Vestas Cuts 2,335 Jobs, More at Risk in U.S.
The changes are aimed at saving more than 150 million euros ($191 million) by the end of 2012, the company based in Aarhus, Denmark, said in a statement today. Vestas said another 1,600 posts in the U.S. are at risk as a tax credit supporting the industry expires.
Chief Executive Officer Ditlev Engel has reduced sales forecasts twice since October and pared staff three times in the past three years as Sinovel Wind Group (SINOVZ) Co. and Xinjiang Goldwind Science & Technology Co. grabbed market share. Vestas also suffered from a delay in ramping up production at a generator factory and from downward pressure on turbine prices.
“The challenges we have faced in the fourth quarter of 2011 have given us a credibility problem,” Engel said in the statement. “I can certainly understand if employees as well as people outside Vestas consider us to be in a state of crisis.”
Vestas fell 5.6 percent to 59.4 kroner as of 10:30 a.m. in Copenhagen, the most since Jan. 4 after the last profit warning. The stock has lost more than 90 percent of its value since peaking at 692 kroner in 2008.
“I’m sad to learn that an industry, which we were counting on to live off going forward, is firing people,” Danish Prime Minister Helle Thorning-Schmidt, who has made renewable energy a priority during her country’s current presidency of the European Union, said today in an interview broadcast by TV2.
Engel, 47, also announced changes to its management, promoting Chief Financial Officer Henrik Norremark to chief operating officer and deputy chief executive officer, and starting a search for a new finance director. Vestas will organize its business into five divisions and form a six-member executive team including Engel and Norremark, who will remain acting CFO until a replacement is found.
Those leaving the management team include Ander Soe-Jensen, the head of offshore wind; Bjarne Ravn Soerensen, president of control systems; Finn Stroem Madsen, head of technology research and development; and Peter Kruse, head of communications.
Juan Araluce becomes chief sales officer and Anders Vedel will be in charge of turbines. The new CFO and a new person to head up a services division will complete the team, which comes into place on Feb. 1.
“We believe replacing the CFO to be a wise move,” Rupesh Madlani, an analyst in London at Barclays Capital said in a note to investors. “The market had been disappointed over the last year at the lack of financial details and two profit warnings in a quarter from the company. We therefore view this change to be particularly positive.”
A total of 1,749 of the posts to be lost will be in Europe, with 1,300 of those in Denmark, according to the statement. In the U.S., 182 workers will lose their posts, with 404 job losses in China and the rest of the world. Vestas will stop producing at its tower factory in Varde, western Denmark, it said.
Vestas has spent more than $1 billion building four plants in Colorado. About 900 work at plants making nacelles and blades in Brighton, Colorado. The company has hired almost 700 people in the U.S. and Canada in the past eight months. Vestas said it will decide about the size of the U.S. staff later this year.
“The expected layoffs are one of many steps that we now take in order to bring down costs,” Engel said. The changes are necessary “in order to prepare for a market with low growth and increased competition.”
In the U.S., a further 1,600 jobs may be cut later this year if lawmakers don’t extend the so-called production tax credit, Vestas said. The credit gives an incentive of 2.2 cents a kilowatt-hour of wind power.
Vestas slashed 3,000 jobs in October 2010, and 1,900 in April 2009. After the latest round of cuts, its workforce will number about 20,400.