Two years ago, President Obama held up Siemens’ rotor blade manufacturing plant in Fort Madison, Iowa as an example of how clean technology could help revive a local economy.
The facility, which had been dark and quiet just a few short years before, was now “alive and humming with more than 600 employees,” Obama said in a speech after a tour of the plant.
It appears those dark and quiet days are returning.
Siemens plans to cut 615 jobs, more than a third of the company’s 1,650 U.S.-based wind employees due to a decline in orders caused by a variety of factors, notably the pending expiration of the production tax credit and low natural gas prices, the company said in a statement given to employees Tuesday. The Fort Madison plant, which will lose 407 of its 660 employees, will take the biggest hit. Siemens also will cut jobs at plants in Kansas and Florida.
The statement, which was published in North American Windpower, said:
The uncertainty surrounding the future of the production tax credit for wind turbine installations, the current trend toward more natural gas-based power generation due to record-low natural gas prices and still lingering recession impacts on energy-demand growth are casting a shadow on the short-term future of the entire U.S. wind power industry.
Siemens is hardly alone. Vestas and Clipper Windpower have cut jobs in the U.S. in recent months due to a decline in orders caused by policy uncertainty.
The 2.2 cents per kilowatt-hour production tax credit triggered a boom in business for wind turbine manufacturers. However, instead of demand being spread out over a several years, the looming expiration of tax credit caused customers to place orders ahead of the deadline.
Wind industry groups have warned for months that manufacturers will face a short-term decline in orders following the production tax credit expiration, leading to job cuts in the United States. The American Wind Energy Association estimated in a study released last year that without a PTC extension total wind supported job would drop nearly in half from 78,000 in 2012 to 41,000 the following year.
Unfortunately for the wind industry, it doesn’t appear Congress will around to extending the tax credit before the November presidential election, if at all.