Wind turbine maker Nordex SE (ETR:NDX1) is planning to discontinue the production of rotor blades at its factory in Rostock, northern Germany, amid high production costs and a shift in global demand.
The closure is necessary as wind turbine manufacturers are under increasing pressure to lower production costs in order to remain competitive and the factory in Rostock is still not competitive despite all cost-cutting measures that have been taken, Nordex said on Monday.
Another reason for the plan is the shift in global demand towards more powerful turbines with longer rotor blades which is expected to result in declining orders at the site in northern Germany as it does not have the capability to produce turbines with a diameter larger than 149 metres.
The company will discuss with the works council a severance scheme for the 600 employees who will be affected by the plan.
Nordex noted that the nacelle, hub and drive trains production site (DMR) and its Engineering and Service organisation, which are also based in Rostock, will continue operating.
“The wind industry operates in a highly competitive, global market that is mainly cost-driven. Against this background, we must optimise our global production and sourcing processes in order to ensure profitable production and to secure the Nordex Group’s competitiveness. As a German and European -based company, we particularly regret that we do not see an alternative to this painful measure," said chief executive Jose Luis Blanco.
The announcement follows a report by German newspaper Ostsee Zeitung from last week that suggested Nordex was considering moving part of its production from its site in Rostock to Asia in an effort to cut rising costs. The considerations come against the backdrop of losses that the wind turbine maker incurred over the last two years as increasing costs for raw materials and logistics took their toll.
The company booked a net loss of nearly EUR 104 million (USD 116.4m) for the first nine months of 2021 although revenues rose almost 25%.
Anna is a DACH expert when it comes to covering business news and spotting trends. She has also built a deep understanding of Middle Eastern markets and has helped expand Renewables Now's reach into this hot region.