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Archive for Wednesday, September 19, 2012

Siemens to lay off 146 at Hutchinson plant, citing tax credit, natural gas prices and economic slowdown

September 19, 2012

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HUTCHINSON — Citing a “perfect storm of factors,” Siemens Wind Energy said Tuesday that it will cut 146 workers at its Hutchinson turbine manufacturing plant, and more than 450 staff in Iowa and Florida.

The company will retain 152 workers in Hutchinson. The laid-off workers will be paid until Nov. 19, said company spokeswoman Melanie Forbrick. They also will receive an additional four weeks of pay, job search counseling and up to $5,000 toward retraining.

The cuts come after months of warnings by executives in the wind industry that the likely expiration of the federal production tax credit on Jan. 1 would mean a plunge in demand that would likely force layoffs.

As wind farm developers rushed to get projects built under the tax credit this year, Kansas saw its single biggest year for new wind turbines, as capacity nearly doubled to 2,600 megawatts.

The tax credit provides 2.2 cents per kilowatt hour of subsidy and has become a high-profile political point of contention between fiscal conservatives and wind power supporters in Congress and in the Obama administration.

Utilities are also moving toward natural gas, which has dropped in price because of the oversupply created as horizontal drilling and fracking led to the recovery of more gas.

The wind-energy industry projects that demand will fall about 90 percent from an artificially high 6,000 turbines installed in 2012 over the next two or three years, Forbrick said.

“The PTC (tax credit) brought this artificial peak, and on top of that, gas prices, which are traditionally projected at $4 to $5 per million BTUs, have stabilized at about $2 per million BTU and, of course, the economy is still lagging,” Forbrick said. “So it’s a perfect storm of events beyond our control.”

But Forbrick said Siemens believes in the long-term future of wind power. The industry expects construction to rebound later in the decade to a more normal level of about 2,000 turbines per year, not including the tax credit and with only slightly higher natural gas prices.

The company has spent $100?million in recent years building manufacturing capacity in the United States, Forbrick said, and thinks the business remains a good one in the longer term.

The company overall is cutting about 615 of its wind energy workforce of roughly 1,600. The turbine blade plant in Fort Madison, Iowa, will lose about 400 workers, and the headquarters in Orlando, Fla., will lost about 60 workers, Forbrick said.

“These decisions are never easy, but the adjustments are necessary,” Forbrick said. “We are committed to the business and committed to wind power and think the industry will rebound in the long term.”

Rep. Tim Huelskamp, R-Fowler, who represents Hutchinson, didn’t back down Tuesday from his opposition to the production tax credit. He blamed the layoffs in part on gas prices and the economy.

“Job losses are a heart-wrenching and all-too-common occurrence in this weak Obama economy,” he wrote.

As far as the production tax credit, he said, long-term prosperity would be best served with an even-handed tax policy, rather than having one form subsidized.

Dave Kerr, who as president of the Hutchinson/Reno County Chamber of Commerce played a big role in recruiting the plant, said Huelskamp and others who argue that any subsidy is harmful and creates unfair competitive advantages aren’t being completely forthcoming.

“They say they want to level the playing field,” Kerr said, “but they have tax breaks for oil and gas drilling that have been in place for 90 years that they are not even willing to acknowledge are tax breaks.”

Comments

just_another_bozo_on_this_bus 2 years, 3 months ago

“They say they want to level the playing field,” Kerr said, “but they have tax breaks for oil and gas drilling that have been in place for 90 years that they are not even willing to acknowledge are tax breaks.”

And the Koch Bros will spend whatever it takes to make sure that their gas and petroleum interests continue unchallenged by competition and completely unregulated so that they can pollute with impunity.

