Vestas’ cost-cutting is far from over.
The company Wednesday announced it plans to cut its global workforce by another 3,000 people by the end of 2013 — 1,000 of which will come before the end of this year.
There is no word yet on whether those cuts will come to Colorado, but so far, the state hasn’t been spared, losing 500 jobs this year alone.
The company last summer announced it needed to cut more than 3,000 jobs worldwide to fit within a tightening industry to get its base down to 19,000 by the end of 2012. But that base will now shrink to 18,000 by the end of the year, and to a planned 16,000 by the end of 2013, according to its third-quarter earnings report.
“The company has been under a full turnaround,” said CEO Ditlev Engel in an earnings call Wednesday, transcribed by Seeking Alpha. “We are changing the business model for the company, looking into (our) manufacturing footprint, looking to the inventories and net working capital, reducing (the) number of employees ... So, I think that we need the quarters coming forward to adjust and calibrate the company more to be even more efficient.”
The continued cuts were announced the day after President Barack Obama was elected. The election prompted the American Wind Energy Association to claim victory for wind energy and predict the eventual passage of the Wind Production Tax Credit, which is set to expire this year.
AWEA President Denise Bode said in a media call Wednesday that the entire industry, which employs roughly 37,000 people in America, could likely be saved now.
“The real losses we are seeing are on the manufacturing side, and some won’t come back,” Bode said in the call. “I’m hopeful that this referendum of sorts on wind energy in the U.S. will provide greater certainty for folks with millions of dollars of investments in American wind, that they will stand through it.”
Vestas’ Engel said that although he thinks the PTC will go through, the company is proceeding regardless, with expectations that next year will be tougher than 2012.
“Even if the PTC should be extended now, I don’t think we’re going to see a normalized U.S. market next year because we are so late into this year,” Engel said. “Even (if they) extend it tomorrow, we would not see that in 2013 but then we will have to see how that will play out for 2014.”
Bode said she has heard discussion about the tax credit being renewed from one year to permanently.
The new Vestas employee cuts are expected to save about $193 million by the end of 2013, which will help the company be profitable. Worldwide cuts have included shutting down plants, consolidating offices and cutting people.
In Colorado, the losses came to about 500 people this year, many of which came from Vestas’ Weld County manufacturing plants. The company also cut its research and development office, and trimmed staff at its Pueblo tower factory, and Brighton blade and nacelle plants. Most recently, it cut about 200 people from its Windsor blade manufacturing plant.
Windsor Mayor John Vázquez said his concern is mostly for the families that already have been and who could be affected by further layoffs. He said roughly 13 percent of the employee base is said to live in Windsor, and the rest come from throughout northern Colorado.
“If there’s anything we can do to assist Vestas, our doors will be open,” he said.
Colorado’s facilities are all less than five years old, with its first plant in Colorado coming in 2008 in Windsor.
Engel said some staff reductions could come from selling facilities. Still other vacancies will come through attrition.
“Due to the slowdown in the wind turbine market and the need to increase the organization’s scalability, Vestas is evaluating its manufacturing footprint and has initiated a process to identify outsourcing and divestment opportunities in order to involve its suppliers in larger parts of the production than is the case today,” according to the company’s third quarter report to the market. “This could mean divestment of production facilities. The intention is to further increase the manufacturing flexibility and to reduce Vestas’ capital requirement.”