Wind turbine maker Vestas said today it will close one factory and cut 2,335 jobs -- about 10 percent of its workforce -- after the global financial crisis and escalating competition from low-cost manufacturers took a toll on earnings last year. Vestas said it aims to reduce fixed costs by more than $191 million (or 150m EUR) by the end of the year.
What's more troubling, at least for the U.S., is what lies ahead. The United States is one of Vestas' biggest markets; and right now, it's where much of the production is occurring. But CEO Ditlev Engel said today in a statement announcing the job cuts, those high production numbers have been inflated as wind developers rush to complete their installations before the U.S. Production Tax Credit expires at the end of the year.
Engel said jobs are being cut today to prepare for a future downturn in the U.S. wind energy market. In a statement, Engel said:
We are now preparing Vestas for the situation where one of our largest single markets, the USA, may be facing a tough 2013. This will have a huge impact on our business, if we do not act now.
If the PTC is not extended, Vestas may cut an additional 1,600 jobs at U.S. factories. The decision will be made this year, according to a company statement.
The job cuts announced today will primarily impact workers in Denmark. About 1,300 employees will lose their jobs when Vestas closes a factory and trims administration services in facilities scattered throughout Denmark. The remaining 1,000 job cuts will be made across its global operations.
The action was hardly unexpected considering the the company has cut sales forecasts twice in the past several months, the most recent warning announced just last week. Chinese suppliers have put downward pressure on turbines and taken market share from Vestas.
This post was originally published on Smartplanet.com