President-elect Obama met on Friday with workers at a factory in Ohio that manufactures wind turbine parts. (Photo: Getty Images)President-elect Barack Obama will spend part of today touring a factory near Cleveland that makes parts for wind turbines — an example of the “green jobs” that he hopes to promote in the stimulus package.
But some of those jobs in the wind industry are becoming casualties of the economic slump. North Dakota-based D.M.I. Industries, which manufactures turbine towers, is laying off 20 percent of its workers across three plants — in Tulsa, Okla.; Stevensville, Ontario; and West Fargo, N.D.
The news comes barely six months after the company announced expansion plans that would make it the “largest wind tower manufacturer in North America.”
“Quite frankly, I was shocked,” the mayor of West Fargo, Rich Mattern, told The Associated Press earlier this month. “I thought they were bulletproof. I never guessed that they would be in trouble.”
L.M. Glasfiber, a Danish turbine company, also announced 150 layoffs last week at a blade-making plant in Arkansas. And Gamesa, a Spanish turbine maker, said it was initiating layoffs at an Eastern Pennsylvania factory — though it was expanding a factory in the western part of the state, which can make larger blades.
The troubles of turbine manufacturers are mirrored in the solar industry, which has also suffered manufacturing layoffs recently.
The wind business, which requires an enormous amount of capital investment, has been hit especially hard by troubles in the banking sector. Experts say that the number of big banks willing to invest in projects through the production tax credit has fallen sharply. Many wind-farm developers, from NextEra (formerly F.P.L. Energy) to the Texas oilman T. Boone Pickens, are cutting back on plans to expand their farms.
The wind industry hopes that the incoming administration and Congress will change the tax structure to make the production tax credit refundable, which would allow more companies to invest in it.
“If something isn’t done, we could see as much as a 50 percent reduction in new wind starts in 2009 compared to 2008,” said Denise Bode, the chief executive of the American Wind Energy Association, in this audio clip.
Refundable tax credits did not appear in the stimulus bill unveiled by the House Appropriations Committee on Thursday. However, the wind industry expects tax provisions to appear in a Ways and Means Committee bill.
The Ways and Means version may not contain refundability, but rather different tax provisions that will allow wind developers (and developers of other forms of renewable energy, like solar and geothermal) to convert tax credits into grants — which would help provide developers with direct cash, as opposed to having to search for for deep-pocketed banks to finance their projects.
10 Comments
Only a carbon TAX in general or a hefty new gasoline TAX is gong to propel solar and wind with any consistency and with serious intent. We will find out soon enough if President Obama is pushing hot air or the CHANGE we need.
— AH2The economy is diving into recession or worse, and as usual investors are not rushing to invest; just look at the banks, who have been subsidized to a fare-thee-well by the “Big Men” who run our fair country; these banks are still just sitting on the money the Big Men say “We the People” gave them. The Solar Power & Wind Power industries are not the only ones lacking investment funding.
Tax breaks, special incentives etc. have some limited power during boom times, but precious little during bust times. Traditional energy industries have connections which Solar and Wind yet lack.
But if there is money to be made, there will be no lack of investment, regardless governmenal incentives and tax-code finaggling. A properly implemented Carbon Tax can internalize the externalities of Coal & Nuclear Power (acid rain, mercury contamination, parasitic military investment & operational expenditures, nuclear weapons proliferation, Global Warming, et al.); this should be done as a matter of morality and ethics anyway, but it would certainly make renewable-sustainable energy profitable, and the investment would follow naturally. As Lyndon Johnson liked to say, “That’s what makes the mare go.”
It would also do wonders to help our fair country climb out from the depression.
It’s time for our fair country’s leadership to stop working so hard at complicating the simple.
— David Ocampo GThis is the result of allowing the accountants to run the business based on the entries in the ledger.
— Rudolf BirzinOf course you must take risks to make returns but you can’t take the money off the table while the dice are being thrown. Short sighted management by the bottom line will inhibit growth and recovery everytime.
Buy fuel efficient cars by the fleet and then wait until there are sunk costs and cancel the order. The Communists don’t need to blow up the capitalists just let the accountants become decision makers without any other experience or knowledge. If you are a hammer all your problems better be nails.
Refundable production tax credits (PTCs) would let the little guy get into the act instead of having to shop the tax credits around to companies that have the “passive” income that does qualify.
Why should those companies be the only ones qualified to benefit? This should have been changed a long time ago.
— DennisDo we say “Thank you, Dick Cheney?”
— Pecos45This makes no sense to me but makes my blood boil.
— RPI’m all for “green”, but please realize that if and as we may choose to unilaterally pay more (directly or through subsidies) for green products, we are not helping the overall economy. We’re simply re-circulating money internally by buying a “green” luxury good, at a higher net cost to the bottom line. Meanwhile, we allow our foreign-produced products to be made by countries subject to little or no environmental requirements. They grow richer by polluting to sell us cheap stuff, while we wash our hands of being “dirty” by buying “green” power? We’ve outsourced much of our environmental impact. By only going green in the US, we further increase domestic production costs, driving more business away, and we don’t solve the problem.
solution: We require foreign produced goods to strict standards for their entire supply chain 2-3 layers deep. We pay to police these rules and enforce them by charging a non-protectionist tariff on foreign made goods entering the US. We won’t buy from manufacturers using child labor, why do we allow our own industry to be undercut by polluters?
— Derek from Austin, TXNot to worry. Unlike in research-intensive areas such as solar PV, laying off manufacturing or closing plants in wind power doesn’t do long-term damage. They simply will ramp up when the money’s there. If the economy stays bad, and there’s too much competition for subsidies, the providers will just remain dormant.
— RichardIt would be different if the US had been a world leader in the technology, or that other developments were critically related to continuity, but neither are true.
I would hate to see this industry play the ‘can’t let us fail’ card; we’ve had too much of this bogosity lately. Congress, though, is not known for its cumulative ability for analysis, and anything is possible.
how do refundable tax credits work?
— Bill SweetHi Bill—Good question. The current problem with the tax credit, from the renewable industries’ perspective, is that investors need adequate profits to take advantage of it, because the credit is used to offset tax liability. “Refundable” basically means that money from the tax credit would be made available directly — so that (and here’s the key) in these hard times, investors don’t need to have large profits to take advantage of it.
— Kate Galbraith