in News Departments > New & Noteworthy
print the content item



The U.S. wind energy industry is already reeling as a result of the production tax credit's (PTC) uncertain future, and the impact has been the most severe on wind component manufacturers.

Supply-chain participants - especially wind turbine tower, blade and nacelle manufacturers - continue to experience financial troubles, which could have a negative ripple effect on the entire U.S. wind industry.

For example, Illinois-based wind tower manufacturer Broadwind Energy just reported a $4.2 million loss for the second quarter. Although the loss was smaller than the $4.4 million one reported in the second quarter of last year, the company attributed its stronger operating results to its gearing and services segments and to lower operating expenses, rather than to the tower segment of its business, which has continued to hamper its earnings results.

These financial woes underscore the troubles recently experienced by U.S. wind tower manufacturers, which have faced stiff competition from their Chinese counterparts. Last month, the U.S. Department of Commerce (DOC) issued a preliminary ruling in favor of the Wind Tower Trade Coalition - a group of U.S. producers of utility-scale wind towers that includes Broadwind, DMI Industries, Trinity Structural Towers and Katana Summit - that utility-scale wind turbine towers made in China and Vietnam were illegally dumped into the U.S.

Although the DOC says that Customs and Border Protection has been collecting preliminary countervailing duties on imports of utility-scale wind towers since the beginning of June, the damage may already be done.

As a result of recent losses in the wind tower segment of their businesses, other U.S. manufacturers are shifting their production away from wind towers altogether. In July, Dallas-based Trinity Industries said it was planning to “reposition a portion of [its] production capacity to meet the growing demand for products serving the oil, gas and chemicals industries.”

And just this week, Otter Tail Corp. announced it was selling wind tower manufacturer DMI Industries, citing reduced demand and an unfavorable policy environment. DMI recorded a non-cash asset impairment charge of $45.6 million in the second quarter. If a sale is not made, Otter Tail plans to close DMI's manufacturing plants in West Fargo, N.D., and Tulsa, Okla., as well as sell DMI's fixed assets, after DMI finishes its backlog of orders for this year.

Meanwhile, wind turbine blade manufacturers LM Wind Power also made a big announcement this week: Thanks to the U.S. government’s failure to extend the PTC, the company plans to lay off over 200 employees at its Little Rock, Ark., facility.

Preventing further damage
The recent wave of announcements comes as no surprise to some industry analysts. Dan Shreve, director and partner at MAKE Consulting, says the firm has long predicted that component suppliers would be the first shoe to drop as a result of PTC uncertainty.

“MAKE has stated for some time - and quite vociferously - that the blade and tower manufacturers would be the first and hardest hit of the supply-chain participants,” Shreve tells NAW. “It is a snowballing effect that begins with U.S.-based utilities. Low load growth and policy uncertainty are inhibiting the development of new wind farms, thus impacting turbine [original equipment manufacturers (OEMs)] and all of their suppliers.”

In order to prevent further damage throughout the rest of the U.S. wind energy industry, there needs to be an overhaul and restructuring of the supply-chain landscape, MAKE Consulting said in a report released last month.

“Failure to evolve the supply-chain landscape will result in further industry setbacks, particularly if strong global competitors leave the market for lack of profitability or if strong multinational industrials stay out of the wind market,” the report stated. “Therefore, realignment of the wind power supply chain is overdue.”

In addition, strong business planning will also help shield component suppliers from increased risk and prevent a ripple effect on the wider industry, Shreve says.

“Market share modeling becomes critical if sub-suppliers wish to align themselves with turbine OEMs and asset owners with a sustainable business plan,” he explains. “Failure to perform this type of business planning exposes an enterprise to these knock-on effects, which will impact the entire value chain, from raw material suppliers to transportation companies to gearbox OEMs to turbine OEMs.”

In addition, aftermarket services, raw-material innovation and an overall reduction in the cost of energy will all be critical to preventing further market contraction, the MAKE report notes. Failure to take these steps could have devastating effects on the future of the U.S. wind energy industry.

“A prolonged market contraction, whereby turbine and component OEMs exit international markets and subsequently linger in smaller regional markets, would hamper the evolution of the industry and lessen its ability to finally go head-to-head with fossil-fueled generation,” the report concludes.



Trachte Inc._id1770
Latest Top Stories

Quebec Government Postpones Wind Power RFP; No New Date Scheduled

The request for proposals (RFP) is part of an overall 800 MW wind power tranche that will serve as a bridge to the next phase in the province's energy future.


Setting The Record Straight: How Many Birds Do Wind Turbines Really Kill?

Several peer-reviewed studies are more or less in agreement with avian mortality rates caused by wind turbines. However, one study, which is wildly off from the others, is most often cited in the media. Why?


Six Takeaways From The IRS' Start Of Construction Guidance: What You Need To Know

The IRS recently issued guidance to wind developers to further spell out what "start of construction" means. Will you be covered?


Eagle Take Permits For Wind Farms - Will They Fly?

Now that the U.S. Fish and Wildlife Service has issued the first permit allowing the legal take of eagles, can wind developers expect more certainty in the agency's application process?


Despite 2013 Challenges, U.S. Wind Power Reaches All-Time Low Price

In a new report, the U.S. Department of Energy details the highs and lows of the country's wind industry last year, and the agency maintains that the U.S. sector remains strong.

Renewable NRG_id1934
Canwea_id1984
Tower Conference_id1965
UnitedEquip_id1995