Wind turbine manufacturing giant Vestas Wind Systems will lay off 2,335 employees by the end of 2012 as part of a major organizational reorganization, the company said Thursday.
This news comes just over a week after Vestas reported its preliminary end of year revenues for 2011 which, despite reaching approximately EUR 6 billion, were down EUR 1 billion from original estimates. Over half of the jobs being cut will be in Denmark, where the company is based. Global salaried positions will be decreased by 1,600.
“I am truly sorry that we have to say goodbye to so many skilled and loyal Vestas colleagues. The expected layoffs are one of many steps that we now take in order to bring down costs allowing continuous development of our products and services and optimising our already global presence in a highly competitive wind energy market,” said Vestas CEO Ditlev Engel.
One of the major reasons for the cuts, Vestas says, is the expected downturn in the U.S. wind market. In particular, Engel cited the expiration of the US Production Tax Credit (PTC).
The PTC, which provides a 2.2-cent per kilowatt-hour (kWh) tax credit on wind, biomass, and geothermal resources for the first ten years of a renewable energy facility’s life, is set to expire at the end of 2012. If the PTC is not extended, Vestas says it may be forced to slow down production at U.S. factories which the company says could result in 1,600 additional job cuts.
This is the third round of layoffs in as many years for one of the leading wind turbine manufacturers in the world. According to Engel, the cuts are a direct result of a weakened wind market and correspond with what is happening in the renewable energy market worldwide.
Commenting on the state of his company Engel said,
”I can certainly understand if employees as well as people outside Vestas consider us to be in a state of crisis. The challenges we have faced in the fourth quarter of 2011 have given us a credibility problem. It is not undeserved. We have to work our way out of this situation and the only way we can do that is by proving that we with our global presence, high customer satisfaction and the industry’s best performing wind power systems will come out stronger after the elimination race which is currently taking place within the renewable energy sector.”
Vestas expects the reorganization and job cuts to reduce its fixed cost by EUR 150 million.