More decline in wind power slashes Danish jobs

Since I’m both Danish and following the green business beat, yesterday was an important day for me in terms of industry news. The world largest wind turbine manufacturer Vestas reported its third quarter earnings and after a horrible second quarter with a $164 million loss it was quite interesting to see what numbers the company could pull out the hat this time.

The earnings report had both good and band numbers. The good numbers were the actual profit of 126 million euro, $175 million, that was higher than the average estimate of 80 million euro in Bloomberg survey of 13 analysts. At the same time the giant wind company reported an order intake of 6,567 MW in the first nine months of 2010, which is the highest ever for the Danish company.

So much for the good news. At the conference call the CEO Ditlev Engel admitted that the administration had been too optimistic in terms of growth in the European wind power market and has to lay off 3,000 people, primarily in Denmark. To US companies 3,000 workers might not sound like a lot, but for a country like Denmark with a population of only 5.5 million a firing round like that can ruin whole regions for good.

In a sense it is also really bad news for the whole wind industry. Vestas predicts a decrease in demand in the European market to 7,000-8,000 MW from 8,000-9,000 MW primarily because the debt crisis has limited the prospects for economic growth.

The job reduction is a direct outcome of the weakened demand in Europa and to Vestas it made sense to cut the jobs where the expenses were highest, the home country. The expenses in Denmark are so high that it cost as much for Vestas to produce a wind turbine in China and having it shipped to Sweden, as it would cost to manufacture the turbine in Denmark and ship it to one of the neighboring countries.

Again it seems like China has great influence on the whole industry and from a green point of view it raises quite a paradox. The carbon emission in relation to shipping a wind turbine halfway around the globe is probably noticeable and not really in tune with what a green company preaches.

Nevertheless, the announcements from Vestas prove once more that China effects both prices, competition and now also the number of people working in high wage countries.