WIND

The Manufacturing Challenge

ADAM BARBER

March 26, 2012

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As the industry grows, one of the issues that this column continues to reflect upon and tackle is the sheer size and scale of the resultant manufacturing challenge.

It’s important, since it’s an issue that generates significant implications, both within established western markets and across emerging markets throughout South America and Asia Pacific.

However, irrespective of the geography, to a greater or lesser degree the manufacturing challenges for many mid market players remain the same, all over the world. And the greatest challenge for many is the ability to understand the investment risk and tool up.

Let’s be clear. Designing, manufacturing and assembling parts and components, for what are quickly becoming larger and larger turbines, isn’t cheap. And it’s certainly not for the faint hearted. The up front investment is high, there’s limited short term market certainty and the returns are measured in terms of five and ten year chunks – at best.

Combine this with the need to be able to negotiate with the major turbine manufacturers and market gorillas – and to not just form commercial relationships but to form trusted working relationships as well – and suddenly you’ve got a complex new market on your hands.

And for many mid tier engineering companies and manufacturers, it’s the ability to understand the complexities of a new market that all too often sucks too great a slice of short term operating profits and investment and generates too many unknowns.

The result?

A hesitancy to invest and a caution associated with upsetting the status quo. Fair enough, perhaps. However, for those with an eye on the future, the risks simply have to be quantified and assessed. And fast.

The European manufacturing base cannot afford to sit back and let others take the lead. Instead, firms – both large and small – need to stand up and tool up. Individual goivernment support might change from country to country but one thing remains clear – the market for European large-scale wind is here to stay.

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