Strategy and the competition

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Vestas' goal is for 25-30% of the wind market. But with GE Wind showing every sign of being deadly earnest about carving out a good chunk for itself, scoring that could become increasingly difficult. "GE, or formerly Enron, has in recent years had a slightly larger market share in the US than Vestas. I believe GE will come to play a major role in America, and in general. But I also believe that Vestas is able to defend its position," says boss Svend Sigaard.

With its financial might, GE has the power to seriously shake up the business. One theory is that GE could buy LM Glasfiber, causing such serious blade supply problems for Bonus and NEG Micon that they become easy takeover targets. "A solution to this hypothetical problem is on the way through another escape route, since both Bonus and NEG Micon have started their own blade production. Clearly they are still dependent on some of their supplies coming from LM. But I believe that Vestas, with the structure and strategy we have chosen where we make key components such as blades and control systems ourselves, is well placed in such a situation."

Sigaard agrees that global mergers could only leave room for three to five major wind turbine suppliers. "Yes, there's potential, if somebody chooses that route. When I look at the synergies that arise with a merger, you have to look at the customers this industry will have in the future. It will be more and more the large electricity companies and the big developers. They will seek out the biggest suppliers in the industry, but if you merge two companies you have to go from two to one brand and thus risk easily losing market share, so it has to be timed with awful precision."

Rather than GE assuming world dominance, however, Sigaard envisages another scenario. "I believe it more likely that we'll see a consolidation, where some companies are very large and global, while others focus on regional markets, simply to be able to finance it."

Industry speculation has been rife that Vestas is in the running to buy the wind turbine making subsidiary of giant utility Endesa, which put Made up for sale in November. Sigaard comments that he has not been in Spain recently. Vestas, he says, has a "fixed strategy to grow organically." Although he admits that Made as a purchase option has been discussed within Vestas, he stresses that "a purchase is not part of our strategy." Neither is there truth in rumours that Siemens is looking to buy Vestas -- a rumour also denied by the German giant.

In Europe, Vestas' split with Gamesa continues to have repercussions, also outside Spain. Last month Gamesa secured orders for 363 MW in Italy, a market dominated by Vestas until now. "We've had a very special situation in Italy, where we've had a market share of 70%. Such a high share is difficult to defend -- and orders have to be given to others. Gamesa has said it is focusing hard on the Mediterranean. And there I think it's been important for Gamesa to also demonstrate that they can get orders in the area." On whether Gamesa is selling turbines at dumping prices to beat Vestas is a subject on which Sigaard will not be drawn further.

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