Tuesday, 18 July 2017

Siemens Gamesa to close Canadian blade factory, by Karl-Erik Stromsta, Recharge News, 18 July 2017

Siemens Gamesa Renewable Energy on Tuesday confirmed it will lay off hundreds of workers and close the blade factory it opened six years ago in Tillsonburg, Ontario, citing the decline of the eastern Canadian wind market and the industry’s shift towards larger rotor blades.
Rumours began swirling after Siemens Gamesa reportedly locked workers out of the factory over the weekend.
On Tuesday the company confirmed that “regretfully” more than 200 of the plant’s 340 employees will be let go immediately, with the remaining workforce to be fired in phases throughout 2017 – and the plant to be closed altogether in early 2018. 
The factory is among the largest employers in Tillsonburg, located roughly halfway between Toronto and Detroit in Ontario's industrial heartland, and was seen as one of the most tangible benefits to come from the province's renewables boom earlier this decade.
“This was a very difficult decision that was taken only after assessing all the options,” says David Hickey, head of Siemens Gamesa’s business in Canada.
“We have a great team of employees at the plant who have produced quality work for the last six years, and we sincerely appreciate all their efforts,” Hickey says.
“However, the harsh reality is that in order to remain competitive we must constantly re-evaluate our global manufacturing footprint.”
The outlook for new wind projects has dimmed considerably in eastern Canada over the past year, with Ontario scrapping its plans for another large-scale renewables tender in late 2016 amid a glut of power in the province. 
Most of the blades made in Tillsonburg have remained in Ontario, although the plant has also sent some output to Quebec and onward to Europe.
As recently as November 2016, Hickey told Recharge the Tillsonburg plant was in a “very strong position” in spite of the weak local market, given its potential to ship blades to emerging wind markets in western Canada and down into the United States.
But Siemens Gamesa’s ability to cost-competitively transport large blades to western Canada was always somewhat doubtful given the logistics and immense distances involved, and the company has struggled recently to win new wind-turbine orders in the US – where it already has factories making blades and nacelles in Iowa and Kansas.
The company noted that its plans to export blades into the US were “delayed due to a combination of factors, including uncertainty around US tax policy” under President Donald Trump.
At the height of Ontario’s wind boom, Siemens was a dominant turbine supplier in the Canadian wind market. But it has also faced recent headwinds in Canada, falling behind German compatriots Enercon and Senvion in the Canadian wind market last year.
In announcing the plant closure, Siemens Gamesa also cited the industry’s shift towards larger blades, saying the Tillsonburg factory “cannot easily be adapted to manufacture this product portfolio”.
“The significant investments necessary to bring the plant in line with current market requirements would result in costs that could not be competitive in the global markets,” the company said in a statement.
The decision to shutter Tillsonburg comes just three months after Siemens completed the merger of its wind business with Spain’s Gamesa.
Germany’s Siemens announced plans for the Tillsonburg blade plant at the beginning of this decade as part of the controversial multi-billion dollar renewables deal South Korea's Samsung struck with Ontario.
The Samsung was given generous off-take deals with the province for big wind and solar projects in exchange for ensuring that four renewables-related factories were built locally – with the other three plants backed by SMA Solar, Canadian Solar, and CS Wind.
As it closes shop for good in Tillsonburg, Siemens Gamesa says it remains “focused on supporting new wind opportunities in Canada” – like the combined 600MW procurements underway in Alberta and Saskatchewan – as well as continuing to support existing customers at the more than 30 wind projects it has supplied to date in the country.
Much of the excitement today in the Canadian wind market is centred on Alberta and Saskatchewan, with many of the supply-chain players in Ontario and Quebec looking for ways to shift their business westward. 
Unlike Ontario, which relied on an overly generous feed-in tariff system in the early years of its renewables boom, both western provinces have adopted competitive tenders, which they believe will allow them to build more sustainable markets.

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