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Vestas to Close Three U.S. Research Centers

by Erik Siemers
Sustainable Business Oregon, October 31, 2012

Wind turbine-maker Vestas on Wednesday said it will close its three primary research and development operations in the U.S. by the end of the second quarter, resulting in the loss of 85 jobs.

The Danish company, which keeps its North American sales and service division in Portland, had previously announced the pending closure of its R&D operations in Houston and Marlborough, Mass. This week's announcement adds its research facility in Louisville, Colo., to the list.

All three offices will close within the next three to six months, resulting in a job reduction of 85 people.

The closures are part of Vestas' effort to reduce costs by simplifying its global research and development operations.

The company has already closed R&D centers in China, Denmark and Singapore. Combined, the company has shed about 20 percent of its research and development jobs this year. It still maintains research functions in six other locations across the globe that design and develop new products.

The company's Portland office -- which has shrunk from around 400 employees at the start of the year to around 300 today -- includes several dozen employees whose jobs include research functions, though their positions aren't affected by the restructuring.

Wednesday's news is the latest move in the company's shrinking U.S. presence.

The wind energy industry is struggling globally, but in the U.S. in particular the issue centers on the uncertain status of the federal Production Tax Credit program, which is set to expire at the end of the year.

The program offers an income tax credit of 2.2 cents per kilowatt hour of energy produced from utility scale wind turbines.

That subsidy is viewed by advocates as a critical tool to helping make wind cost-competitive with other energy sources. But the program's political opponents -- which include Republican presidential nominee Mitt Romney -- view the tax credit as an unnecessary hand out to support a technology that can't stand on its own in the marketplace.

The tenuous nature of the tax credit has made it difficult for wind farm developers to plan for new projects beyond this year, vastly shrinking the size of Vestas' market opportunity in the U.S.

Data from Navigant Consulting that's quoted frequently by the American Wind Energy Association forecasts that as many 37,000 jobs could be lost by the first quarter of next year if the tax credit isn't extended.

The Senate Finance Committee tucked a one-year extension of the tax credit into a broader tax extender bill back in August, but the issue isn't expected to be resolved until sometime after Tuesday's elections.

Earlier this week, Jon Chase, Vestas' vice president of government relations in Washington, D.C., issued a statement to the Business Journal saying the company believes the U.S. wind energy market will grow regardless of Tuesday's election outcome.

Earlier this month Vestas announced plans to llayoff close to 300 people at two of its Colorado manufacturing plants. That followed the 130 Colorado layoffs the company announced in August.

Vestas employs 2,600 across the U.S. and Canada.

"We believe Congress will extend the Production Tax Credit by the end of this year because it has strong bipartisan support," Chase said. "The continued development of wind as part of a national energy strategy will lower consumer electricity costs, provide economic growth in local economies, and support American manufacturing jobs."

Erik Siemers
Vestas to Close Three U.S. Research Centers
Sustainable Business Oregon, October 31, 2012

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