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Becalmed Mark Ohrenschall Con.Web, December 20, 2002

Proposed Northwest Wind Turbine Plant 'On Hold,' Vestas Announces

A proposed wind turbine manufacturing plant in the Pacific Northwest is officially becalmed.

Vestas Wind Systems A/S announced Nov. 26 that its investment plans for a Northwest manufacturing facility are "on hold." A company news release did not elaborate, although it noted plans for reduced capital spending in 2003 amid lowered expectations for the U.S. wind market. Vestas officials could not be reached by Con.WEB for comment.

The prospective factory and its many hundreds of jobs were touted just nine months ago as a huge clean energy economic development coup for Portland, and a sign of confidence in wind's regional and national future by the world's leading turbine manufacturer. But the Vestas plant has grown increasingly uncertain with a slowdown in the U.S. wind market and congressional inaction on the future of the federal wind energy production tax credit.

'On Hold'
"Investments in manufacturing facilities in the USA ... have been put on hold," stated the Nov. 26 Vestas news release.

That differs substantially from an Aug. 22 company pronouncement that, "Activities concerning preparations for production facilities are still ongoing in the Portland area. Final location and timing for establishment is related to a clarification regarding extension of the PTC scheme."

A Vestas official in Portland told Con.WEB in late September that her firm was still considering a Northwest plant, and that the list of potential sites had expanded from Portland (the original pick) to Vancouver and Longview in Washington. "We're anxiously awaiting in Congress action on the production tax credit," said human resources vice president Jo Anne Firestone of Vestas-American Wind Technology, a Vestas subsidiary. "Once that comes through we'll look at the feasibility of where we need to locate." An extension of the current 1.8 cents per kilowatt-hour credit failed to materialize this fall, and thus it is still scheduled to expire at year-end 2003.

VAWT moved its corporate offices from Palm Springs, CA to Portland, and as of late September employed more than 100 people.

The manufacturing plant at full production would employ more than 800 people, according to Firestone. Vestas' initial announcement in April called for a 227,000-square-foot plant designed to assemble nacelles, produce blades and make towers, on an estimated investment of $35 million in production equipment. The company at the time anticipated opening the plant in summer 2003 and reaching full capacity by early 2004.

Vestas Projections
Vestas' Nov. 26 news release indicated the PTC could be extended in March or April of 2003, although "it will most likely not happen until October/November 2003. Therefore, the expectations for order intake for the American market this year have been reduced." The Denmark-based firm forecasts gross revenues of about 1.3 billion Euros in 2002, down from prior projections of 1.4 billion to 1.5 billion Euros. It expects 2003 revenues to grow to 1.7 billion to 1.8 billion Euros, lower than earlier projections of 2.1 billion to 2.2 billion Euros. (A euro roughly equals a dollar under current exchange rates.)

The company characterized non-U.S. wind market developments as "positive as expected" for the second half of 2002, particularly in European countries including Germany, Italy, United Kingdom, Ireland and the Netherlands.

"Vestas' expectations for the world market in 2004 and onwards are very much related to the American market," the news release said. "In case of an early extension of the PTC in 2003, the expectations for the American market in 2004 and onwards are positive. In case of a late extension of the PTC in 2003, the expectations for the American market in 2004 are lower, however, growth is expected again in 2005 and 2006."

Vestas in early December announced layoffs of 533 people from its Danish facilities.

Executive director Randall Swisher of the American Wind Energy Association called Vestas' recent announcements "unfortunate, but reflecting the hard realities of the wind business in the U.S. today. The U.S. independent power market is in turmoil at the moment, with many companies slashing plans to build new power plants, and that certainly has not helped matters," Swisher said in AWEA's Wind Energy Weekly. "At the same time, this news underlines the urgent need for Congress to act on an extension of the production tax credit and to put policies in place that will promote the sustained, orderly development of wind and other renewable energy technologies, instead of the roller-coaster, off-again, on-again situation we have at present."