by Lance Turner
Posted 6/28/2013 06:37 am
Updated 5 months ago
A Jonesboro wind turbine plant that said it would eventually employ 750 people has halted production, cutting 40 of its 50 workers.
Nordex USA, the domestic unit of Germany's Nordex SE, said early Friday that it would cease nacelle production at the plant after it fills current orders. It said it will move production to its factory in Rostock, Germany, and that layoffs will begin in the fall.
In a news release, the company said its decision was based on "the wind industry’s global overcapacity and the continued uncertainty and instability of the US market."
"This was an extremely difficult decision for Nordex," Jürgen Zeschky, Nordex SE's CEO, said in a news release. "We are reacting to the weakened demand from the US market, brought on by the unpredictable extensions of the Production Tax Credit (PTC), and the resulting low utilization rate of our US assembly plant.
"We see great potential in the US and Latin American markets and are committed to serving those markets and increasing our installed base," he said. "With this decision we also increase our flexibility to react to US demand for our turbines out of one single plant in Rostock, Germany."
Nordex said it will retain its sales, engineering, service, project management, training and support operations at its Jonesboro and Chicago locations. But the move effectively ends Nordex manufacting in North America.
"Obviously we're disappointed about the decision to cease the nacelle unit in Jonesboro and move it to Rostock, Germany," said Mark Young, president and CEO of the Jonesboro Regional Chamber of Commerce. "Our concern is with the individuals impacted by this, and we're working very hard to make sure there are opportunities for those individuals to have employment opportunities right here in Jonesboro."
The move also thows into doubt the future of a nearby Nordex supplier, the Beckmann Volmer plant in Osceola. The German company broke ground on its $12 million plant in September 2011 and planned to eventually employ 300 workers making components for Nordex turbines. Calls to Beckmann Volmer were not returned on Friday.
The uncertainty of an extension of the Production Tax Credit dogged the wind industry throughout 2012. The tax credit, which was set to expire at the end of last year, let companies producing renewable energy pay a lower income tax rate by 2.2 cents per kilowatt-hour.
But gridlock in Congress made an extension of the tax credit look doubtful, which chilled activity in the wind industry. In April, Mitsubishi Heavy Industries Ltd.'s decided to suspend construction of a planned, $100 million wind turbine manufacturing plant in Fort Smith that was to have employed 400 people.
And in August, the state's first big wind energy player, LM Wind Power, laid off more than 200 of its Little Rock workers, or about half its state workforce.
The Danish company, which makes fiberglass wind turbine blades at its $150 million North American headquarters at the Port of Little Rock, attributed the layoffs to a decrease in demand for its products as Congress failed to renew the tax credit, which would have expired Dec. 31.
The American Wind Energy Association later warned that the industry could shed up to 93 percent of its workforce.
"We're at a very perilous moment for U.S. wind energy," Peter Kelley, spokesman for the AWEA, told Arkansas Business in August. "We've had growth by leaps and bounds in the past few years just because there's been a lot of demand for renewable energy, and there's a tax credit."
Congress ultimately approved a one-year extension of the tax credit.
Nordex announced plans in 2008 to build a wind turbine production plant in Jonesboro. At the time, the company said it would invest about $100 million in the new facility on 187 acres in the Craighead Technology Park. It projected that employment would eventually reach 750 people at an average wage of $17 an hour.
The company planned to make 2.5 megawatt N90 and N100 turbine models. A $40 million facility would produce nacelles, the tubular towers that support the windmills, in 115,000 SF of production space. Plans also called for a 10,000-SF "training academy" and 35,000 SF of office space. At full capacity, the nacelle plant was to employ 240, Nordex said at the time.
When the plant opened in 2010, employment was about 70.
On Friday, Nordex said the training academy, the central parts storage and the repair facility in Jonesboro will remain in operation to support its services and operations in the Americas.
"This is a sad day for all of us at Nordex USA," Ralf Sigrist, president and CEO of Nordex USA Inc., said in the company's statement. "We will lose valued colleagues, who have done their very best for us, but the decision was inevitable considering the underutilization of our plant."