Growing Vestas breezes past uncertainty

WINDSOR — Danish wind turbine maker Vestas Wind Systems A/S has recorded five consecutive profitable quarters and plans to expand its Windsor factory as it hires hundreds of additional employees.

Although the continued limbo of the federal wind-production tax credit may hamper wind-turbine manufacturers later this year, the momentum at Vestas is strong.

Aarhus, Denmark-based Vestas (OMX: VWS) and other wind producers have long-relied on the wind-production tax credit that vaulted the industry to higher production earlier this decade, and company officials repeatedly have called for its renewal.

Large wind producers such as Vestas who do much of their business in the United States continue to rely on the tax credit to sell turbines. Deal volume is likely to shrink this year without the incentive, experts said.

“That is probably slowing down some deals from being made this year,” said Tom Darin, senior director for Western state policy at the American Wind Energy Association. “The question is, what happens next?”

Amid the tax-credit debate, Vestas has attained profitability in every quarter since the fourth quarter of 2013 after two years of quarterly losses.

The United States represents Vestas’ largest market in the Americas, with a third of wind-turbine orders being generated here.

“Market activity in the USA is as always heavily correlated with the production-tax credit (PTC),” Vestas’ annual report reads. “In 2014, the market was characterized by continued PTC-related demand, as customers utilized the PTC based on certain conditions being met.”

Vestas earned $443 million in 2014, following a loss of $93 million in 2013. The company reported 2014 revenue of $7.8 billion versus $6.9 billion in 2013.

The company produced and shipped more than 2,500 wind turbines in 2014, up from more than 2,000 in 2013. The higher sales came from increased orders in the United States.

Vestas would welcome a tax-credit extension this year but would prefer a longer-term energy policy so it does not have to depend on annual renewals, said Vestas spokeswoman Piper Baron.

Congress renewed the production tax credit in December to retroactively cover projects started in 2014, it but expired at the end of the year. A Senate bill to extend the wind tax credit five years failed in January, with Sen. Cory Gardner, R-Colo., voting against the bill and Sen. Michael Bennet, D-Colo., voting in favor. The bill was structured as a formal opinion of the Senate, and would not have actually extended the credit, according to Gardner’s office. 

State renewable-energy standards, meanwhile, have helped lift wind producers despite the uncertainty surrounding the production tax credit, which the wind association has sought to renew, Darin said.

“We’re working with the new Congress to see what that’s going to look like for 2015 and moving forward,” Darin said. “Because there is no tax credit in place right now for 2015, we’re back to the starting point, which is (that) it’s an uncertain business environment.”

Vestas owns four factories in Colorado: one each in Windsor and Pueblo and two in Brighton that produce wind turbines for wind farms throughout North America, the company’s second largest market. The Windsor factory is the only one where the company will hire 400 additional workers, including production and production-support jobs. Pay will range from $13 to $16 per hour.

“We are considering a physical expansion of the Windsor facility to accommodate our increased production needs, but have not made a final decision,” Baron said.

Vestas stock, traded on the Copenhagen Stock Exchange, has recorded a 52-week-high of 303 Danish kroner ($43.09 U.S.), almost double its 52-week-low of 162.50 ($23.11). Shares were selling for 287.80 kroner ($40.93) in mid-March and for 197.80 ($28.13) a year earlier.

As Vestas stock rose 46 percent in the past year, the company has gone on a hiring spree in Colorado. The company does not release individual factory employment figures, Baron said, but past statements by the company indicate the company planned to hire hundreds of workers in Windsor last year alone.

Vestas planned to employ almost 2,000 people at the end of 2014 in Colorado, with more than 850 new hires at its Colorado factories.

In 2012, Vestas reached its former peak in Colorado employment with a total of nearly 1,800 workers thanks to the production tax credit. But the company was forced to lay off hundreds of workers when Congress waited until the beginning of 2013 to renew the credit.

Other Northern Colorado wind producers also have seen growing success since 2013. Stamford, Conn.-based Hexcel Corp. (NYSE: HXL), which operates a plant in Windsor that supplies the nearby Vestas factory, reported sales in its wind business had increased 25 percent in 2014 from 2013.

Fort Collins-based Woodward Inc. (Nasdaq: WWD), which makes energy and aerospace control systems, makes a part that converts variable power into a stable electrical current for the energy grid. After deciding not to expand its wind business in China during the wind slowdown of 2013, the company shifted its focus to Europe and lately has seen higher growth, although not as high as during the wind boom in 2012, said Bob Weber, Woodward’s chief financial officer.

“We decided to focus on a European base, and that has proven very successful for us,” said Weber, noting that Woodward does not disclose financial performance of sectors within its energy segment, including wind. “Wind, for Woodward, is coming back.”

Woodward does not rely on the tax credit since it has very little wind business in the United States, he said.

“We will still argue that, whether it’s our business or anybody’s business, that stability in energy policy is clearly of value to everyone,” he said. “To take something like wind … and have it subject to on-again, off-again legislation is not good for business.”

Steve Lynn can be reached at 970-232-3147, 303-630-1968 or slynn@bizwestmedia.com. Follow him on Twitter at @SteveLynnBW.

Clarification: This story has been clarified to reflect the nature of the Senate vote on the five-year wind production tax credit extension. 

on Facebook on LinkedIn