Offshore Wind Turbine Builder Vestas Closes Three Factories
After reporting mixed financial results in the second quarter, with rising revenue but slim margins, wind turbine manufacturer Vestas has announced that it is closing three of its factories in Europe, including a facility that makes power components for one of its largest offshore models.
Vestas is the leading manufacturer in the onshore wind turbine market, and it has a portfolio of offshore turbine models as well, including a new 15 GW giant with the largest swept area in the industry. Scale is key in offshore wind project developments, and Vestas' leap forward from 9.5 to 15 GW at the high end of its range will help it to keep pace with competitor Siemens Gamesa and GE, which have recently boosted the top end of their respective lineups to 14 GW.
Vestas’ factory in Esbjerg, Denmark makes power conversion modules for two previous generations of offshore wind turbine, the V164 and the 9.5 GW V174. The factory employs about 75 people, and it is on the list for closure. "As demand for these modules will gradually shift to markets primarily outside of Europe and be delivered via more localized manufacturing facilities, Vestas expects to conclude production of power conversion modules in Esbjerg during the first half of 2022," the company said.
Vestas said that it will look for opportunities to relocate the staff currently working at its factory in Esbjerg to other sites in Denmark, where it has a total of nearly 6,000 employees.
In Spain, Vestas will be closing a factory that makes control panels for the V164 offshore turbine and generators for its smaller 2 MW onshore turbines. Demand for the 2 MW platform is falling, Vestas will close its factory in Viviero and offer opportunities to employees to relocate to other sites; about 115 personnel will be affected.
In Germany, Vestas is planning to sunset its factory in Lauchhammer, which makes a limited number of turbine blades for its V117 and V136 series. The company expects to make enough blades for these models using supply from its other factories around the world. The expectation is to end production in Lauchhammer by the end of 2021, and about 460 people will be affected. As elsewhere, Vestas will work to find new opportunities for employees who are displaced by the closure.
"Today’s fast-moving energy transition, rapid introduction of new products and recent integration of our onshore and offshore business require us to further mature and evolve our supply chain network and manufacturing footprint," said COO and EVP Tommy Rahbek Nielsen. "I would like to emphasise that we are deeply committed to explore opportunities to relocate our colleagues, who unfortunately will be impacted by the cease of production at our factories in Lauchhammer, Viveiro and Esbjerg."
Vestas to Close Offshore Wind Factories in Denmark and Spain
Danish wind turbine manufacturer Vestas plans to cease production at its factories in Viveiro, Spain, and Esbjerg, Denmark, as well as the onshore wind factory in Lauchhammer, Germany.
Vestas said that the move is part of the company’s integration of its onshore and offshore business started after Vestas acquired a 100 per cent stake in MHI Vestas from Mitsubishi Heavy Industries.
The factory in Esbjerg employs approximately 75 people who manufacture power conversion modules for the V164 and V174 offshore turbines.
As demand for these modules will gradually shift to markets primarily outside of Europe and be delivered via more localised manufacturing facilities, Vestas expects to conclude the production of power conversion modules in Esbjerg during the first half of 2022.
The company will explore opportunities to relocate employees currently working at the factory in Esbjerg to other Vestas sites in Denmark.
The Viveiro factory employs approximately 115 people who manufacture generators for the 2 MW onshore platform as well as control panels for the V164 offshore turbine for markets outside of Spain.
Due to both the decrease in demand for the 2 MW platform and the need to optimise offshore manufacturing, it is no longer sustainable to continue activities in Viveiro, Vestas said.
Based on current plans, Vestas expects to finalise production in Viveiro end of 2021 and will offer opportunities to relocate employees currently working in Viveiro to other Vestas sites in Spain.
”Today’s fast-moving energy transition, rapid introduction of new products and recent integration of our onshore and offshore business require us to further mature and evolve our supply chain network and manufacturing footprint,” said Executive Vice President and COO Tommy Rahbek Nielsen.
”While Vestas will sustain a strong footprint in Europe across manufacturing and service activities, it’s always hard to make decisions that negatively affect our good, hardworking colleagues at Vestas. I would like to emphasise that we are deeply committed to explore opportunities to relocate our colleagues, who unfortunately will be impacted by the cease of production at our factories in Lauchhammer, Viveiro and Esbjerg.”
Where required by local law, Vestas will now initiate legal proceedings and negotiations with worker’s representatives and the local work councils for all affected employees. The total cost of this adjustment of Vestas’ manufacturing onshore and offshore footprint will depend on specifics related to the outcome of negotiations with work councils, sale of buildings, etc. As indicated in Vestas’ guidance for 2021, the total cost will be booked as special items related to the integration of the offshore business and will be recognised in the third quarter of 2021.
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