Vestas Wind System, the world's biggest maker of wind turbines in terms of revenue, said that it is to layoff 2,335 people worldwide and warned that an additional 1,600 jobs in the US could be at risk if Congress doesn't extend tax breaks for renewable energy.
Vestas said that the layoffs were part of efforts to reduce fixed costs by more than EUR 150 million as it deals with tough competition and a market slowdown following the global recession in 2008-2009.
Vestas said it would lay off 1,300 employees in Denmark; 450 of those would come in Spain, Italy, Germany and Sweden while 400 would go in China and 182 in the United States. The company is preparing for further cuts if the US doesn't extend its Production Tax Credit for renewable energy, which expires at the end of 2012.
It added that "This can result in layoffs of an additional 1,600 employees at the factories in the USA."
In 2010, Vestas was awarded about USD 51 million in federal tax credits in the US, where it has invested more than USD 1 billion in four facilities in Colorado. The US operations are headquartered in Portland in Oregon.
The Danish company expanded rapidly until the economic downturn slowed investments in wind power. In addition, Vestas has lost market share to Chinese competitors.
Sluggish sales have already forced the company to slash its forecasts for 2012 twice. It has also abandoned its 2015 sales target of EUR 15 billion and the aim of reaching a profit margin of 15%.
Danish Prime Minister Ms Helle Thorning Schmidt called it very, very sad news for the country, which seeks to profile itself as a green energy leader. She said that "This is one of the businesses that we thought would be the new way of doing green technology. Despite the setback that we have seen right now, this is and will be the right approach."
In 2011, Vestas laid off 3,000 workers after posting a 24% drop in profits in the third quarter.
Sydbank analyst Mr Jacob Pedersen said that the cutbacks were a big step in the right direction to make the company more competitive.
After the cuts, Vestas said it will have around 20,400 staff and 25 factories worldwide.
(Sourced from Associated Press)
