Wind turbine market blamed as Skycon files for insolvency

A wind turbine manufacturer which last year received a £9.7m grant from the Scottish government to help it take control of a Vestas factory on the brink of closure has entered Danish insolvency proceedings, citing the impact of the financial crisis on the wind energy market.

Skycon, which employs about 450 people in Denmark and the UK, today announced it has filed for suspension of payments to creditors because the economic downturn has left it "cash-strapped".

"The wind turbine industry is project based and very cyclical, and it is currently being affected by a number of negative factors in the wake of the financial crisis," explained Skycon chief executive Jens Pedersen in a statement. "These effects have also impacted Skykon to the effect that we are in a very cash-strapped situation."

Speaking to BusinessGreen.com, however, Pedersen said it was too early to say if the suspension of payments would affect Skycon's wind turbine factory at Machrihanish near Campbeltown, which makes towers for wind turbines.

"We don't know yet if it will affect the whole company," Pederson said. "Our lawyers are trying to find out today if the procedure also includes the Scottish factory or not."

Skykon was given a £9.7m grant from the Scottish government last March when it took over the troubled Machrihanish factory from Vestas.

As part of the takeover deal, Skycon pledged to invest £35m in the facilty and triple its size with the help of private investment from EQT Expansion Capital.

Later that year, it won a multi-million pound contract to supply towers for Europe's largest onshore wind farm development, Clyde Wind Farm, in South Lanarkshire.

Skycon also had plans to start up a new manufacturing facility in Machrihanish by the end of the year, aiming to ramp up employment from 150 to its full capacity of 250.

A statement from Kaj Thorén, Skycon board of directors chairman, insisted that the management had not given up hope of reviving some parts of the company.

"The Board of Directors has received indications from key stakeholders that there is a willingness to find a solution subject to certain conditions," he said. "As a result, we will now make a final attempt to pursue any remaining possibilities available to us."

The news marks a second blow to confidence across the wind turbine sector today, after manufacturing giant Vestas announced it would cut around 3,000 jobs across Europe.

However, while the European wind energy sector has undoubtedly suffered as a result of the economic downturn, global figures for new capacity continue to show that the market is growing rapidly, suggesting that the financial problems experienced by some manufacturers are a result of over expansion and increased competition as well as slower than expected growth.