Vestas Axes 1,400 Jobs

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) -- Tougher trading conditions continue to plague Danish wind turbine manufacturer, Vestas Wind Systems (OTC:VWDRY) (Randers, Denmark), which has announced plans to axe another 1,400 jobs by the end of the year.

The job cuts, most of which will be made in Europe, will reduce the company's workforce from 20,400 to 19,000 by the close of the year. The company claimed that the new cuts are necessary to help it compete with new Chinese rivals, lower orders and reduced subsidy levels by a number of governments. The proposed reductions follow on from a previous cull of 2,335 staff, which is due for completion next month.

The news arrives just two months after Vestas abandoned plans to construct an offshore wind turbine manufacturing plant in the U.K. The plant was to be developed at a 70 hectare site at the Port of Sheerness, in Kent, southeast England and was designed to allow Vestas exploit the country's huge plans for offshore wind. It had received permission from the local council just a month before the company axed the project. For additional information see May 29, 2012, article - Vestas Dumps Plans for U.K. Turbine Plant.

The company claimed that 2013 will be even tougher than 2012. The new job losses will help save approximately €100 million ($125.2 million), on top of savings of around €150 million ($187.8 million) which have already been achieved. The company expects to ship around 5,000-megawatts (MW) of turbines in 2013, a lot lower than the 6,300 MW it expects to ship for this year. The company had originally expected to ship 7,000 MW of turbines for 2012 but had to reduce that figure, blaming grid connection delays in China and lower turbine orders than expected at the start of the year.

"The further reduction in the workforce is part of the continued cost saving plans which Vestas has been working on since November 2011," commented Vestas' CEO, Ditlev Engel. "Vestas is intensifying earlier cost reduction plans in order to prepare for a challenging 2013. It is always unfortunate to have to say goodbye to good colleagues in Vestas, but we have said before that 2012 will be tough and 2013 will be even tougher for Vestas, and in order to reach our target of making 2013 profitable, it is unfortunately a necessity."

The company said that around 55% of the reductions will happen in Europe, the Middle East and Africa, around 25% in Asia Pacific and around 20% in the Americas.

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