Wind Manufacturing Follows Demand
With Michigan’s suppliers facing automotive losses, they should pursue new opportunities in wind, because wind manufacturing co-locates near wind generation, which is taking off in Michigan.
In a recent article emphasizing the importance of diversification, the Kalamazoo Gazette suggested that hundreds of Michigan automotive suppliers are “stuck in neutral” as they encounter economic challenges. It went on to cite a survey by the Original Equipment Suppliers Association, indicating that “thirty-three percent of top executives in the automotive supplier business....reported that they were significantly more pessimistic about the future of their businesses over the next year than they were at the beginning of the year.” (1)
Wind power generation and the wind manufacturing industry, on the other hand, are growing in the United States, by leaps and bounds. Consider some of the key data presented in the American Wind Energy Association Annual Wind Industry Report (2):
- In 2008, the U.S. added 8,545 megawatts (MW) of new wind capacity, representing growth of 62% over the 5,249 MW installed in 2007. With a cumulative total of 25,369 MW at year-end 2008, the U.S. surpassed Germany as the country with the largest wind power installed base.
- This growth has driven significant expansion in U.S. wind turbine manufacturing. During 2007 and 2008, more than 70 manufacturing facilities were opened, expanded or announced in the U.S. In 2008 alone, 10 new facilities were opened, 17 facilities were expanded, and 30 were announced. Once fully online, these manufacturing facilities represent 13,000 new direct jobs and nearly $2 billion in investment. The U.S. is approaching 50% in domestic component production today, up from 30% in 2005.
- Overall, the wind industry added 35,000 jobs in 2008, bringing the total to about 85,000.
Because of the large size and high transport cost of utility-scale wind turbine components, regional manufacturing makes good sense. And while Michigan has just scratched the surface of its potential, it is beginning to gain traction. For instance, according to AWEA (2):
- In 2008, Michigan increased its installed wind capacity from 3MW to 129MW, and was ranked 22nd in existing capacity among the 50 states at year-end. Michigan ranked #2 in terms of relative increase in 2008. Granted this increase is measured against a very small base, but at least Michigan is now “on the map.” In terms of potential capacity, AWEA ranks Michigan 14th at 7,460 MW.
- Of the ten new U.S. wind manufacturing facilities opened in 2008, two were in Michigan: ATI Casting Services (castings) and E-T-M Enterprises (composite structures).
- Of the seventeen facilities expanded in 2008, three were in Michigan: Danotek (generators), Genzink Steel (frames), and K&M Machine Fabricating (hubs and gearbox housings).
Beyond the AWEA list of new and expanded facilities, more than three dozen Michigan manufacturers already supply some product or service to the wind industry. And some 1,000 people attended the Michigan Wind Energy Conference held in Detroit in early March (an estimated half of these representing manufacturing), far surpassing expectations. (3) (4)
What comes now? The credit freeze has dampened wind project development, and manufacturers have had to scale back operations and/or delay implementation of expansion. But the American Recovery and Reinvestment Act of 2009 includes numerous provisions expected to significantly boost the wind industry, and the long-term industry drivers are favorable. Further, Michigan wind manufacturing is supported by the state’s Renewable Portfolio Standard, enacted in October 2008. The RPS requires utilities in the state to generate 10% of their electricity from renewable sources by 2015. Michigan joins 26 other states that have instituted RPS requirements.
While the pain is real and severe, the good news is that wind power represents a tremendous diversification and growth opportunity for Michigan manufacturers. The Michigan Economic Development Corporation estimates that Michigan has “over 900 firms operating that could apply their capabilities to the wind industry” and that “the wind industry alone could support 24,000 jobs.” (5)
1. http://www.mlive.com/business/west-michigan/index.ssf/2009/04/diversification_key_to_future.html
2. http://www.awea.org/publications/reports/AWEA-Annual-Wind-Report-2009.pdf
3. http://blog.mlive.com/businessinnovation/2009/03/michigans_pursuit_of_wind_ener.html
4. http://www.mlive.com/businessreview/oakland/index.ssf/2009/03/manufacturers_swarm_wind_energ.html
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