Vestas reorganizes, announces layoffs

Vestas will lay off 2,335 employees immediately with the closure of some facilities — most in Europe. An additional 1,600 people could be let go in the U.S. if the Production Tax Credit is not extended by the U.S. Congress.

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Vestas Wind Systems A/S (Aarhus, Denmark) announced on Jan. 12 that it is reorganizing to increase customer focus and earning and to reduce investments required for future growth.

In summary:

  • Vestas will reduce its fixed costs by more than €150 million – with full effect as from the end of 2012 – primarily through streamlining of support functions and closing of factories to align capacity with market demand. A total of 2,335 employees will be released.
  • Executive management will be extended to six members to allow greater functional focus on all key parts of the value chain and to drive a stronger performance management.
  • A Global Solution and Services unit will contribute to improving the performance of both existing and upcoming wind power plants and accelerate the development of the services and solution business.
  • Manufacturing is consolidated to capture cost synergies and reduce capital required for future growth as well as to increase flexibility in case of a prolonged industry slowdown.
  • In addition to the planned layoffs of 2,335 employees in the coming months, Vestas is preparing for a potential slowdown in the U.S. in case the present Production Tax Credit (PTC) is not extended. This can result in lay off of an additional 1,600 employees at plants in the U.S. The potential savings in this respect will be in addition to the more than €150 million mentioned above. 

Most the immediate layoffs, more than 1,700 people, will be in Europe. Less than 200 people will be laid off in the U.S. The current PTC expires on Dec. 31, 2012 and provides subsidy for wind energy developers. The U.S. Congress is considering a bill (H.R. 3307) to extend the PTC, but it has not yet come up for vote.