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Acciona expects to rebound soon after layoffs
by Gregory R. Norfleet · News · March 25, 2009
The economic downturn prompted Acciona Windpower to announce last week that it would lay off about one-third of its workforce from its West Branch assembly plant.
However, Vice President and General Manager Adrian LaTrace expects the company to rebound quickly.
The company issued a press release March 19 that it would lay off 65 employees, with 58 of them working at the turbine plant on the south side of the city.
The company employs 188 here and the laid-off workers include mechanical and electrical workers who assemble the turbines and some production support staff.
The other seven layoffs will be from various wind farms throughout the United States.
About 30 Acciona employees live within the city, though LaTrace was uncertain how many of them were part of the cuts.
Workers were notified then that the layoffs would take affect in 60 days.
The layoff “was to scale the workforce to the current demand for wind turbines, which is uncharacteristically low due primarily to instability in the financing markets,” an Acciona press release said.
“We don’t anticipate future layoffs,” LaTrace said. “We fully anticipate the market will rebound.”
LaTrace said the company started feeling the effects of the economic downturn as early as November, but the full impact came in 2009 with “the paralysis of the credit markets.”
The company has seen a “moderate impact” by the economy overseas, but also this month delayed two wind farms in Canada due to the economy.
Many customers who planned orders in 2009 have “postponed” them until 2010, he said. LaTrace said the company is still taking orders, though.
Orders that are already in place will be fulfilled, he said, and the West Branch plant has already produced enough turbines to generate about 400 megawatts of electricity.
LaTrace said the company is committed to West Branch.
“Acciona is not going anywhere,” he said in a statement. “We’re members of this community, we continue to employ community members and we’ll continue to support the community however we can.”
West Branch City Administrator Kyle Soukup said Workforce Development was at the Acciona plant the morning the layoffs were announced to begin working with the employees.
“I think the city is very disappointed the situation has come to this,” he said. “We understand it’s the economy and we hope the stimulus money gearing up for wind energy will work its way down and rehire those laid off and allow (Acciona) to get back up to full production.”
The company predicts that the federal stimulus package, specifically the Production Tax Credit and the Investment Tax Credit, “will have a positive effect.”
“But it will take time for those positive effects to turn into orders for wind turbines,” read the release.
LaTrace expands on that, saying the company will “grow and flourish as we make our way out of this economic downturn.”
“And (we) expect Acciona Windpower and our West Branch team to grow with it,” he said.
Acciona recently asked the West Branch city council if it could use a five-year, partial property tax exemption — worth about $115,000 — on its recent $10.7 million addition to then leverage a High Quality Job Creation incentive — worth about $218,000 — from the state.
Though Acciona has yet to apply for the tax exemption, which would have to come before seeking the HQJC benefit, the city council voted against supporting Acciona’s application for the HQJC and is now in the process of removing the tax exemption from city ordinances. An official vote on that is expected at its April 6 meeting.
Soukup said that he wrote to the Iowa Department of Economic Development about the council’s concern that when the council adopted the IDED’s incentive as part of the city code, it did not understand that industry would bypass the council for the tax exemptions — that the exemptions were “automatic.”
The city administrator said that the IDED has now waived the local match requirement so Acciona could still take the salary and benefits tax credits. LaTrace said the layoffs would not affect the HQJC benefit.
Soukup said he does not think the layoffs will change the council’s mind on removing the property tax exemption.
“But, the council has surprised me before,” he said.
LaTrace said that even if the council changed its mind about the tax exemptions, it would not reduce the number of layoffs.
“(The two) are unrelated,” he said. “What’s occurring today is directly related to the economy.”
LaTrace said that the West Branch plant is strategically located for transporting turbines throughout the United States and he has confidence that the market will improve.
“Acciona Windpower has one of the best products on the market and with our West Branch facility we will remain well-positioned to fill orders for turbines when the demand inevitably increases,” LaTrace said.
The company produces 1.5 megawatt turbines and recently finished a 30,000-square-foot addition to add a 3 MW model. LaTrace said the company only needs to purchase some minor tools to begin producing the 3 MW turbine.
The company opened with the announced goal of employing up to 110, but a strong market allowed them to last year announce increased hiring.
Less than a year ago, the company increased its 2009 production goal from 400 to somewhere between 550 and 600. LaTrace said he did not have a figure of what the plant would produce this year after the layoffs take effect.
Acciona’s press release points out that though this is not a furlough, the laid-off employees are “specially trained,” which is an “obvious advantage” if they want to reapply for their jobs.
Headquartered in Spain, Acciona Energy chose to build its West Branch turbine plant to cut transportation costs to customers in the United States.
The local plant opened in December 2007.
LaTrace said the price of wind turbines depends on the location and other issues, but the industry average is about $2.3 million per megawatt.
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