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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

WristTwister 1 year, 7 months ago

Failed energy policy, failed economic policy and failed foreign policy. Who would possibly vote for a President with such a record? Oh...I forgot about the 49% of Americans who are on some form of government assistance. Obama is promising even more. The welfare ot the country and it's future generations be damned. Looks like Romney was wrong. It's not 47%.

http://mercatus.org/sites/default/files/publication/nation-of-dependents-analysis.pdf

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toe 1 year, 7 months ago

Anything that relies on Obama will fail.

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LJ Whirled 1 year, 7 months ago

If only we could figure out a way to unleash the power of the atom, so that we wouldn't have to burn anything or industrialize vast areas of our land and sea ...

Yes, Nukes.

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Steve Jacob 1 year, 7 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.

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Armstrong 1 year, 7 months ago

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

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rockchalk1977 1 year, 7 months ago

Coal producer Alpha Natural Resources said yesterday it was cutting production by 16 million tons and eliminating 1,200 jobs company wide, laying off 400 workers immediately by closing mines in Virginia, West Virginia and Pennsylvania. Shutdowns and layoffs are a necessary part of ensuring Alpha survives in the face of Obama's out of control EPA, a regulatory environment that's aggressively aimed at constraining the use of coal. More shovel ready union jobs gone thanks to Obama. Romney-Ryan 2012!

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oneeye_wilbur 1 year, 7 months ago

Blame Bush, blame Koch, but better yet get ready for more layoffs and they will come in Lawrence. It's too bad KU can't layoff a bunch of professional local meeting goers so they can become the 47% Romney speaks of. Right or wrong.

Lawrence is about to not become so insulated from reality.

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brutus 1 year, 7 months ago

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

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average 1 year, 7 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?

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Chris Golledge 1 year, 7 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.

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JackMcKee 1 year, 7 months ago

Where are all the jobs, Brownback?

3

deec 1 year, 7 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/

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Michael LoBurgio 1 year, 7 months ago

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

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Michael LoBurgio 1 year, 7 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

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autie 1 year, 7 months ago

Quick, get on the bat phone and dispatch thousands of dollars to Hutch Juco for dislocated worker job training. Pastor Sam shall save the day.

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Larrytown 1 year, 7 months ago

Tim Huelskamp is a piece of work....

1

just_another_bozo_on_this_bus 1 year, 7 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.

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