Chasing windmills
Posted on 11/08/2012 11:08:01 PM PST by My Favorite Headache
Vestas Wind Systems is aiming to sell a stake of as much as 20 percent and shed another 3,000 off its headcount, more than doubling the number of jobs it plans to eliminate by 2013.
The announcement came as the Danish company reported disappointing financial results that sent its shares tumbling 13 percent.
The world's biggest wind turbine-maker said Wednesday that its third-quarter loss widened to 175 million euros ($225 million), compared with a loss of 60 million euros in the year-ago period. Analysts had forecast net income of 20 million euros, according to a Bloomberg survey.
Revenue increased 49 percent, to 1.99 billion euros.
Vestas, struggling to return to profit as overcapacity has squeezed margins, will trim its workforce to 16,000 by the end of next year, versus 22,721 in 2011, bringing its annual fixed cost savings to 400 million euros by the end of 2013. The company did not provide a regional breakdown of the job cuts.
In one sense, Oregon and Portland have already dodged several bullets with Vestas.
Portland was considered a front-runner in 2002 when Vestas was fishing for a place to land its North American manufacturing operations. Those plants went to Colorado, which subsidized the move and had seen employment slashed from 1,700 to 1,200 in recent months.
Oregon also lost a bid in 2008 to score a $25 million Vestas research center. That went to Houston, which offered an agreement with three universities. The company announced last week that the Houston center will close, along with two other R&D offices in Massachusetts and Colorado, cutting 85 more jobs.
Later in 2008, Oregon offered $19 million in incentives for Vestas to build a $250 million headquarters in the South Waterfront, in exchange for a promise of 850 new jobs. Vestas held off that expansion because of the economic slowdown.
Officials finally persuaded the company to take taxpayers' money in 2010, when Vestas agreed to a $66 million renovation of a former Meier & Frank building in the Pearl District to house its North American sales and service operations.
The city of Portland extended an $8 million interest-free loan to the developer, Gerding Edlen, to fund part of the renovation. The state kicked in an additional $2.25 million, including a $1 million forgivable loan from the governor's strategic reserve fund. That forgiveness was conditioned on the company retaining 398 jobs and creating 102 more over any eight consecutive calendar quarters between Oct. 1, 2008, and June 30, 2014.
If the company fails to do so, the October 2010 agreement requires Vestas to return part of the $1 million.
Vestas moved into the building this summer. For now, it remains Vestas sales and service hub in North America, but employment there has also been cut. The company says it employs "nearly 300" in the Pearl, down from "more than 300" in recent months, and 25 percent below the "nearly 400" at the beginning of the year.
Vestas is looking for an investor to help it weather falling turbine prices, Chief Financial Officer Dag Andresen said Wednesday.
"What's important is that we have investors who understand the company, the segment that we are working in and also have a longer-term view," he said from the company's headquarters in Aarhus, Denmark.
He and CEO Ditlev Engel declined to discuss talks announced in August about a potential "strategic cooperation" with Mitsubishi Heavy Industries Ltd.
Engel said he's bracing for a decline in orders next year in the U.S. as a tax credit supporting wind power expires. "We are preparing for it to be a very tough U.S. market in 2013," he told Bloomberg Television.
The production tax credit provides an incentive of 2.2 cents a kilowatt-hour for wind power. When it was allowed to lapse at the end of 2003, U.S. wind installations declined to 397 megawatts in 2004 from 1,670 megawatts in 2003. President Barack Obama has said he supports extending the credit.
The company's job losses include about 3,700 previously announced job cuts and 3,000 reductions announced Wednesday. Engel said some staff reductions will come through the selling of facilities, meaning Vestas workers may retain jobs by working for another company. Others will come from not filling vacant positions, he said.
Vestas closed at 26.65 kroner Wednesday in Copenhagen.
That blows...
HOORAY Vestas Wind Systems! Prepare. Persevere.
Is Atlas starting to shrug?
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