Vestas Wind Systems Cuts Workforce by 20 Percent

Published November 27, 2012

Alternative energy development has taken another hit as the world’s largest developer of wind turbines, Denmark-based Vestas Wind Systems, trimmed its U.S. workforce by approximately 20 percent. Vestas says the reason for the layoffs is lagging revenues and the uncertain future of federal subsidies.

Bleeding Jobs, Value

The job cuts reduce Vestas’ workforce in the United States and Canada to 2,600, a fall from 3,400 in just the past few months.

Andrew Longeteig, a communications specialist for Global MarCom & Corporate Relations, the firm that represents Vestas, said the company is “being more aggressive with its cost-out initiatives” and has plans to trim its global workforce to 16,000 in the coming year. That’s a cutback of about 30 percent.

The company reported a 93 percent drop in its stock price during the past three years. Despite this failure, company officials say they expect to continue operations in the United States for years to come. The recent reelection of President Obama, who has championed taxpayer subsidies for alternative energy companies, gives failing alternative-energy companies like Vestas a glimmer of hope.

“Vestas is pleased the American public reelected many wind energy supporters, which includes both Republicans and Democrats,” said Longeteig. “It’s a favorable step toward securing an extension of the Production Tax Credit. Vestas is confident the PTC will be extended because it has strong bipartisan support.

“Vestas is optimistic about the long-term future of wind power and intends to be in the U.S. market for a long time,” Longeteig added.

Subsidies Drive Production

The Production Tax Credit gives wind power providers taxpayer subsidies, in the form of tax credits, based on how much electricity the alternative energy providers produce. 

“The PTC has been very successful in attracting private-sector investment,” Longeteig said. “It works.”
Industry analysts, however, disagree with that assessment and argue the wind industry is entirely dependent on taxpayer-funded subsidies.

“For years the wind industry has been propped up by government handouts and mandates. Vestas realizes that its current size is unsustainable and has moved to cut back,” said Daniel Simmons, director of regulatory affairs at the Institute for Energy Research. 

“The tax credits for the wind industry are huge,” said Simmons. “In fact, wind producers frequently pay the electrical grid to take their electricity just so they can continue to collect the tax subsidy.”
This tax subsidy nets the public absolutely nothing, says Scott Walter, vice president of the Capital Research Center, a Washington, DC, nonprofit that studies environmental groups. 

Economic, Environmental Shortfalls

Wind energy is inefficient and far more costly than other sources of energy, Walter says. Wind energy providers are generally incapable of turning a profit, he says.

“Companies in the industry can’t succeed without corporate welfare from the government,” Walter said. “It’s unreliable. When the wind doesn’t blow, a heart-lung machine can’t use wind power.

“Turbines break, and to manufacture them from high-tech materials, you need rare-earth metals that are obtained from mining in places like fragile African ecosystems,” Walter added.

Walter cited a recent MIT study that found it takes roughly 1,300 pounds of rare earth metals to manufacture just one large wind turbine. But that’s hardly the only ecological drawback, he said. Wind energy kills birds, consumes large tracts of land, and even draws on coal power plants when back-up is required.

“A new Argonne National Laboratory study showed that the coal power plants required to back up wind energy actually consume more energy and produce more carbon dioxide emissions if they must be switched on and off, than the same plants would consume if they stayed on continuously,” Walter said.

Agree on Reelection

However, the energy analyst did agree with Vestas’ spokesman on one point.”The reelection of the president means that it is more likely for the wind production tax credit to be continued,” Simmons said. Simmons said the Production Tax Credit is “wasteful” and should be discontinued.

Cheryl Chumley ([email protected]) is a digital editor with Times247, the latest project of The Washington Times.