The short-term extension of the wind-power production tax credit, enacted in cliffhanger negotiations as 2013 dawned, ensured that new installations in the U.S. wouldn’t completely collapse in the next few years. But it apparently wasn’t all that some sectors of the overbuilt industry supply chain needed to flourish, despite wind’s increasing competitiveness.
Evidence of that arrived late last week as the German company Nordex announced it would shut down a Jonesboro, Ark. factor where it had manufactured turbine nacelles since 2010.
“This was an extremely difficult decision for Nordex,” CEO Jürgen Zeschky said in a statement. “We are reacting to the weakened demand from the U.S. market, brought on by the unpredictable extensions of the Production Tax Credit (PTC), and the resulting low utilization rate of our U.S. assembly plant.”
Other wind equipment suppliers haven’t been suffering as greatly as Nordex. Broadwind Energy, for instance, experienced a “sharp increase in tower orders” after Congress extended the PTC for a year while broadening the law to include wind farms that merely begin construction this year (vs. going into service). “The Towers segment’s momentum that we anticipated on the heels of the PTC renewal and improved dynamics in the tower market is coming to fruition,” Broadwind said in a quarterly report released in May.
It could be that the tower sector is gaining some additional traction as a result of duties placed on Chinese and Vietnamese tower makers.
Nordex said it would supply nacelles for the North American and Latin American markets from its factory in Rostock, Germany, after it lays off the 40 workers toiling in Jonesboro, beginning this fall.
Back during the depths of the Great Recession, Nordex had visions of employing hundreds of workers in Arkansas, and in those job-scarce times, that plan drew government assistance (which the state said was being paid back). But the big jobs never quite materialized as the U.S. wind-gear pipeline dried up when natural gas prices plunged and wind developers, fearful the PTC would not be extended, stopped planning new projects.
In the wake of the Nordex announcement, Arkansas politicians -- Democratic and Republican alike -- said it’s just that sort of policy inconsistency that is the problem.
“Promising industries like wind turbine production are particularly sensitive to this uncertainty, as Washington has been unable to tell them what their tax burden will be beyond a very short term,” U.S. Senator John Boozman (R-Ark.) said, according to a release from the American Wind Energy Association. “You can’t make major planning decisions from a business perspective on that timeframe.”
Boozman went on to say that “there must be a longer-term extension in place so that companies like Nordex and Mitsubishi can grow and put Arkansans to work. I support the credit, have voted for the extensions, and would like to see the wind tax credit authorized for a longer time period to provide certainty to business owners.”
Mitsubishi suspended construction of a wind turbine manufacturing plant in Fort Smith, Ark. in April 2012 as demand faltered.