For months, the wind industry has warned Congressional leaders that failure to extend a key tax credit for wind producers would result in tens of thousands of job losses, particularly in manufacturing.
Led by a small band of ideologues determined to shut down bipartisan support for the burgeoning wind industry while maintaining tax credits for the oil and gas industry, Congress did the only thing it’s currently capable of: doing nothing.
And now, the layoffs have started.
Gamesa, a leading wind turbine manufacturer with multiple facilities in Pennsylvania, says that a slump in demand is forcing the company to furlough 165 workers at two plants starting this fall. According to a story in the Altoona Mirror, Gamesa officials cited the expiration of the Production Tax Credit (PTC) as the reason:
Current production at Gamesa’s facilities is still ongoing for 2012 orders. But the demand for new turbines beyond 2012 dropped significantly, pending the layoffs, Rosenberg said.
“We produce only to order,” Rosenberg said. “Everything that’s being produced is for projects that we have in-house that are scheduled for commissioning for 2012.”
With the pending tax credit expiration at the end of the year, the company has seen a significant drop in demand for new turbines.
The PTC provides wind project owners with a credit for 2.2 cents per kilowatt-hour of electricity produced. Since tax credits were introduced for the industry, the cost of wind electricity has fallen 90 percent, allowing the technology to compete with the heavily subsidized fossil fuel sector.
However, unlike permanent tax credits for the fossil fuel industry, the PTC is only extended on a short-term basis. The PTC is set to expire at the end of this year. Wind companies in the U.S. say the threat of expiration is killing plans for wind projects after 2012, thus causing a drop in orders and forcing them to consider laying off workers.
Vestas, the world’s largest wind manufacturer, says it could soon lay off 1,600 American workers if the credit expires. The company’s CEO recently predicted an 80 percent drop in the market in 2013 without Congressional action to extend the credit.
In April, a wind developer said it would scrap plans for a $20 million project in Ohio — House Speaker John Boehner’s home state — thus preventing the company from employing 200 construction workers.
And in March, Mitsubishi Heavy Industries said that national policy uncertainty was a major reason for halting plans to build a $100 million production facility in Arkansas that would have supported 330 manufacturing jobs.
Over the last five years, wind has brought $20 billion in annual private investment to the U.S. — helping support 75,000 jobs and making America one of the most competitive in the wind industry. But companies are now looking to expand operations into other markets like China, India, and Brazil that offer more policy stability.
A Gamesa spokesperson tried to sound optimistic, saying he hoped the layoffs in Pennsylvania would be “a temporary action.” However, with more companies stalling plans and announcing layoffs of American manufacturing workers, Congress is still unmoved.
How many more layoffs will it take?