Siemens is the latest, and by the far the biggest company to announce layoffs in its U.S. wind operations caused by the lapse of a popular tax credit that has killed project development for 2013. The company also cited competition from low natural gas prices and power demand suppressed by the sluggish economy.
“We have had to make the difficult decision to adjust the manufacturing, projects and administrative support functions of our wind power operations to reflect the current and projected business volume. This will affect approximately 615 of our workforce in our wind power business,” the company said in a statement.
The layoffs will be spread across its turbine manufacturing plant in Kansas, a blade manufacturing facility in Iowa and Siemens’ U.S. headquarters in Orlando, Fla.
The federal production tax credit (PTC) of 2.2 cents per kWh is set to expire at the end of the year, which is set to cause a market collapse next year. Attempts to extend it in Congress have stalled throughout the year and the industry is pinning its hopes on consideration in the lame duck session following the election
Siemens said it is scaling back its operations to meet what it expects to be 3 to 5 GW in the U.S., or about 1,500-2,500 wind turbine units in the mid-term. While the U.S. market may set a record of 12 GW of installed capacity due to a rush to beat the credit’s expiration, the lower level of development represents typical installations in the middle of the last decade.
Siemens said it has invested $100m in building its wind power production facilities in the U.S. and employed more than 1,650.
“We remain committed to maintaining our U.S. factories and will continue to support the U.S. industry as well as export wind turbine components to markets across the Americas,” the company said.
“This is a terrible shame,” said Denise Bode, CEO of the American Wind Energy Association. “It’s a great loss to America, in what has been one of our leading sources of new manufacturing jobs. But Congress can make it stop.”
Recent layoffs have also come in Nebraska and Washington at wind tower maker Katana Summit. Molded Fiber Glass, in Aberdeen, S.D., this week announced 92 of its 370 workforce at its blade factory will be cut.
“Uncertainty about the future of tax credits for wind power is forcing the closures,” Katana CEO Kevin Strudthoff told the Associated Press. He said orders for the towers Katana Summit makes have nearly stopped for 2013 because wind power developers want to know whether the tax credits that expire at the end of this year will be renewed.
According to Bode, that is a reference to uncertainty surrounding the PTC. “When the PTC has expired in the past, installations have dropped between 73 and 93%, with corresponding job losses,” Bode said.