EnergyWatch

German turbine maker fires 3,000 staff

Enercon begins an extensive turnaround program and outsources, among other things, the entirety of its turbine blade production. Five out of six jobs are being cut from the company's headquarters.

Photo: BWE/Tim Riediger/nordpool

Germany's wind sector crisis is now seriously impacting Enercon. Friday, the German wind OEM told its employees that up to 3,000 staff stand to lose their jobs, report several domestic media including news agency DPA and Süddeutsche Zeitung.

"The energy transition's crisis has now caught up with us," Enercon Managing Director Hans-Dieter Kettwig tells Süddeutsche Zeitung.

The manufacturer has initiated an extensive turnaround strategy which, according to German media, entails several rearrangements including the outsourcing of all turbine blade production. The OEM also takes a hard blow to its administrative nerve and reveals that 250 of the 300 personnel stationed at the company's Aucrich headquarters will be laid off.

German malaise

There's something to be expected about Enercon being impacted so hard, as both the company's product quality and price have earned the reputation of being the Rolls-Royce of wind turbines. The manufacturer has been leading player in the German market throughout many years and, until seven years back, was the largest wind turbine producer outside the US and China. However, the firm has come under heavy fire this year because of the shift to the tender system and problems securing environmental permits, which have practically paralyzed the market.

Enercon has gone from having installed an annual capacity of roughly 5 GW five years back to roughly 1-1.5 GW this year. This malaise has been clear in the latest five tenders, which have become more and more undersubscribed.

However, despite the federal government's recent reforms to reduce the complexity for securing licenses, the market is expected to take a few years before normalizing. The government's climate protection plan also entailed added distance requirements and generally affords a national energy policy the sector sees as unambitious for onshore wind.

Not just jobs at risk

Kettwig also points to the political environment as a big factor behind the misery, and references the solar PV industry, which began in Germany, but after spending billions in public aid, the sector's center of gravity shifted to China.

"The present energy and climate policy not only jeopardizes the jobs and knowledge that we have build up in a sector over the years – but also climate change mitigation and the green energy transition as such," says Kettwig, as cited by DPA.

"After the federal government presented its climate protection package, it became clear to us that our problems have grown even larger.

The massive round of layoffs doesn't exactly come without warning. News emerged last September that Enercon had eliminated more than 800 staff positions in the privately-owned wind OEM's hitherto larger cost-cutting exercise. Meanwhile, the manufacturer's Brazilian subsidiary, Wobben, has jettisoned 370 jobs since the spring.

Not the one firing

Furthermore, the other wind turbine manufacturers active in the German market are also having problems. Most obviously Senvion, which filed for insolvency protection in April and last month sold off most of its service business as well as its blade factory in Portugal to Siemenes Gamesa. No buyer has yet been found for Senvion's onshore and offshore wind turbine production in Germany.

Siemens Gamesa, too, has made significant cuts in recent times and also referred to Germany's stagnation. In late September, the German-Spanish turbine maker announced that it would terminate 600 jobs as a consequence of the German market slump. The reduction of 600 further jobs was disclosed earlier in the week – including 100 employees in Germany.

Similarly, Vestas, which hold the second-largest market share in Germany after Enercon, also slashed 600 jobs because of the German market. Nordex was obliged to ask for financial aid from its largest stakeholder, Acconia.

Rips away the carpet

Turbine producers are not alone in feeling pressure in the country. The same applies to a long series of suppliers and subsuppliers, several of which have been forced to close shop. At Enercon, whose business model has to a high degree entailed allowing other companies to function as exclusive "production partners", the CEO acknowledges that the turnaround will be painful.

"We're ripping away the carpet from under these companies," Kettwig tells Süddeutsche Zeitung.

German labor union IG Metall calls the layoffs "catastrophic". Enercon is the largest employer in Aucrich, located on the coast of Northwestern Germany, and the wind OEM has a big responsibility for the dismissals taking place in ordered fashion – as do politicians.

"As in recent years, Enercon must take responsibility here. We demand a reasonable, socially acceptable solution for all affected parties, and this must also be supported on the national political level," Thomas Gelder from IG Metall Leer-Papenburg tells media Handelsblatt.

English Edit: Daniel Frank Christensen

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