In a statement to the stock exchange, NEG Micon says it has made a $28 million provision to pay for its share of the retrofit. No information is being given by either Flender or NEG Micon about the cost to Flender, nor about the details of who will carry out which task. It appears, however, that NEG Micon will remove the gear box from each turbine and transport it to Flender's German works, which will undertake the necessary repairs and improvements. Both companies are carefully avoiding any division of blame for the gear box failures.
Industry observers estimate that for Flender to dismantle, repair, refurbish, and reassemble each gear box will cost around DEM 30,000 per machine, resulting in a total cost to Flender of at least DEM 35 million over three years, and possibly up to around DEM 45 million ($25 million). Flender's turnover in 1998/99 was DEM 1.5 billion, with only a fraction of this coming from the wind industry. The profit for that financial year is not yet available, but was DEM 57.8 million in 1997/98.
Flender is preparing a "systems factory" at Friedrichsfeld in North Rhine Westphalia for wind turbine gear box manufacture, though the company's quality chief, Stefan Tenbruck, says the move has nothing to do with the retrofit program. He confirms that most gear boxes for wind turbines are built at the company's Bocholt plant, but that production is being shifted to Friedrichsfeld. Some gear boxes are also made at a facility in Penig in east Germany. As well as NEG Micon, Flender supplies gear boxes for wind turbines made by Nordex, Vestas and Tacke.
No decision seems to have been made about where in the world the retrofit of more than 400 gear boxes in NEG Micon turbines in North America will take place. "We don't know at this point," says Herb Schreiber, manager at Flender Service in Bakersfield, California. "Most likely it's going to have to be back to Germany." Flender Corp, the biggest manufacturer of industrial gear boxes in the world, also has a facility in Elgin, Illinois.
Flender has already fixed the gear boxes on five NEG Micon machines in a wind plant repowering on Cameron Ridge in California after defects were detected earlier this year. Schreiber describes the defects as a "grind temper problem" and says the five gearboxes were fixed by May. This is confirmed by Tenbruck and by NEG Micon's technical director, Ole Gunneskov. He adds that the heat treatment of the metal was not done to a sufficient depth, resulting in grinding faults. All five gear boxes were still under guarantee and Flender fixed them at its own cost, says Tenbruck.
In some cases the parts were retrofitted, says Schreiber, but where metal was found to have contaminated the oil, the bearings had to be replaced. The 56 MW repowering was developed in 1998 by WindCo, consisting of M&N Wind Power -- a partnership between Japanese financier Nichimen Corp of Japan and NEG Micon -- as well as British developer Renewable Energy Systems Ltd together with FPL Energy, part of the US energy giant FPL Group Inc, which also owns the utility Florida Power and Light.
Schreiber is uncertain if the Cameron Ridge grind temper problem is the same -- or linked to -- the problems suffered by NEG Micon 600 kW and 750 kW machines in Europe. "It is the same problem... It may be the same problem." But he stresses he is only familiar with the problems in the Bakersfield area of California and refers questions to Flender's head office in Germany.
Flender is mainly owned by the huge Babcock Borsig Group, which incidentally also owns one of NEG Micon's chief competitors, Nordex. Babcock is undergoing significant restructuring and recently signalled it is prepared to significantly reduce its current holding in Flender of about 75%. This has been interpreted by analysts as a willingness to pull out of the company completely. Flender is now seeking strategic partnerships to give it a more international outlook and talks are underway with several internationally active companies, according to a Babcock spokesman. Aside from in Germany, A. Friedrich Flender has facilities in France, China, Japan, India, Brazil and America.
The company has been going through turbulent times even without the wind industry problems. Two months ago it fired its chairman of just one year, Ulrich Bez, after a conflict between Bez and Babcock head Klaus Lederer. At the time it was said that Lederer was dissatisfied with Bez, who was keen on visionary pronouncements, including an expansion into wind energy, but neglected the details of daily business, according to press reports.