GE (NYSE: GE), the number one wind turbine maker in the US, has issued a grave warning to those companies involved in the wind power equipment business about bleak expectations in 2013.
VP of GE’s renewable business, Vic Abate expects that many makers of gearboxes, towers, and blades for wind turbines will go under next year.
Bloomberg Business Week says that Abate is in a prime vantage point to make such an assertion. As vice president of General Electric’s renewable energy business, Abate is the executive who will ‘seal their fates.’
The pessimism is based on the fact the US federal tax credit that subsidises the US wind industry expires in 2012. As a result GE will be more selective about its supply chain.
With a federal tax credit that subsidizes the U.S. wind industry set to expire at the end of 2012, GE is scrutinizing its supply chain, with uncompetitive vendors set to be cast away.
“We’re in the process of picking winners and losers. “The ones that have the best quality and the lowest cost position are the ones that are going to win,” says the GE veteran.” says Abate, who, according to Bloomberg, may see the industry shake-up as an opportunity to get better terms from its present 200-plus vendor list.
The company may have as many as ten vendors for particular components, but after next year’s new reality, that figure could be cut to three.
Manufacturers of turbines and other components will shed an estimated 10,000 workers in the U.S. this year in anticipation of a slowdown in orders, says the AWEA. If Congress doesn’t extend the production tax credit, that figure will hit 37,000 next year—about half the industry’s workforce.
As the industry leader, GE is in a better position to weather the loss of incentives. Its orders for wind turbines more than doubled in the first quarter, from a year earlier, partly because wind farm developers are scrambling to beat the December deadline.
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