Nearly seven years after the first wind manufacturing facility opened its doors in the state, the industry’s sails are anything but full.
What began as a promising new manufacturing sector for the state has petered out into one the Arkansas Economic Development Commission no longer actively pursues.
Of the five manufacturing companies that announced plans to do business in the state, only one still remains, LM Wind Power of Little Rock, which was also required to return state investment funds after failing to generate enough jobs. Manufacturing projects announced by Mitsubishi, Beckmann Volmer, Nordex and Polymarin have gone by the wayside. The state has either recouped or plans to recoup its incentives in the projects, AEDC spokesman Scott Hardin said in an interview.
Hardin said the agency has removed wind from its list of “targeted industries,” which he said get the bulk of its marketing dollars, as well as its time and recruitment efforts.
“A lot of what happened can simply be considered bad timing. These projects announced, and then the bottom just fell out of the market,” Hardin said.
The American Wind Energy Association, a trade group with the goal of promoting the wind industry, has said that the federal wind industry tax credits that expired at the end of 2014 helped developers obtain financing for wind energy projects and boosted the economy.
Susan Sloan, vice president for state policy at AWEA, said stability in the policy affecting the industry and falling costs are drivers in manufacturing growth.
“Lack of policy stability at the federal level has created uncertainties for domestic manufacturers who face highs and lows in demand. Wind power’s costs have fallen by more than half in the last five years, and the industry is working hard to keep bringing costs down,” Sloan said.
LM Wind Power now operates two facilities in Little Rock, employing about 450 people, but it was also hurt by the expiration of the tax credits. In December, AEDC announced it had recouped $3.4 million in incentives from LM Wind Power, stating the company had failed to reach certain employment goals.
Bill Burga Jr., a spokesman for LM Wind Power, said in an email that “Little Rock’s limited growth [was] far and away from what was expected in its formative year.”
“In the end, the incentives were appropriately adjusted when it was clear our employment commitment would most likely not be achieved in the intended time frame heavily influenced by this unpredictable Congressional action,” Burga said. “We’re hoping the Congress finds ways to extend the current bill which actually ended last year in exchange for allowing those projects already underway to remain eligible. A refreshed bill, we’re advised, might very well reach the floor of both houses this year and if approved, promises to avoid another near term market reaction.”
Hardin said that in discussions with wind manufacturers in the state, the other companies shared similar thoughts.
“These companies were highlighting the fact that this tax credit was going to be a deal breaker in a lot of these cases. Whether or not the companies were able to continue in production was based on whether Congress passed this federal tax credit. So it was extremely important and definitely played a role in some of these companies,” Hardin said.
Going Great Guns
After seeing the effects on the market in recent years, Hardin said AEDC revised its list of targeted industries and removed wind manufacturing. In its place, AEDC is pursuing other sectors that are showing growth, he said.
“A lot of it is going to just be the level of interest that we’re receiving. When it comes to firearms manufacturing, as an example, that’s one sector where we’re receiving a lot of interest, a significant number of leads, a significant number of inquiries. … Secondly, we can look at the numbers nationally and see what the sector’s doing,” Hardin said.
Although the state is now down to just one wind manufacturing company, businesses and utilities in Arkansas are still tangentially involved in the industry.
John Bethel, the executive director of the Arkansas Public Service Commission, said several utilities, including Southwestern Electric Power Co., Empire District Electric Co. and Oklahoma Gas & Electric, own and purchase wind energy from out-of-state generation facilities. Arkansas Electric Cooperative Corp. announced in May that it would purchase 108 megawatts of wind energy from a facility in Oklahoma.