U.S. manufacturers urge the government to believe in wind power
June 2012 - As oil prices keep both investors and the public glued to news outlets, wondering how this week’s global politics and events will affect prices, alternative energy sources are struggling to gain a foothold. “The term green energy rose very quickly and became a toxic phrase quickly. In this case, it’s associated with wind but not technology,” says Jeff Metts, president of Astraeus Wind Energy Inc., part of a collaboration between Dowding Machining and MAG Industrial Automation. “This wind technology is in its infancy but we’ve had dramatic improvements in advancing innovations into 21st century processes.”
The U.S. government passed the American Recovery and Reinvestment Act establishing incentives for renewable energy. However, the Production Tax Credit is set to expire at the end of 2012. Viewpoints vary as to whether the government will renew the subsidies and if so, for how long. “I believe the government will approve the PTC extensions, but I’m afraid it will only be for one year and to deploy this technology, we need four to five years, after which we will no longer need the subsidy,” Metts says. The president of the Eaton Rapids, Mich.-based company often travels to Washington, D.C., to meet with Congress, lobbying to extend funding. He says if the government doesn’t extend the funding long enough, many smaller manufacturers will be unable to compete and fall to the wayside.
“Only the big players will be able to play, which hurts innovation since much of the innovation and technology comes from small companies that have to constantly improve processes and technologies to compete globally,” Metts says, adding the best technologies often are absorbed into larger companies through acquisitions and joint ventures. “I don’t have GE or Caterpillar’s resources, so smaller companies like ours have to get better, constantly innovate and stick our neck out. We put the farm on the line every time.”
According to a February 2012 IBISWorld report, “Wind Turbine Manufacturing in the U.S.,” although wind turbine demand likely will continue, albeit at lesser rates, the uncertainty of the costs of wind power will “hamper the industry’s growth prospects as other renewable energy technologies and conventional energy generation sources compete for power developers’ attention.”
Losing time and ground in wind power technology innovation and uncertainty around PTC renewal “does very little for manufacturing in 2013,” says John Purcell, vice president of Leeco Steel, Lisle, Ill. “The real problem here is if you take a significant amount of time to get the policy put through, how long can companies who capitalize specifically on wind power last? We need the PTC passed sooner than later.”
Metts says a major obstacle is trying to convince Congress of the substantial and proven innovation in technology to warrant government funding. “One of the parts we machine normally takes 35 hours to machine. We’ve worked this down to six hours,” Metts says. “Now we’re looking at automated carbon fiber technology as used in aerospace.” He adds the company is capable of producing high-quality blades that last much longer than those manufactured in China.
The Chinese government has subsidized alternative energy companies heavily; however, Metts says these products are not high quality and often don’t last. “Right now, a wind blade is made using 70- to 80-year-old technology. When the blades are inspected, workers go to the top, rappel down the blade and eyeball it. Most manufacturing processes today do not recognize visual inspection as an accepted quality-control process,” he says. “What if instead we used carbon fiber with embedded fiber optics telling you in real time” stress points in high-wind situations for both predictable and preventative maintenance, he asks. Metts adds having oil and gas as the driving forces in energy is a “little short-sighted” given the technological advancements in other industries.
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The wind turbine and power industry “does not have the same clout as automotive and oil,” says Brian Bueno, lead research analyst at IBISWorld, Santa Monica, Calif. He says wind turbine manufacturing is a $6.2 billion industry, employing 14,300 people, “but relative to other manufacturing industries, is on the smaller side.”
Technological advances as well as manufacturing processes could change that if the industry is allowed to flourish, Bueno says. This, in turn, would raise demand for component products, which continue to compete against imports. Initiatives by organizations such as the American Founders Society say large metal castings and components used in wind turbines are imported currently rather than manufactured domestically. That could change if the government increases investment in wind energy, which would raise demand domestically for related machinery.
Because turbine and equipment manufacturers benefit indirectly from greater demand for wind energy, “the PTC ending would hurt demand for wind energy in the U.S., thereby diminishing downstream demand for manufactured turbines, electrical parts and castings,” Bueno says.
“You hear in the news about the push for manufacturing to go to green energy, but that’s hard to do if companies are sourcing everything from abroad,” he continues. If domestic iron and steel companies can supply turbine manufacturers and green energy manufacturers, “it’s a boon for the industry, but if wind energy producers do not receive the government support they expect, it definitely hurts the entire supply chain,” Bueno adds.
“Everything is about process improvement,” Metts says. “We’ve already identified improvements in foundry processes.” Metts uses an example of a 20-ton casting that normally takes five to six days to cool. Now foundries can cool the materials in one day. The foundry believed cooling during that time frame would result in brittle metal that would be difficult to machine. “We found the cooling process actually made machining easier,” Metts says.
“An industry stuck in old technology does not advance,” he continues. “The government needs to realize these incentives are necessary to allow modern thinking to improve and advance antiquated technologies where people are reluctant to change.”
Although many in the alternative-energy industry believe there will be a long-term energy policy in place, the timing of action is critical. “Whether it will be in time to save the manufacturing in place currently is the real issue,” Purcell says. “It’s a matter of political compromise, which I believe there is very little right now.” While the prospects for the manufacturing industry and in particular, the metals sector, is bright, it is more so in the long-term, “beyond 2014, 2015,” he says. “But the next one to two years could be a rough ride.” MM