The price war in wind power is settled with hundreds of layoffs in its factories
The inflation The onshore wind energy sector has been pushed ahead in full expansion of renewable energies. The combination of factors that have driven the general rise in prices worldwide is being a burden for an industry called to be part of the energy transition on which developed economies want to base their future in order to try to comply with global energy agreements and climate set for 2030 and 2050.
Added to supply chain delays stemming from the pandemic and reliance on Asian production has been the market volatility, conditioning the complex situation that the onshore wind segment had already been going through. This is aggravated by even lower margins due to the increase in the cost of raw materials, electricity or transport, as well as the administrative jam that leaves behind a slow development of parks in countries such as Spain.
But if there is a main reason that gives rise to this situation, it is the signing contracts years before of the current context, generating enormous distortions in finances that are no longer the same today. Confident in its growth capacity, the main leading companies in the sector opted for fuel a price war for its components that made wind power the cheapest renewable energy, but has also made it prey to its own practices, taking away thousands of jobs around the worldincluding Spain, where a good part of the industry is located.
Faced with this situation, the results of large firms in recent quarters are especially negative, despite the fact that the context ends with better paid agreements and supplies due to the price update. This has resulted in the need to carry out restructuring that, as a general rule, is mainly affecting workers in the sectorthe weakest link in a chain that the companies themselves have broken by pushing their prices and business policies to the limit.
General Electric will lay off 20% of its workforce
The last to join this wave of layoffs has been the industrial conglomerate General Electric (GE), which after announcing the dismissal of 20% of its employees in the North American region, could also replicate the formula in other regions such as Latin America, the Middle East and Africa, Market Watch reported in early October. As reported by La Información, the company is negotiating with the German unions the extension of this downsizing to the European sectionwhich although it is still in the preliminary phase, could reach a maximum of 20%.
“We are taking steps to optimize and size our onshore wind power business for market realities in order to position ourselves for future success,” said a spokeswoman for the company, which plans to split its company into three listed companies during the years 2023 and 2024. , starting with the health branch, followed by renewables and creating a third dedicated to aeronautics.
“These are difficult decisions … but they are necessary to ensure that the business can compete and improve profitability over time,” he added. One of his subsidiaries in Spain, LM WindPowerwhich has plants in Castellón and Ponferrada (León) fired last year a third of the factory staff351 employees in total, although less than the 400 initially proposed.
The big companies in the sector also announce layoffs
In early October it was Siemens Gamesa who announced his intention to cut 2,900 jobs worldwide, 475 of them in Spain -most of them in the office- after locating “structural costs that are disproportionate to what the company needs”, according to its CEO, Jochen Eickholt. Rumors link the company’s upcoming news with the sale of part of the businesswhich would affect a minimum of eight factories and wind farms that are scattered throughout Spain.
The difficult financial situation of the company is reflected in the 1,226 million euros of losses recorded in its third fiscal quarter, tripling the losses of the previous year, something that has led the company to launch four ‘profit warning’ (forecast cuts) in a year and a half. These red numbers, as made public Financial Timesare mainly caused by the gas and energy business that Siemens Gamesa has attached to it since the parent company included this branch in its subsidiary Siemens Energy, which was the majority owner of the investee by Gamesa.
Its great competitor in the wind sector, the Danish vestas, has been announcing since the end of last year of a “turbulent” context motivated by the instability of the supply chain and its consequent increase in transport and logistics costs, something to which the rise in energy prices has been added . These reasons motivated the closure of its factory in Viveiro (Lugo) and the dismissal of its 115 workers at the end of 2021.
Another of the big firms in the sector, Nordexowned by Acciona and responsible for generating concrete to lay the foundations for the wind turbines, closed its factory in the Vall d’Uixò in spring (Castellón), taking away 94 workers. This closure was followed by the announcement of a ERE for 136 employees and the closure of the Motilla del Palancar plant (Cuenca), inaugurated just two years ago. The entity closed its third fiscal quarter with a 21% drop in sales compared to the data for the same month of 2021.
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