1southernjayhawk 2 years, 3 months ago

And you have absolutely no idea what you are talking about and have such strong and unfounded biases that readers immediately discount anything you have to say.

just_another_bozo_on_this_bus 2 years, 3 months ago

Excellent link, and from the standpoint of investors, so relatively neutral.

just_another_bozo_on_this_bus 2 years, 3 months ago

I'm sure all those readers out there are very thankful that you 'splained exactly what they should think about me and my posts. Now they can go through life without ever having to think for themselves, just like you.

jhawkinsf 2 years, 3 months ago

Everyone gets tax breaks. Everyone. Remove all tax breaks for all corporations, for all individuals, for all non profits, including religious institutions. For everyone. Then, if a tax loophole is proposed for anyone for any reason, we can throw stones. But as long as you get a tax break (and we ALL do), then you can't complain that their tax break isn't fair.

Fair, is the place where pigs are judged.

jafs 2 years, 3 months ago

Of course you can.

We can make reasonable arguments about what sort of tax breaks are justified, and what sort are not, and on what grounds.

I tend to favor simplifying our tax system in a number of ways, including cutting down on a variety of tax breaks and incentives, just for the record.

But, that doesn't mean that we can't say a tax break for oil companies makes less sense than one for poor families with kids.

jhawkinsf 2 years, 3 months ago

What I was saying, and I've said it before, trying to define fair, as in who deserves tax breaks and who doesn't, is an effort in futility. You will never get consensus as to what constitutes fair. So as long as you say my tax breaks are fair and your tax breaks are unfair, all you're doing is giving an opinion, not stating a fact. We all have opinions.

If we had a flat tax, with every person, corporation, non profit, etc. paying the exact same amount, we bypass that whole issue. Then if we want to provide services to the poor to compensate them for what they are paying in additional tax, fine. We might want to lessen services that the upper echelon typically benefits from, fine. (Examples might be increased social services to the poor, while saying to business class fliers that the costs of airports, air traffic control, etc. will be passed on to them). But I sincerely believe that with an equal amount of skin in the game, voting patterns will even out. More people from each class will be voting and their interests will be better reflected by our elected officials.

jafs 2 years, 2 months ago

The problem is that those who advocate a "flat tax" are also those who generally advocate against social programs, so it's exceedingly unlikely we'd get additional services to the poor if we instituted a flat tax.

You're an anomaly in advocating for both of those things.

An equal percentage of income doesn't translate to "an equal amount of skin in the game" either. Flat taxes are regressive, and affect those at the lower end of the income spectrum disproportionately.

And, I'm a little confused - I thought that all those poor people were voting, and getting themselves "goodies" from our elected officials already. Are you saying they don't vote that way?

Finally, I think I've said it before - if we tax everybody more, and they vote, they'll almost certainly vote for the guy who promises to lower their taxes, making the whole exercise a bit moot.

The real problem is that most Americans have a very small vision, one which revolves around their own concrete situation, when we need people to think a bit bigger, about the country as a whole.

Michael LoBurgio 2 years, 3 months ago

Last year, the 5 major oil companies raked in more than $260,000 in profits every minute of every hour of every day

jhawkinsf 2 years, 2 months ago

A very prominent sentence in your link states very clearly, "It depends on how you count". Great. So the liberal think tank counts only one tax while the companies count all taxes. Interesting, you're on the other side of the argument when it comes to the 47% who don't pay taxes. (Whoops, Federal Income Tax, but they pay other taxes).

Anytime it says it depends on how you count, skip it. There's something there for everyone and nothing of any real value.

headdoctor 2 years, 3 months ago

If like many of the big corporations the tax could have been zero or not much more. Remember GE who not only paid nothing but received subsidies. Some taxes may have been paid down line for the CEO, bonuses, board and stock holders wages and dividends.

headdoctor 2 years, 3 months ago

Who is whining. Facts are facts. Perhaps you should get a real job instead of hanging around on the net all day burning up your brain trying to think of stupid disruptive posts that have zero content.

