Strikes, profit warnings, plant closures: the wind power industry is slipping deeper into the crisis

 

Düsseldorf -- In the middle of the energy crisis, the incoming orders from European wind turbine manufacturers collapsed. A look at the latest figures from the domestic market leaders shows that orders in the third quarter fell by more than a third compared to the previous year. Siemens Gamesa and Vestas are deep in the red, had to cut their forecasts and are cutting thousands of jobs. 

 

Siemens Gamesas CEO Jochen Eickholt therefore requested financial support from Brussels. "I would advise EU politicians to introduce similar support measures for the ailing wind power industry as the US does," he said on Thursday when the quarterly figures were presented. In North America, the government under US President Joe Biden is currently channeling 400 billion euros into climate-neutral industry, 260 billion dollars into the expansion of solar, wind and hydropower alone.

 

In Europe, on the other hand, Eickholt sees the energy transition threatened by uncertainties , supply chain problems and inflation. The European wind power industry has not only been in crisis since record raw material prices, supply chain problems and the Ukraine war have been affecting business. The turbine manufacturers simply don't make any money.

 

 

Companies are trying to counteract this with cost savings. They are closing down entire plants like Nordex in Rostock , laying off thousands of employees like Siemens Gamesa and, like Vestas boss Henrik Andersen , demanding an end to the ruinous price competition among themselves .

 

The mood on the global wind power market is actually good, says expert Dirk Briese from the market research agency Trendresearch, and demand is huge. “The problem: the manufacturers are still not getting the orders processed with the costs that they actually should have. Finally, the technical problems were added to those of the supply chains and Corona. And at Vestas the strike,” explains the industry insider.

 

 

At the world's largest wind turbine manufacturer Vestas from Denmark, some of the German employees have been on the barricades for days. Last Monday, IG Metall called on workers to go on a five-day strike in order to force management to enter into collective bargaining. It is the first time that employees of a turbine manufacturer have gone on strike. For a better wage.

 

Vestas wants to sign an agreement with the works council instead. "The wage-price spiral is another dilemma facing the turbine manufacturers, also against the background of the ever-increasing shortage of skilled workers," explains wind expert Briese. 

 

 

A look at the current quarterly figures shows how serious the situation is. Siemens Gamesa made a net loss of almost one billion euros in the past fiscal year (until October 31). Sales fell by four percent to 9.8 billion euros. CEO Eickholt, who started as a reorganizer, said that the portfolio of projects had to be reviewed in view of the changed environment and cost increases. Meanwhile, Eickholt is not promising sustainable progress until 2025. 

 

 

Competitor and onshore market leader Vestas had to lower its forecast and after nine months of the current year has only turned over 9.7 billion euros. In 2021 it was eleven billion euros in the same period. In the first three quarters of 2022, Vestas made a loss of almost one billion euros. In the same period last year, the Danes were still able to report a net profit of 135 million euros.

 

 

There has been a tough price war on the market for years. Above all, the switch from fixed state remuneration to free tendering systems, in which only the cheapest gets the contract, has driven the turbine manufacturers into ruinous competition. At the same time, the German market, one of the main sales markets, has collapsed in recent years. What was once the world's largest wind market is now a difficult environment for the globally active manufacturers Vestas, Siemens Gamesa, Nordex and Enercon. 

 

In September, for example, just 87 bidders with wind farms for 772 megawatts applied for the funding program for the expansion of onshore wind power. They don't even use 60 percent of the available funding. "The Ministry of Economic Affairs has initiated many important things, but the new regulations have not yet been put into practice," reports an industry insider. There is uncertainty throughout Europe. 

 

 

New projects are currently difficult to finalize, especially in view of the EU Commission's plans to skim off profits from companies that are currently earning well from the high electricity prices. "We will concentrate on the markets where the demand is," emphasized Siemens Gamesa CEO Eickholt in view of the current situation in Europe. Nothing has been decided yet, but he sees an additional internationalization in the new strategy of the market leader for wind turbines at sea (offshore).

 

Manufacturers are increasingly relocating labour-intensive production abroad to save money, explains wind expert Briese. This was most recently observed when Nordex closed its rotor blade factory in Rostock. At the same time, manufacturers such as Nordex and Enercon have repeatedly had to contend with quality problems in their systems in recent months.

 

Briese is therefore convinced: In order to get out of the loss zone, “prices have to keep rising; and under constant competitive and development pressure.” In recent months, the prices for onshore wind turbines have already risen by between 15 and 20 percent. Industry insiders report that where just under EUR 800,000 per megawatt was due two years ago, it is now over EUR 1 million. Wind energy, which has become cheaper and cheaper over the past twenty years, is becoming more expensive again. 

 

However, it can already be heard from individual project planners that they will not pay every price. A real dilemma.