Nordex USA said it is shuttering its Jonesboro production facility that once promised to employ 750 workers.
The plant, which manufactured “nacelles” for large wind turbines said it will complete the orders in its pipeline and then shut the $40 million factory down. Nacelles house the engine and other key turbine components and sit high atop a wind turbine tower.
Around 40 employees will be affected with layoffs beginning in October 2013.
The German-based company said the decision was driven by the wind industry’s “global overcapacity” and the “continued uncertainty and instability of the U.S. market.”
“This was an extremely difficult decision for Nordex. We are reacting to the weakened demand from the U.S. market, brought on by the unpredictable extensions of the Production Tax Credit (PTC), and the resulting low utilization rate of our U.S. assembly plant,” said Dr. Jürgen Zeschky, CEO of Nordex SE.
“We see great potential in the U.S. and Latin American markets and are committed to serving those markets and increasing our installed base. With this decision we also increase our flexibility to react to U.S. demand for our turbines out of one single plant in Rostock, Germany. We will be maintaining the extensive expertise in sales, engineering, service, project management, training and support which we have built at our Chicago and Jonesboro locations to continue the growth we have achieved through these challenging times.”
Ralf Sigrist, President & CEO of Nordex USA, Inc. said, “This is a sad day for all of us at Nordex USA. We will lose valued colleagues, who have done their very best for us, but the decision was inevitable considering the underutilization of our plant.”
A LOOK BACK
Arkansas quickly made a name for itself in the early half of the Gov. Mike Beebe (D) administration with its success in landing wind energy manufacturers in the state.
Nordex was an early score when the announcement was made in 2009. The Jonesboro plant opened in 2010 with officials they would eventually hire hundreds of workers.
Beebe also landed projects that include LM Glasfiber (now LM Windpower) in Little Rock that has ramped up and down with production and employment. The state also landed a lucrative $100 million Mitsubishi wind turbine plant at Fort Chaffee that was built, but never opened. The mothballed factory remains unused after Mitsubishi and General Electric became embroiled in a significant legal patent dispute.
The production tax credit (PTC) referenced by Nordex officials has been at the center of industry leaders claims of instability in the U.S. Congress has renewed the PTC on several occasions for short extensions and usually close to the deadline for the credit to expire.
The (PTC) establishes an income tax credit of 2.2 cents per kilowatt hour of energy produced by utility-scale wind turbines. The credit was first established in 1992, and was set to expire at the end of 2012. The fiscal cliff deal pushed the expiration date to January 2014.
UPDATE: Gov. Beebe offered a sharp rebuke to federal officials in the wake of the Nordex closure.
“Nordex’s departure is directly related to Congress’s inability to follow through on an alternative-energy policy they started and now can’t agree on. I have been saying for years that there must be stable tax policy with this kind of intense capital investment. Congress has totally failed to provide one, wavering year-to-year on the wind energy tax credit. This indecisiveness is costing Arkansas, and America, jobs,” he said.
“Fortunately for taxpayers, Nordex has been a model corporate citizen, and is repaying Arkansas incentives that the company received when operations began. Nordex is not completely leaving Jonesboro, and I hope future conditions will allow American production to resume,” Beebe added. “I am so fed up with Congress. I think the American people and Arkansans are fed up with them, too. This is just the most recent example of how dysfunctional Washington has become.”
Congressman Tim Griffin (R), who sits on the House Ways and Means Committee, said Beebe’s blame is misplaced.
“Nordex’s decision to close its plant is disappointing and my heart goes out to those affected, but blaming Congress, while convenient, is also misguided: The House is working on bipartisan tax reform to produce a simpler, fairer pro-growth tax code so we can stop jobs from moving overseas,” Griffin said in an email statement. “Also, the wind industry’s tax credit that has been in place since 1992 – more than 20 years – was extended in January, and the industry supports phasing it out. Ultimately, Nordex’s decision underscores the pain American workers are feeling as a result of failed policies.”