GE Vernova Plans to Pull Back on Wind Power Including Large Job Cuts

 

In a potentially critical blow to the development of the wind energy sector, GE Vernova, one of three leading manufacturers of wind turbines, confirmed it is looking at scaling back this portion of its business. The company’s plan would leave only two large Western manufacturers as well as the emerging competition from Chinese companies.

The company confirmed reports that it has made a filing with its European Works Council, which would be the first step toward layoffs for its operations in France. EU labor regulations require the company to notify and involve its unions in any planned reorganization.

The company said it is looking at what it called a “downsizing to transform its offshore business globally into a small, learner, and more profitable business.” The reports say it could involve cutting as many as 900 jobs with a third or more of the cuts reportedly planned for the company’s two facilities in France. The plant in Montoir-de-Bertange which builds nacelles according to reports in the French media could lose more than half its workforce. A second facility in Nantes could be downsized by a third. In total, the reports in France say the company is seeking to cut as many as 360 people.

By management’s own emissions, 2024 has been “a very difficult year” for the wind power segment of the company which was spun out from GE in April 2024 to focus on power, wind, and electrification. Earlier this year the company reported it had decided to shelve a plan to build an 18 MW version of its Haliade-X offshore wind turbines. It said it would instead focus on its 13 and 15 MW units which were called the workhorse of the industry. The retrenchment was cited as the reason New York State canceled three selected projects that planned to use the larger turbines.

The company also suffered a high-profile incident when one of the blades on its turbine at the Vineyard Wind 1 project in Massachusetts fractured sending bits into the ocean. The debris washed up on local beaches leading to more protests over the safety of offshore wind power. GE Vernova later blamed that failure on a manufacturing deviation at its plan in Quebec, Canada. All the blades were being reinspected.

Two failures of blades at the UK’s Dogger Bank wind farm were also for its Haliade turbines. They were blamed on installation problems. 

The failures along with disruptions in the supply chain and higher material costs due to inflation were cited as placing increased pressure on this segment of the company’s business. The supply contracts also have long lead times exposing the company to increased costs.  In September, GE Vernova told investors its wind segment is now expected to generate an approximately $300 million EBITDA loss in the third quarter of 2024 given these costs, despite onshore wind delivering a fifth straight quarter of profitability. The company said it expects the wind segment to be modestly profitable in the fourth quarter.

GE Vernova’s scaling back leaves Siemens Gamesa and Vestas Wind Systems as the two leading Western manufacturers. China’s Mingyang and others are growing competitors seeking to make inroads into the Western market. News however that an offshore wind farm in Germany planned to use Mingyang as its supplier triggered a host of political complaints and reports that the contract would be placed under tight scrutiny. 

At the beginning of September, an offshore project planned for New Jersey known as Leading Light Wind asked regulators for a delay citing supply chain problems. The company said it was having problems securing a provider of turbines after GE Vernova canceled its larger turbines. According to the reports, the New Jersey developer decided not to use Vestas while Siemens Gamesa reportedly told them there would be a significant price increase for the turbines.

GE Vernova in its September update to investors cited incremental strength in its Power and Electrification segments saying that it gave it the confidence to reaffirm its full-year 2024 financial guidance despite the challenges in its Wind segment. The company’s stock price was flat today while it was up nearly eight percent for the week. Since the spinoff from GE in April, the stock price is up more than 87 percent.