LM Wind Power Lays Off U.S. Workers Despite Government Loan Guarantee to Back Their Jobs

August 24, 2012

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Just days after a mostly foreign-based wind energy equipment manufacturer received a multimillion-dollar federal loan guarantee from the U.S. Export-Import Bank, the company pink-slipped more than 200 American workers. The loan transaction in question involved a Brazilian firm, Wind Power Energia S.A., in Sao Paulo, which required wind blades to complete a 180-megawatt wind farm in the Brazilian state of Bahia and another 211-megawatt farm in the Brazilian state of Ceara, according to company officials.

According to Ex-Im Bank officials, the export credit agency authorized a $32.1 million loan guarantee to Wind Power Energia to buy wind turbine blades manufactured by LM Wind Power Blades Inc., in Little Rock, Ark.

The Little Rock operation is actually a subsidiary of LM Wind Power, which is headquartered in Kolding, Denmark, and is the largest manufacturer of wind turbine blades in the world.

Ex-Im Bank approved the loan guarantee backed by American taxpayer dollars so a Brazilian company could buy wind turbine blades from a Danish company because the deal would “support approximately 250 permanent American jobs at the company’s Little Rock, Ark., and Grand Forks, N.D., manufacturing facilities,” bank officials said.

But as CJ Ciaramella reported in the Washington Free Beacon, LM Wind Power laid off 234 of the Arkansas plant’s roughly 300 workers just two days after its loan was approved.

Obviously, the timing of the layoff raises questions about whether a plan was already in place when the loan, granted expressly to guarantee American jobs, was given.

The Obama administration has not announced any plans to reconsider the loan guarantee.

In May, Bloomberg reported that LM Wind Power Holding A/S saw profits fall 41 percent last year and “expects demand to weaken.” As the report noted, the company's earnings fell to 73.9 million euros ($92.9 million) in 2011 from 125.1 million euros a year earlier. Sales declined 2.7 percent to 707.5 million euros ($888.9 million). The company counted 5,803 employees at the end of 2011.

In June, as reported in the renewable energy industry journal Recharge, LM Wind Power appointed Leo Schot, a former Siemens Wind Power executive, as its new chief executive officer to replace Roland Sundén.

Ciaramella noted in his Washington Free Beacon article that LM Wind Power hasn’t been the model corporate citizen at its American production facilities, writing that the manufacturer has had numerous citations for workplace safety violations.

The Department Of Labor’s Occupational Safety and Health Administration cited the firm 11 times in an investigation beginning October 2010 for exposing workers to unsafe conditions and noted the company had demonstrated a "continued pattern of failing to comply" with OSHA standards.
After the death of a worker at LM Wind Power’s North Dakota production facility in 2010, industry journal Reliable Plant reported that OSHA cited the company with five safety violations for exposing workers to hazards that ultimately took a worker's life.

OSHA's Bismarck Area Office reported that an employee working from a scissor lift was crushed to death by a nearby crane and cited LM Wind Power with “one willful, three serious and one other-than-serious citation.” Tom Deutscher, the office's director, said the death occurred because “the employer failed to identify and eliminate the hazards prior to allowing this employee to perform the work."

OSHA defines a willful violation as one committed with intentional knowing or voluntary disregard for the law's requirements, or plain indifference to worker safety and health, according to Reliable Plant. OSHA proposed to fine the company $92,000 over the incident.

Government-Backed Failures Are Mounting

The LM Wind Power debacle continues a litany of failures of government-backed green energy firms across the range of renewable technologies besides wind energy.

Noted columnist Timothy P. Carney wrote that solar panel manufacturer Amonix closed down its 214,000-square-foot Las Vegas factory after receiving various federal subsidies since 1995.

Amonix is unusual in that it has been receiving government grants through three presidential administrations. As Carney explained, during the Clinton administration, the Department of Energy gave Amonix $49,559, while the agency gave the company a "Renewable Energy Research & Development" grant worth approximately $5.5 million during the Bush administration.

Another $10.1 million under this grant was awarded by the Obama administration, in addition to a $9 million federal loan guarantee for manufacturing solar panels for export last year and a $90.6 million loan guarantee to Cogentrix Energy to buy solar panels from Amonix.

In June, the New York Times reported that solar panel manufacturer Abound Solar, which received a $400 million loan guarantee from the federal government, would file for bankruptcy “amid plummeting prices and intense competition from Chinese manufacturers in the solar equipment market.”

The paper noted that the company actually received at least $68 million of the allotted funds. The same article also noted that electric car battery manufacturer A123 Systems received a $249 million grant from the Energy Department “but has laid off some workers and acknowledges that it faces serious challenges.”

In May, in a ThomasNet.com Green & Clean article, I noted that government subsidies allow the American wind power industry to simply exist.

A recent report from the Global Warming Policy Foundation, titled “Why Is Wind Power So Expensive: An Economic Analysis,” authored by Gordon Hughes, professor of economics at the University of Edinburgh, found that in Britain – which is as heavily invested in wind power as any other country — wind farms are “almost entirely subsidized by a complex yet hidden regime of feed-in tariffs, tax cuts and preferential tax credits."

Hughes’ report found that meeting Britain’s target for renewable energy by 2020 would require a total investment of some £120 billion ($190 billion) in wind turbines and backup. The same amount of electricity could be generated by gas-fired power plants that would only cost £13 billion ($20 billion).

Wind power will most likely always need subsidies, since as Hughes’ report concluded, it is, after all, an inefficient and unreliable method of energy generation. “It is typically much cheaper to transport gas and to rely upon open-cycle gas turbines to match supply and demand than to adopt any of these options,” Hughes wrote, adding that any sizable wind generation installation requires a backup energy-generation system, as well, so the cost is effectively two systems.

As the number of renewable energy casualties continues to climb, it reinforces the thought: Why not just pay for one system that generates electricity less expensively and more consistently and put taxpayer money to better uses?

 

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