A plan by Siemens Gamesa to find €2 billion ($2.5 billion) in savings within three years may sound ambitious, but is eminently feasible, according to analysts.

The turbine maker unveiled the target in February as part of a three-year strategic plan called L3AD2020, which aims to focus on levelized cost of energy, agility and digitalization.

The savings "are focused on procurement, technology and industrial footprint enhancements, as well as the already-announced synergies and restructuring work,” said Siemens Gamesa in a press statement.

“Against a backdrop of increasing competition, Siemens Gamesa expects to outperform the market on sales while maintaining strict balance-sheet control," the release states.

The company hopes to meet its cost-control targets while continuing to invest in research and development and at the same time deliver a year-2020 earnings before interest and tax margin of between 8 percent and 10 percent, up from 7 percent to 8 percent expected this year.

Part of the savings will come from rationalizing the company’s portfolio. Until now this has included an overlapping mix of products from Siemens Wind Power and Gamesa, which merged in April 2017.

Siemens Gamesa will now focus solely on geared technology for its onshore machines and direct-drives for its offshore turbines. Onshore, it will go from 25 variants down to nine, based on two main product lines with a modular design.

Offshore, it will discontinue all geared machines, including those produced by the Gamesa and Areva Wind joint venture Adwen, and focus on a single platform.

The company will also look to cut third-party costs by more than 20 percent, most likely by rationalizing procurement to gain economies of scale.

And it will close factories in high-cost markets such as Canada, Denmark, Germany and Spain, and move production instead to countries such as China and Morocco. Around 6,000 people, or roughly a fifth of the company’s staff, will be subject to layoffs.

Shashi Barla, technology consultant at MAKE Consulting, didn’t balk at the proposals. “There are a lot of factors that could influence this,” he said. The portfolio consolidation alone, he said, “has a significant implication on the total cost structure.”

A streamlined portfolio would mean bigger orders for a smaller number of suppliers, he noted.

Gamesa, which had to weather a severe order drought in its home market of Spain, had perfected the art of cost reduction before the merger.

Gamesa’s ability to cut costs helped it establish beachheads in many emerging markets and could now prove useful as Siemens Gamesa seeks to do the same on a larger scale. Tellingly, Gamesa’s sourcing director Wim Geldhof is leading procurement within Siemens Gamesa.

Barla said he expected the strategy to boost the company’s market share. “The competitive position would definitely increase,” he said. “There is absolutely a market synergy.”

Siemens came into the joint venture with a leading share of the offshore wind market, which is expected to boast double-digit growth in the next 10 years. Onshore wind growth, meanwhile, is not expected to rise above 5 percent globally in the same time frame.

But Gamesa has a strong foothold in onshore wind thanks to a presence not just in established markets, but also in many that are emerging.

All told, Siemens Gamesa has a wider geographical reach than any other turbine maker so far, said Feng Zhao, senior director of the global clean energy practice at FTI Consulting.

The company boasted installations in 35 countries worldwide in 2017, versus 30 for market leader Vestas, he said.

This even wider geographical diversification could help Siemens Gamesa grapple with Vestas, which itself has been able to grow thanks to a presence across multiple markets.

“After the merger between Siemens Wind Power and Gamesa, nobody can compete with Siemens Gamesa at this level now,” Zhao said.

FTI Consulting named Siemens Gamesa as the second-largest turbine maker in the world in 2017, ranked between Vestas and Goldwind. Gamesa had previously occupied the fourth slot in FTI Consulting’s ranking, with Siemens placed sixth.

By 2020, Zhao expects Siemens Gamesa to be vying with Vestas for first place in the wind market.

Siemens Wind Power has already been in that position before. Back in 2011, Siemens announced plans to be one of the world’s leading suppliers of wind turbines, Zhao said. It was No. 9 at the time but rose to second place in 2014. Now it could be aiming even higher.