Slow economy becalms Pipestone wind power business

The Obama administration intends to spend $93 million to boost the nation's use of wind energy. Yet in Pipestone, Minn., 160 employees of a wind power company will lose their jobs this summer.

Suzlon Rotor Corp. in Pipestone will cut its workforce in half because of weak demand for its wind turbine blades -- even as state and federal officials are still pushing renewable energy sources. The disconnect is explained, in part, by the steep drop in orders for wind turbines in the past six months as the recession deepened, the banking crisis spread and the price of oil dropped.

"2008 was probably the best year that wind energy had in the United States," Suzlon spokesman Mike Aabram said Monday. "2009 dropped off because of the economic downturn."

Suzlon, whose parent corporation is based in India, received state and local financial incentives to open a plant in late 2006. Employment peaked at about 500 a year or so ago, and Suzlon now employs 324 people. Seventy jobs at Suzlon will be cut Aug. 2, and 90 more are scheduled to be cut by Sept. 12, the company said.

Suzlon hopes the economy will recover late this year or early next year, Aabram said. "Anybody who is laid off is going to be the first considered for any available jobs when they are able to hire again."

The news of the job cuts comes just a few weeks after Pipestone's Economic Development Authority completed construction of an 18-unit apartment building for $1.8 million. It was built partly to provide housing for Suzlon workers. Suzlon has drawn from a wide geographic area to meet its employment needs in Pipestone, which has a population of about 4,300.

"They were busing from Worthington and Sioux Falls to meet their workforce needs," said Jeff Jones, Pipestone's city administrator. Suzlon is located in the city's industrial park on the southeast end of town. "The city provided a number of incentives. We acquired 42 acres, annexed it and deeded it over to Suzlon, the bulk of those 42 acres for $1."

The state's dislocated worker program now will be tapped to help the laid-off workers search for new jobs or get additional training, said Kirsten Morell of the state's Department of Employment and Economic Development.

Others feel slowdown

DMI Industries, a West Fargo, N.D., company that makes towers for wind turbines, also has made layoffs. DMI is owned by Otter Tail Corp., with corporate offices in Fergus Falls and Fargo.

"The rate of growth of the wind industry in 2009 has dropped dramatically," said George Koeck, Otter Tail's general counsel. The tight credit market in the United States is a key factor in the slowing of development of wind energy projects, Koeck said.

"We are building a new facility in North Dakota, but we are unusual in that regard," he said.

A new wind energy facility near Valley City, N.D., became fully operational in January, and a neighboring wind farm was recently announced. "When we finish the Luverne (N.D.) wind farm, about 15 percent of our energy will come from wind," said Otter Tail spokeswoman Cris Kling.

Under Minnesota law, Otter Tail must generate 25 percent of its energy from renewable sources by 2025. The bar is somewhat higher for Xcel Energy, which must derive 30 percent of its energy from renewable sources by 2020. The Legislature stipulated "at least 25 percent must be generated by solar energy or wind energy conversion systems."

A 100-megawatt Grand Meadow wind farm near Austin, Minn., "is the first wind farm we own in Minnesota," said Xcel spokeswoman Mary Sandok. That facility started providing power in late 2008. Xcel has 1,224 megawatts of wind power on its system in the Upper Midwest, with the bulk of it purchased from other providers.

Meanwhile, a developer is moving ahead with plans for two other wind energy facilities that Xcel will own. Sandok said a Nobles Wind project is expected to be operational by the end of 2010 in southwestern Minnesota. In addition, a project in McIntosh and Dickey counties in North Dakota is expected to be producing wind energy by 2011.

In late April, U.S. Energy Secretary Steven Chu said the Obama administration wants to generate 10 percent of U.S. energy from renewable sources by 2012. He announced his department will allocate $45 million for wind turbine drivetrain research and development. From a total pot of $93 million, the department is awarding other funds to support research and promote use of wind energy.