Rex L. Troute, The Hawk Eye, Burlington, Iowa –
FORT MADISON – Siemens Energy Inc. announced a major restructuring Tuesday, which will cost 615 workers their jobs, most of them at its wind blade facility in Fort Madison.
The uncertain future of a tax credit for wind energy, low natural gas prices and slowing demand were cited as reasons for the workforce reduction.
Siemens employs 627 permanent workers and 163 contractors (temporary workers) in Fort Madison. All of the temporary workers and 407 permanent workers will be let go, leaving 220 employees to operate the plant at 2597 U.S. 61.
The affected permanent employees will be notified today and will work until Nov. 19
“We are tremendously thankful for the support from Fort Madison and the state of Iowa,” said Melanie Forbrick, a Siemens Energy spokeswoman. “We are so proud of the work they have done.”
The other affected Siemens employees work at the company’s Nacelle generator plant in Hutchinson, Kan., and its headquarters in Orlando, Fla.
“We have worked very hard to manage the consequences of the market conditions, all of which are beyond our control and are affecting the entire wind industry,” Siemens Energy said in a statement. “Now, we have had to make the difficult decision to adjust the manufacturing, projects and administrative support functions to our wind power operations to reflect the current and projected business volume.”
Siemens has experienced a rapid ramp-up over the past five years, but has seen a significant drop in new orders – from 6,000 wind turbines this year to only 600 in 2013.
At the start of this year, the Fort Madison plant increased its goal to 2,500 blades. It produced 1,700 blades in 2011. Due to the job cuts, the plant goal likely will be scaled back.
Forbrick said Siemens hopes the drop off in orders is short term. If Congress renews the Production Tax Credit after the election, it could drive demand back up for wind power.
While the tax credit doesn’t expire until the end of the year, Forbrick said blades must be shipped and installed by Dec. 31 to qualify.
Rep. Dave Loebsack, D-Iowa, criticized his colleagues for failing to extend the wind energy tax credit.
“Congress should not be going home to campaign at a time when so much critical work remains unfinished,” the 2nd District congressman said. “The livelihood of thousands of Iowans depends on the renewal of the credit.”
Sen. Charles Grassley, R-Iowa, blamed the lack of leadership “provide the kind of certainty and confidence employers need to keep and hire workers.”
A wind energy recovery will be hampered by a sharp decline in natural gas prices brought on by an abundance of new natural gas fields. It has led to a growing trend toward natural gas-based power generation.
Siemens said it has invested $100 million in wind power in the past five years. The company began production in Fort Madision in 2007 with a 311,000-square-foot plant. With $3.4 million in Department of Energy manufacturing tax credits, it expanded the plant to nearly 600,000 square feet in 2008. Employment increased steadily from 230 workers in May 2007 to almost 800 this year.
Nationwide, Siemens Energy had grown to 1,650 employees who built, installed and serviced more than 3,900 wind turbines across the country. The electricity created from the turbines would power 1.75 million households.
Wind power had become so important for Siemens the energy wing recently became its own division in the company.
Permanent Fort Madison employees with at least six months of service affected by the restructuring will be given four weeks of severance pay, a continuation of benefits, career counseling, and resume preparation and job placement assistance. Permanent employees also will receive a $5,000 credit toward education and training.
