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What is the situation with wind turbine manufacturers Siemens Gamesa and Vestas?

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Due to their severe losses, Siemens Gamesa and Vestas had to lower their projections and are laying off thousands of employees.

Siemens Gamesas CEO Jochen Eickholt, therefore, requested financial support from Brussels. “I would advise EU politicians to introduce similar support measures for the ailing wind power industry as the US does.”

Under US President Joe Biden, the North American government is presently investing 260 billion dollars in the growth of solar, wind, and hydropower alone, along with 400 billion euros in climate-neutral industries.

Eickholt, on the other hand, believes that supply chain issues, inflation, and uncertainty are threats to the energy transition in Europe. In addition to the record-high cost of raw materials, the Ukraine war and supply chain issues have also negatively impacted the European wind power industry. Simply enough, the turbine makers lose money.

Cost-cutting measures are being taken by businesses to combat this. They are closing down entire facilities, like Nordex in Rostock, firing thousands of workers, like Siemens Gamesa, and demanding an end to their destructive price wars, like Vestas CEO Henrik Andersen.

According to industry expert Dirk Briese of the market research firm Trend research, there is a lot of demand for wind energy worldwide and the mood is actually positive.

“The problem: the manufacturers are still not getting the orders processed with the costs that they actually should have. Finally, the technical problems were added to those of the supply chains and Corona. And at Vestas the strike,” explains the industry insider.

Some German workers have been blocking traffic for days at Vestas, the largest maker of wind turbines in the world. In order to compel management to engage in collective bargaining, IG Metall issued a call to strike for five days on Monday. The first strike by workers at a turbine maker has taken place. for a higher salary.

Vestas wants to sign an agreement with the works council instead. “The wage-price spiral is another dilemma facing the turbine manufacturers, also against the background of the ever-increasing shortage of skilled workers,” explains wind expert Briese. 

How terrible the problem is may be seen by looking at the most recent quarterly numbers. In the most recent fiscal year, Siemens Gamesa experienced a net loss of about one billion euros (until October 31). Sales decreased by 4% to 9.8 billion euros. In light of the altered environment and cost increases, CEO Eickholt, who began as a reorganizer, stated that the project portfolio needed to be reassessed. Eickholt does not guarantee further advancement till 2025.

Vestas, a rival and the leader of the onshore market, was forced to cut its projection and has only generated 9.7 billion euros in revenue so far this year. It was eleven billion euros in 2021 for the same time frame. Vestas experienced a loss of about one billion euros in the first three quarters of 2022. The Danes were nonetheless able to generate a net profit of 135 million euros over the same time last year.

Source: Handelsblatt

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