Wind turbine imports increase; Can U.S. factories catch up?

WASHINGTON — Manufacturing of wind turbine parts in the United States grew last year as the market for wind energy boomed, but trade figures show that imports continued at a high rate after years of big growth.

Wind turbine imports from Europe and Asia rose from $60 million in 2004 to $2.5 billion in 2008, according to Customs data reviewed by McClatchy. Imports of other equipment usually, but not always, used for wind power production also increased in the same period. The value of AC generators and towers, for instance, jumped from $84 million to $1.6 billion.

The numbers suggest that there's potential for U.S. manufacturers to seize some opportunities, and some of the largest turbine makers say they're looking for U.S. suppliers.

"Wind is positioned to help take a lot of those manufacturing jobs that have been lost, especially in the auto industry, and move them into the work we're trying to do," said Roby Roberts, a senior vice president with Vestas, the world's largest wind turbine maker, which produced about one-fifth of U.S. wind turbines.

Vestas has made none of its turbines in the United States. But Roberts said that by 2010, it plans to make all of them here, using four factories in Colorado — one completed last year and three expected to be producing by early 2010.

According to the U.S. International Trade Commission:

  • The number of companies assembling nacelles (the big box that sits on the tower containing the gear box and generator) went from one in 2004 — GE Wind — to five in 2008 — Clipper Windpower of Carpinteria, Calif.; Acciona and Gamesa of Spain, and the Composite Technology Corp. subsidiary DeWind of Irvine, Calif. Five other foreign firms plan to build U.S. plants.
  • At least 11 blade manufacturers and 16 tower manufacturers have plants or plan to open plants in the United States.
  • The new plants announced in the first three quarters of 2008 could add 4,000 jobs, at wages generally between $13 and $20 per hour.
  • Imports leveled off from $2.4 billion in 2007 to $2.5 billion in 2008. That could indicate more U.S. production taking up some of the demand at a time when wind energy grew dramatically. That's not entirely clear from import data, however, because turbines don't always arrive in the same year they're installed.
  • The American Wind Energy Association estimates that the share of U.S.-made parts in wind turbines increased from 30 percent in 2005 to nearly 50 percent at the end of 2008.

    The ITC in a report last month said that U.S. wind turbine manufacturing was expanding "due to new investments in production, a growing domestic market and a recent period of stable tax policy." It said domestic producers could meet more of the U.S. demand for turbines and may be able to take advantage of investment and export opportunities in China, North America and South America.

    The largest supplier of wind turbines in the United States is GE, which makes and sells turbines around the world. Last year it supplied one of every two turbines installed in the United States, all of them in states with policies that require that a percentage of electricity come from renewable sources such as wind or solar.

    GE imports some parts, including some blades, and some material, including steel, said Thomas Rumsey, the company's communications chief for its power business. The company also has an extensive U.S. supply chain, however, including companies in Iowa, Texas and the Dakotas, he said.

    Rumsey said GE increased imports of parts in the past because federal policies in the United States didn't create a stable climate for investment.

    The recent stimulus legislation was good for the wind industry because it provided investment credits and grants. Another important boost was the extension of investment tax credits for wind for four years. But what the wind industry really needs is a national requirement to get a set percentage of electricity from renewable energy, Rumsey and other wind industry officials say.

    "That allows for stable investment, and smaller companies can get into the game," GE's spokesman said.

    GE has factories in Pensacola, Fla., Greenville, S.C., and Tehachapi, Calif., where workers assemble the control system, drive train and generator in the nacelle and ship them for final assembly at the sites where they're being installed.

    The company wants to get more parts domestically because up to 20 percent of the cost of a turbine is transportation — "so the closer you can have the major components manufactured, the better," Rumsey said.

    The recession has put wind turbine building into decline because developers have been unable to get credit. McClatchy recently reported that companies in Michigan had been retooling to shift from making auto parts and large equipment for other industries to components for wind turbines, but that a lack of loans for developers was putting their business on hold.

    Rumsey and Roberts said that even before the recession, an inconsistent renewable energy policy in the United States set back the wind industry. Tax incentives to make wind competitive with fossil fuel energy have expired twice in recent years, and each time manufacturing fell off sharply.

    "You can't set up reasonable-cost manufacturing in a boom-bust business cycle," because component manufacturers need a sense of a long-term and stable market before they invest in making the large parts for turbines, Roberts said.

    European and Asian countries, in contrast, have had long-term policies that support wind energy, he said.

    The U.S. supply chain for the more than 8,000 parts in each wind turbine is still being formed. Vestas has 300 suppliers in China, where it also assembles turbines, but only a handful in the United States so far, Roberts said. He said the company was busy looking for suppliers and finding a lot of interest among manufacturers.

    The drive for cleaner energy as a solution to global warming is changing the landscape.

    Last year the United States passed Germany to become the world's leading country with total wind capacity. China is second and growing fast — last year its total wind capacity doubled for the fourth year in a row, according to the Global Wind Energy Council.

    "You grow where the markets grow," Rumsey said.

    The U.S. has much growth potential. The United States today gets less than 2 percent of its electricity from wind. President Barack Obama's energy plan calls for 10 percent of American electricity from renewable sources such as wind by 2012 and 25 percent by 2025.


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