Siemens (NYSE: SI) to Cut U.S. Wind Jobs

Brian Hicks

Written By Brian Hicks

Posted September 20, 2012

As you may have heard, wind energy tax credits are set to expire this year unless Congress gets off its butt and takes action. And we’re already seeing what could be the early consequences of that inaction: Siemens (NYSE: SI) is planning to lay off 615 employees across Iowa, Kansas, and Florida.

The roughest hit will be at an Iowan wind turbine blade-manufacturing factory, which will lose 407 people. Some 220 workers will continue on with operations. Another 146 workers stand to lose their jobs in Kansas, and Florida will see 62 job cuts.

Siemens pointed to difficult market conditions, exacerbated by the current boom in natural gas, as the reason for the sour situation. Although the company has tried for 10 months to come up with a less radical solution, Congress’s inaction has left them with no other choice at this time.

From the Telegraph Herald Online:

“As a result, following the rapid ramp-up of the wind power industry over the past five years, the industry is facing a significant drop in new orders, and this has an unfortunate consequence on employment in this segment of the power industry,” the company said in a statement. “Now, we have had to make the difficult decision to adjust the manufacturing, projects and administrative support functions of our wind power operations to reflect the current and projected business volume.”

After all layoffs are completed, Siemens will retain about 1,000 employees in its U.S. wind operations. The company has invested around $100 million in developing its U.S. wind operations, retaining more than 1,650 workers at its peak. It has developed and installed more than 3,900 wind turbines nationwide, which collectively power over 1.75 million households.

The company started out in Ford Madison, Iowa, with the help of $3.4 million from the Department of Energy in manufacturing tax credits. The wind tax credit is vital since it provides an income tax credit of 2.2 cents per kilowatt-hour for the first decade of production from industrial-scale wind turbines, thus enabling companies to recover their bottom line. Renewables, by nature, tend to be long-term investments and require time to see a real profit.

Of course, opponents of renewable energy claim that the government shouldn’t ‘favor’ some products over others, despite the fact that such subsidies are essential to allowing startups and newer companies establish themselves while their renewable power products accumulate returns on investment.

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