Michael LoBurgio 2 years, 3 months ago

BP, Chevron, ConocoPhillips, ExxonMobil, and Shell — made a combined record profit of $137 billion in 2011#wow

headdoctor 2 years, 3 months ago

Nice try. Record profits do not mean record taxes especially for corporations.

deec 2 years, 3 months ago

"In the United States, credible estimates of annual fossil fuel subsidies range from $10 billion to $52 billion annually, while even efforts to remove small portions of those subsidies have been defeated in Congress, as shown in the graphic below. "

http://priceofoil.org/fossil-fuel-subsidies/

Chris Golledge 2 years, 3 months ago

Coal is the direct competitor to wind. The coal industry makes a lot of political contributions, mostly to Republicans. http://www.opensecrets.org/industries/indus.php?ind=E1210

As has been already pointed out, the industry gets huge incentives and tax breaks.

The wind industry also makes political contributions. http://www.opensecrets.org/pacs/lookup2.php?strID=C00259572

As has already been noted, the FF industry receives massive support from the government.

So, what Huelskamp is saying is that well-established industries making very large political donations are entitled to government subsidies, and up and coming industries, making less than 1/10th the contributions, are not.

I think we can see who butters his bread.

average 2 years, 3 months ago

“They say they want to level the playing field,” Kerr said, “but they have tax breaks for oil and gas drilling that have been in place for 90 years that they are not even willing to acknowledge are tax breaks.”

Yes but, Grover Norquist has declared that touching those tax breaks would be a tax increase, thus a violation of 'the pledge'.

Oddly enough though, removing the PTC on wind is not, under Norquist-logic, a tax increase, and thus is not a violation of 'the pledge'.

The difference between them? Well, who do you think is paying Grover Norquist, anyway?

brutus 2 years, 3 months ago

Will coal burn when the wind doesn't blow? Can we turn up the wind when demand peaks?

Chris Golledge 2 years, 3 months ago

So, what you are saying is that you tend to fall victim to false dichotomies, and you know nothing about engineering for excess capacity or systems for storing energy, such as thermal salt. Thanks for enlightening us about your ignorance.

brutus 2 years, 3 months ago

Storing always involves large losses. Wind is a nice supplement but never the answer. The demand is just too great.

Chris Golledge 2 years, 2 months ago

IMHO, wind will remain supplemental, but you are still trapped in a false dichotomy; thinking that if it isn't all wind, it must be coal. You are wrong about storage. Thermal systems can operate with little loss, "...the roundtrip efficiency of the TES is about 98.5%" http://www.nrel.gov/docs/fy10osti/45833.pdf

Chris Golledge 2 years, 3 months ago

Most of the 47% Romney speaks of actually work for a living, and a few are actually well off, making $100,000/year or more.

Chris Golledge 2 years, 3 months ago

Actually, the coal industry is suffering from the lowering of natural gas prices, the same as the wind industry.

deec 2 years, 3 months ago

Yet no one is calling to end their subsidies.

jafs 2 years, 3 months ago

Yes, God forbid the EPA should actually protect the environment!

What was I thinking?

headdoctor 2 years, 3 months ago

Is it possible for any of you pseudo-right wing mouth pieces to even come close to the truth? The loss of jobs is always bad but those being cut are not union mines. Nice try blaming Obama for something that hasn't happened yet. There is a little more going on here besides cheaper natural gas to bring about the closing of mines 3 years in advance of any rule changes that may never get put into place.

If you want to push conspiracy theories one could very easily say they are just trying to manipulate the market and perhaps even influence a national election.

Armstrong 2 years, 3 months ago

Hope and change. Oh wait Siemnes went from going full tilt to tilt.

Steve Jacob 2 years, 3 months ago

"He (Brownback) said it is likely Congress would renew production tax credits."

Wichita Eagle 12/5/2010

"When attempting to lure the plant here, local and state entities offered the company more than $3.22 million in direct cash incentives, as well as free land, construction of a railroad spur and 10-year tax breaks."

p>Hutchnews.com today

Remember this when business make promises to the tax payers. The plant is open less then two years when this happened.

Armstrong 2 years, 3 months ago

Per the news today ( KMBZ ? ) the reductions are due in large part to the downturn in the economy and lowered demand.

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