German turbine manufacturer Enercon is ending cooperation with several domestic production partners that could lead to up to 3000 job losses at the company and in the wider wind industry.
The company said it had been forced to make the move as a result of the collapse of the onshore wind market in Germany.
Enercon has stopped placing production orders for blades and is reducing orders for other components.
It does not have any more orders for the rotor blade factories in Aurich and Magdeburg, due to “failed political reforms causing orders for new wind energy projects in Germany to virtually grind to a halt”.
The company has only installed 65 turbines totalling 210MW this year, compared with 711 machines with combined capacity over 2GW in 2017.
Enercon management head Hans-Dieter Kettwig said: “We deeply regret this alarming development. Current energy and climate policies not only put expertise built up over years and jobs in our sector at risk; they are also a threat to climate protection and the energy transition in general.
“To make matters worse: the climate protection package put forward by the Federal government makes it clear that we are going to be faced with even bigger problems.”
Enercon said distance regulations in the package impacting where turbines can be sited will cause the “stagnant onshore expansion to dwindle even further”.
Kettwig said: “The German onshore market will not recover under these conditions.”
He added that the company is “suffering significant losses” for the first time.
“For us, it means we have to quickly and consistently set the course to lead Enercon out of this crisis and position it as a future-proof company once more,” he said.
The company has implemented a “comprehensive turnaround programme to reorganise the company and bring it back to profitability”.
“As well as significantly reducing planning for 2020, a focus on international markets with better prospects is at the essence of the programme,” the company said.
Enercon’s company structures will be adapted in light of the drastic slump in demand, and the central divisions restructured, it said.
Management has agreed an ambitious saving and cost reduction programme for all company divisions, and imposed a recruitment freeze.
“Every function of Enercon will be affected,” said Kettwig.
There will also be changes in the company’s supply chain and the value chain.
Enercon management team member Jost Backhaus said: “Optimising our supply chains is a key challenge in reorienting our company.
“This includes working more intensively with production partners, service providers and suppliers in the countries of installation.
“This is the only way we can meet the local content requirements we are confronted with in new target markets and ensure we are competitive in international business.
“The cost pressure is immense, we are up against tough competition from major global companies.
“Cost aspects therefore also have to be taken into account for the new orientation.”
Enercon said the business decision will have grave consequences for its production partners in Germany and, beyond that, for other companies in the sector, and “will likely end in the closure of entire factories”.
Kettwig said: “We are working on the assumption that our new orientation will affect several thousand jobs in the wind industry as a whole – at Enercon itself, at production partners, subordinate suppliers and local temporary employment agencies.
“We are left with no choice: systematic reorientation is the only way to improve our economic situation and enhance our competitiveness in the long term.
“This is an important prerequisite to get us back on the road to success – something we aim to achieve with the turnaround programme.”