Vestas, the wind turbine blade manufacturers who employ a large number of Island residents within their Newport and Ryde sites appears to be questioning their commitment to the Island.
We’ve received reports from VB readers (unconfirmed by Vestas, as yet) that staff were called to a meeting at 7am this morning to be told that there was 90 day consultation starting today and that they may lose their jobs following this period.
UPDATE 1: The closure of the plant appears to be confirmed by new in the Wall Street Journal which says Vestas “was cutting 1,900 jobs in production units in Europe, mainly in Denmark and the U.K., while it continues to expand operations in the U.S. and China.” (Thanks for the update Simon Lilly)
VB Reader Jillian contacted us and told us that she had overheard workers walking away from the Newport site saying, “all I have to do is clock in and out for the next 3 months.”
It’s not clear whether it is the R&D division or manufacturing division that will be affected and the story is developing rapidly, so we’ll bring you updates as we get them.
UPDATE 2: The County Press is reporting that “it is understood the new multi-million-pound research and development building on the West Medina Mills site at Stag Lane, Newport, will still go ahead.”
We were only reading a couple of days ago that Vestas are quoted as being the number one wind turbine company in the world.
New share issue
UPDATE 3: Today Vestas announced that they were offering 18,500,000 new shares for private placement.
This would represent an additional 9.99 per cent of share captial.
They report the additional funds would be used “to further strengthen Vestas’ capital resources, especially to position Vestas to quickly and efficiently exploit the opportunities offered by the credit crisis in a technology based industry.”
Banks a problem
UPDATE 4: Interviewed in New York on the Forbes Video Network, Ditlev Engel Vesta’s CEO said the major problem with the continued growth of their company could be put done down to one thing – The Banks.
He said the demand for wind power solutions was there, but the banks are not funding the purchases.
Infact, due to the credit crisis, “some of the banks that were previously key players in the wind turbine market are no longer active.”
Pressure on the UK Government
In their results, published this morning, Vesta, first quarter net profits are up 70% on sales.
More importantly for the Island, they also say “Capacity will be reduced in Northern Europe, as demand in this area at the moment does not meet expectations.”
Placing the ball squarely in the court of the UK Government, they also say “The British Government’s commitment of 21 April 2009 regarding massive investments in wind power and higher tariffs, will have a positive influence on Vestas’ possibilities of producing blades in Great Britain.” – Translated: If the goverment order wind turbines, we won’t shut down the manufacturing on the Island.
Vestas said capacity will be increased in the USA and China, “owing to the positive market prospects.”
Supply and demand
According to the financial report released today, Vestas’ need for buffer stocks has been reduced and blades will be produced on a supply and demand basis.
The report also mentioned that when looking at the most important risk factors, these included amongst other things, potential patent disputes. With 35 competitors launching in China in the last year, we can see the potential for serious competition.
Number of jobs to go
UPDATE 6: The financial report claims that 1,900 employees will lose their jobs in Northern Europe.
In Denmark alone, the company have stated that they expect to lay off a total of 1,275 employees – going by our maths, that leaves 625 jobs going from elsewhere.
It’s understood that Vestas employs around 500 staff on the Isle of Wight, so some job loses may also occur at the Woolston plant which according to the Southern Daily Echo, employs 200 people.
Share price rises
UPDATE 7: Reuters are reporting a share price rise of 4.1 percent to 342.50 Danish crowns this morning after the announcement of stronger quarterly earnings than expected and news of the planned share issue.
“The Q1 result was much better than the market had anticipated, as many were waiting for a profit warning. On the other hand it`s a surprise they`re issuing new shares”, says Mads Zink, head of sales trading at Danske Bank.
Nimbyism partly responsible?
UPDATE 8: Ditlev Engel told the Guardian today that as well as the other factors highlighted already in our article, one of the major problems lay in planning applications.
“It is extremely time consuming and extremely complicated. Some of our developers, customers, will tell you it is so difficult. In the UK nimbyism is a huge challenge. ”
New planning permission
Vestas recently received planning permission to expand their Newport Wind Turbine industrial unit. It was hoped that this could lead to the creations of an additional 200 jobs.
The news was broken exclusively by Michael Coombes on Isle of Wight Radio at 8am this morning. Well done to them.
More news as we get it.