An ill wind blew across Denmark's wind energy sector late last year when a homegrown major, Vestas Wind Systems, announced 3,000 layoffs. It was perhaps an inevitable restructuring of global operations for the company after its operating profits fell from €325m in Q3 2009 to €271m in Q3 2010. The share price has declined nearly 44% over the past 12 months amid concern over the European outlook and intensifying competition from Chinese manufacturers such as Sinovel and Goldwind.

Chief executive officer Ditlev Engel spoke of a “European problem” relating to the sector and remarked it was cheaper for Vestas to produce a wind turbine in Spain and ship it to Sweden than to send it out of Denmark.


According to Peter Wenzel Kruse, senior vice president of communications for Vestas: “We did announce layoffs to the tune of 3,000 people and out of this 2,000 were in Denmark. At present we have 6,000 employees in Denmark. I can’t say what will happen five years down the line but there will not be any more layoffs this fiscal [year].”

Last year, Vestas caused an uproar in the UK when it closed its blade-making factory in the Isle of Wight, with the loss of 600 jobs. While the company shut its factory in UK, its close competitors General Electric, Siemens and Spain's Gamesa have planned investments of more than £300m ($475m) in the UK in the next three to four years, creating an estimated 3,600 jobs.

Growth in new wind energy installations in Europe is forecast to shrink from 14% in 2010 to 1% this year, according to Citigroup analysts. Meanwhile, the emerging markets of China and India are gaining ground in this area.

Vestas has been diversifying in different geographical territories since 2005 and top of its agenda have been the Asian and US markets.

Mr Wenzel said: “We wanted to hedge the currency risks and we are expanding in China and the rest of Asia. In the next few years we see the Latin American, African and Eastern European markets developing fast. Now we are manufacturing and exporting from China and India because of the cost factor.”

The company has gained in the US, but high costs of transmission act as a limiting factor.

According to data from fDi Markets, Vestas has invested in 19 greenfield projects in Asia-Pacific between 2003-10 and this led to the creation of 5,654 jobs. Western Europe received 17 projects that employed 2,483 people. This is followed by North America where 11 projects were set up with jobs for 3,248 people.

Vestas senior management said despite market and regional challenges, the company's numbers look headed for an upturn, with EBIT (earnings before interests and taxes) of 15% projected in 2015, up from 7% in 2010, and revenues expected to reach €15bn in the same length of time. One factor that will play in its -- and its competitors' -- favour is a resurgence in oil prices. "Going forward the International Energy Agency has said that oil prices will go up and our prices are going down,” said Mr Wenzel.

Wind power fulfils 20% of the energy needs of Denmark, and Vestas is hopeful that 10% of global energy needs by 2020 will be met by the same figure. To keep its back to the wind and stay at the forefront of technological advancement in the sector, the company is also working on new technologies for the production and transmission of wind power and has increased its research and development workforce to 300.