "I don't know if you want to put your trust in a firm that doesn't put its trust in its shareholders," she concluded.

Meanwhile reports of blades problems on the Model 33M-VS remain confusing. In August, Kenetech's underwriter, Merrill Lynch, stated that a key blade manufacturing process was suspended for three months earlier this year, and that 37 blades had been replaced, 19 at Kenetech's Buffalo Ridge wind farm in Minnesota and 18 in Palm Springs. But later comments from Kenetech blade manufacturers do not appear to square with Merrill Lynch's.

Unspecified loads

Jon Bakken of Ciba Composites, which makes some of Kenetech's blades, said its product has only been installed at the Palm Springs project, not at Buffalo Ridge. Just "one or two" Ciba blades have failed, because of an 'out of spec' condition, says Bakken. "The blades just saw loads way out of the specified loads." He believes the blades were those bent over like "rabbit ears" in Palm Springs.

Kenetech's main blade supplier, TPI Inc of Warren, Rhode Island, had said just four blades were shipped back to the New England state from California because of seam problems, while two had their seams repaired in the field. TPI makes some 90% of Kenetech's Model 33M-VS blades, while Ciba reportedly makes the remainder.

Meanwhile, Kenetech proposes installing 1200 wind turbines in West Virginia. The Livermore company may even build a plant for turbine assembly in the state, according to the Associated Press. The wind farm plans, in northern Greenbrier County, could face questions regarding possible impact on birds, it appears. The site may be an important flyway for raptors and other birds, says a local bird lobbyist.

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