Vestas to cut 3,000 jobs at wind turbine plants
Financial Times|Clare MacCarthy|October 26, 2010
Vestas, the world's largest wind power company, is to cut up to 3,000 jobs - some 14 per cent of its global workforce - because of excess capacity and a cut in order expectations in Europe. The closures of four production facilities in Denmark and one in Sweden were announced on Tuesday.
Vestas, the world's largest wind power company, is to cut up to 3,000 jobs - some 14 per cent of its global workforce - because of excess capacity and a cut in order expectations in Europe. The closures of four production facilities in Denmark and one in Sweden were announced on Tuesday.
Vestas, the world's largest wind power company, is to cut up to 3,000 jobs - some 14 per cent of its global workforce - because of excess capacity and a cut in order expectations in Europe.
The closures of four production facilities in Denmark and one in Sweden were announced on Tuesday with the Denmark-based group's third-quarter results. Net profits fell to €126m ($176m) from €165m a year earlier and sales declined 5.1 per cent to €1.72bn.
Shares in Vestas tumbled more than 8 per cent to DKr183.30 in afternoon trading in Copenhagen.
The closures in Denmark - representing about a third of its current domestic workforce - will come as a severe disappointment in its native country. As a pioneer in the industry worldwide, Vestas is …
... more [truncated due to possible copyright]Vestas, the world's largest wind power company, is to cut up to 3,000 jobs - some 14 per cent of its global workforce - because of excess capacity and a cut in order expectations in Europe.
The closures of four production facilities in Denmark and one in Sweden were announced on Tuesday with the Denmark-based group's third-quarter results. Net profits fell to €126m ($176m) from €165m a year earlier and sales declined 5.1 per cent to €1.72bn.
Shares in Vestas tumbled more than 8 per cent to DKr183.30 in afternoon trading in Copenhagen.
The closures in Denmark - representing about a third of its current domestic workforce - will come as a severe disappointment in its native country. As a pioneer in the industry worldwide, Vestas is cherished as a national champion though many industry watchers harbour deep concerns about its fluctuating fortunes. Support functions at locations worldwide will also be affected.
Ditlev Engel, chief executive, said Vestas was increasing its global market share because of orders booked during 2010.
"Based on the expectations we have for 2011 in Europe, however, we must now recognise that a higher European level of activity will not be realistic - at least not in the short term," he said.
Mr Engel, who joined Vestas as chief executive in 2005, has presided over several deep redundancy rounds but has managed to internationalise the company out of its Danish homeland by opening production plants in the US, China and Spain.
"The distribution between the regions of Europe, North America and Asia is today out of balance, and the situation in Europe is very clear when you look at the number of orders in relation to how many employees we have. To ensure the competitiveness of Vestas, we therefore have to act in a very offensive and very drastic way today," he said.
Mr Engel said it was cheaper for Vestas to produce a wind turbine in Spain and ship it to Sweden than to send it out of Denmark. A turbine manufactured in China and shipped to Denmark cost about the same as making it at home.
"Vestas must always be able to compete against what we call Asia cost plus freight. And that is unfortunately not possible with the current overcapacity in Northern Europe where the cost level is too high," Mr Engel said.