Nordex to end Jonesboro production

Nordex USA Inc. plans to end production at its windturbine facility in Jonesboro later this year and lay off about 40 employees because of uncertainty in the U.S. market, the company said Friday.

Nordex said it will moveits production operations to Germany, where its parent company, Nordex SE, has its headquarters because of continued uncertainty over the federal production tax credit.

“Demand is so low because of the delay on the tax credit,” said Naomi Lovinger, spokesman for the company.

Lovinger said that Nordex’s decision was also driven by overcapacity in the global market and that moving production operations to Germany will give the company more flexibility to respond to the market.

The layoffs are expected to take place in October, she said, and some layoffs are expected at its U.S.

headquarters in Chicago.

The layoffs will not affect the employees who work in training, maintenance and other support and service operations, Lovinger said.

When Nordex started production in Jonesboro in 2010, the company had plans to create at least 700 jobs, but at its peak, the company employed only about 100, said Joe Holmes, spokesman for the Arkansas Economic Development Commission.

Nordex employees 50 workers in Jonesboro and 186 nationwide. In January, the company said it employed 70 people in Jonesboro and 220 nationwide.

“It’s been no secret about it,” Holmes said. “The wind industry has been struggling the last few years.”

Holmes said the company is working with the state to pay back the incentives it received for opening the plant in Jonesboro.

Nordex was offered several incentives, including a sales-tax refund of construction materials; $3.9 million of the $8 million it was to receive from the Quick Action Fund; a total bond guaranty of $11 million; and a cash rebate of $263,275, which has already been returned to the state.

Nordex is not the first company in the wind industry to scale back operations in Arkansas.

In August 2012, LM Wind Power announced plans to lay off more than half of its work force at its Little Rock plant.

The company employed about 300 full-time workers and 140 temporary employees at the time of the announcement. Eighty hourly employees and 14 salaried employees were laid off, and all of the temporary positions were cut.

Like Nordex, LM Wind Power attributed the layoffs to the delay in the renewal ofthe production tax credit.

The extension of a tax credit of 2.2 cents per kilowatt-hour of renewable power was approved by Congress in January as part of a bill to avoid the “fiscal cliff,” but the delay in reaching a deal led to uncertainty for manufacturers for most of 2012.

As a result, companies began laying off employees and slowing production. The lateness of the extension also curtailed production this year.

“What you end up with is a lot of hold in your production scheduling,” said Lovinger.” That makes it very, very difficult because the U.S. market has been so uneven and unpredictable.”

A change in the tax credit, designed to help spark development, doesn’t require companies to complete construction of wind farms this year to qualify for the credit; they just have to start them.

But Nordex and others in the industry had to wait for the Internal Revenue Service to clarify a change in the definition of the tax credit.

Companies in the industry said they asked for the change in the legislation because it takes 18 to 24 months to develop a wind farm.

Gov. Mike Beebe said Friday that Nordex’s decision to cease production operationsin Jonesboro “is directly related to Congress’ inability to follow through on an alternative-energy policy they started and now can’t agree on.”

“I have been saying for years that there must be stable tax policy with this kind of intense capital investment,” he said in a prepared statement. “Congress has totally failed to provide one, wavering year-to-year on the wind energy tax credit. This indecisiveness is costing Arkansas, and America, jobs.”

U.S. Rep. Tim Griffin, RArk, said the House of Representatives is working on a bipartisan tax overhaul to produce a fairer tax code to prevent jobs from being outsourced overseas.

“Nordex’s decision to close its plant is disappointing and my heart goes out to those affected, but blaming Congress, while convenient, is also misguided,” he said.

Sen. Mark Pryor, D-Ark., said that he’s disappointed Nordex will close its facility and that he supports a tax credit for the industry.

“I hope we’ll consider a long-term production tax credit as part of comprehensive tax reform,” he said. “These companies need more certainty than a one-year extension.”

Business, Pages 25 on 06/29/2013

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