That’s the word from Justin Wu, a Hong Kong-based analyst with Bloomberg New Energy Finance who tracks the wind energy industry.
“Turbine manufacturing margins have plummeted while competition has become increasingly fierce,” Wu said.
His comments came in response to news from Vestas that it is cutting more than 2,300 jobs in Europe and China, and that it could be forced to make cuts to its workforce in the U.S. later this year.
There are about 1,600 jobs in the U.S. that could be affected, including hundreds in Northern Colorado, where the Denmark-based company operates blade and wind-turbine plants in Brighton and Windsor.
This isn’t the first bad news from Vestas. For one reason or another, the company’s stock has lost almost 92 percent of its value since peaking in 2008. Given its struggles, and its difficulty in responding to competitive pressures, the company’s credibility at the moment obviously isn’t where investors would like to see it.
Yet wind is a key part of our national energy policy and Vestas has its supporters, including Colorado lawmakers in Congress who promise to work hard in the next few weeks to help push through an extension of a critical wind production tax credit. The credit – which provides an incentive of 2.2 cents per kilowatt-hour of wind power – is set to expire by the end of this year.
Without the credit firmly in place, Vestas says, more job cuts will be coming.
And perhaps not just at Vestas. Among others, Hexcel in Windsor and Bach Composite in Fort Lupton rely on the wind company for business.
The damage wouldn’t be limited to Northern Colorado. According to Navigant Consulting, if Congress allows the credit to expire, jobs in the wind industry will be cut in half, meaning a loss of almost 40,000 American jobs. Raising taxes on wind energy would also cause private investment in the industry to drop by nearly two-thirds.
Clearly, half-measures in this case won’t help. Congress can best bring some stability to this corner of the energy world by extending the credit for at least five years. A one- or two-year extension will not do the job.
In a commentary piece in the Business Report in mid-December, Denise Bode, the CEO of the American Wind Energy Association, noted that the price of American wind power has dropped by over 90 percent since 1980.
Eventually, as wind energy costs drop even further, the credit can be allowed to expire. But for the moment, Northern Colorado cannot afford the blow of losing a single more job and so I hope Congress will move swiftly in extending this credit.
Allen Greenberg is the editor of the Northern Colorado Business Report. He can be reached at email@example.com or 970-232-3142.