For the first time since 2004 global wind turbine demand is expected to contract this year by as much as 5% mainly due to declining demand in the US, Spain and Italy – historically key markets with extensive local supply chains.
This has created the need for capacity adjustments while growth opportunities in new and emerging markets and the growing demand for larger wind turbines require additional investment due to local content requirements or logistics. The global supply chain and long held sourcing strategies have been put under pressure creating opportunity for innovation and new business models to optimise the wind power supply chain.
Fundamental shifts in market demand caused by changes in support policies, power demand projections and overriding macroeconomic factors are causing substantial capacity adjustments in traditional wind power supply chain manufacturing hubs. Unstable support policies in key wind markets such as the US and Spain have already resulted in significant redundancies and facility closures in the last twelve months, having a major impact on the global supply chain. Turbine OEMs have begun to withdraw production capacity from secondary markets and instead concentrate production in core markets with higher volumes to take advantage of economies of scale.
At the same time a need for expansion and new investments in the supply chain is created partly by growth opportunities in new and emerging markets associated with localization policies like in Brazil and South Africa and partly by the continued drive towards large offshore and onshore wind turbines that require the supply chain to produce longer blades, taller towers, larger diameter bearings and more complex castings.
Increasing competition and low capacity utilisation result in lower margins. In combination with volatility in demand and shortened demand visibility this is putting turbine both OEMs and suppliers as well as long held sourcing strategies under pressure resulting in a window of opportunity for innovation and new business models in the global wind power supply chain.
Vertically integrated wind turbine OEMs contemplate divestitures of in-house supply chain activities. Hybrid sourcing strategies and partnerships designed at striking a balance between cost, cash flow, security of supply, quality, control of proprietary technology and market access are on the rise. Suppliers are diversifying their business areas to reduce dependency on new wind turbine demand and new suppliers and partners are entering the wind industry while others exit.
[mappress]
Press release, September 02, 2013