Wind Industry Threatened By Fiscal Cliff, Avoiding Hiring, Laying Off Workers

12/08/2012 09:22 am ET

Andrew Sipres spent much of the fall waiting to hear if he'd been let go. The Vestas plant in Brighton, Colo., where he worked manufacturing blades for wind turbines, had announced it was downsizing. What Sipres didn't know was who was getting axed.

"We heard it was coming up, but we weren't sure when," said Sipres, a military veteran who received training through a federal green jobs program that helps veterans adjust to civilian life. "One day we all showed up, we met in the lunchroom and they told us what was going on. Then one by one they took us into the office."

The layoffs at Vestas, one of the world's largest manufacturers of wind turbines, are the result of continued uncertainty over the fate of a crucial subsidy that makes wind power competitive with traditional sources of energy such as oil and gas. With the subsidy set to expire at the end of the year and Congress grappling with big-picture negotiations over taxes and spending, no one knows what rules will apply next year. While companies wait for clarity, major wind power projects are sidelined.

All of which means that the companies that make the piece parts required to turn wind into electricity -- companies like Vestas -- are hunkering down, avoiding hiring and in some cases cutting their payrolls.

Though Sipres' job was spared, Vestas laid off 80 of the workers at its Brighton plant in October. Hundreds more were let go from plants around Colorado as part of global cost-cutting measures meant to help stabilize the company's deteriorating finances.

"The U.S. wind industry has slowed largely due to the uncertainty of the federal Production Tax Credit extension at the end 2012," explained Vestas in a statement at the time of the layoffs. "This has led to a significant reduction in turbine orders for 2013, and the market slowdown is affecting Vestas’ manufacturing facilities in Colorado."

The so-called production tax credit, which has been in effect on and off since 1992, has spurred remarkable growth in the wind industry, with peaks and troughs reflecting times when the subsidy was allowed to lapse. The current credit of 2.2 cents per kilowatt-hour of wind electricity produced has been in effect continually since 2005.

For now, the subsidy is tied up in negotiations around the "fiscal cliff," the package of tax hikes and spending cuts scheduled to take effect at the end of the year. If the credit is renewed at the end of the month as part of Congressional bargaining, it could provide Vestas and others in the industry with a critical boost -- even as debt-laden governments in the U.S. and Europe have lost their appetite for providing financial support for such green projects.

Sen. Lamar Alexander (R-Tenn.), who's helped lead the crusade for allowing the production tax credit to expire, described the credit as an "outrageous waste of billions of dollars" to Politico earlier this week. "We could take that money and use it to help reduce the debt," he said. The Senate earlier this year passed a proposal for a one-year extension of the tax credit that will cost $12.1 billion over ten years.

Republican Chuck Grassley, whose home state of Iowa is a top producer of wind energy, thinks the credit is an important investment in jobs. "As much energy as possible -- both nonrenewable and renewable -- should be produced at home to create jobs and strengthen our national security," he told reporters at the Capitol last week. "It’s stupid to be importing as much oil as we do and spending as much as we do and shipping those dollars overseas to do harm in some ways to our national security."

Signs of an industry-wide slowdown are evident in other states as well: a wind developer in Ohio scrapped a project employing 200 construction workers this spring; a major turbine manufacturer in Kansas laid off more than 900 employees; and a wind tower maker announced plans to close plants in Nebraska and Washington. All told, if the tax credit is allowed to expire, it could mean the loss of some 37,000 jobs nationally, according to a study by Navigant Consulting.

Sipres, 52, is worried about what comes next. "When they're laying off so many people, everybody thinks they're one of them," he told HuffPost in an interview.

The wind-power industry generated 3 percent of the nation’s electricity needs in 2011, according to the Energy Information Administration. Advocates say it is among the fastest-growing and cleanest energy sources available.

"I'm always thinking positive," said Sipres, who served in the military for 24 years as a heavy equipment operator and quarry platoon sergeant before going back to school for green jobs training. "It's going to continue on. Wind turbines, there are going to be wind turbines -- it's part of renewables. There's going to be solar energy -- all of these renewables are coming out. They're going to be there. That's the future. And so I have no doubts if not in this job -- if I end up getting laid off in the future -- then I've always got other things I can resort to, which would be renewables and energy-saving fields. You always have to think positive and go with it."

CONVERSATIONS