Prices must go down

“We need highly talented subcontractors. They can get good orders and business terms. But the demands will be tougher, and prices must go down”, was the main message at the Hub North network meeting of 6 October.

Per Andersen (left) of Vestas Nacelles and Ralf Seehase of Siemens Wind Power in an unusual situation, shoulder to shoulder.
Per Andersen (left) of Vestas Nacelles and Ralf Seehase of Siemens Wind Power in an unusual situation, shoulder to shoulder.

For once, wind turbine giants Vestas and Siemens Wind Power sat side by side as they met subcontractors. It was not a new alliance, however. Leaders from the two wind turbine factories were invited when Hub North held its network meeting of 6 October at the Port of Aalborg. There, members could hear what Vestas and Siemens have to offer and what they expect of their subcontractors.

Ralf Seehase, Director of Global Procurement Blades, Siemens Wind Power, went straight to the heart of the matter.

“The challenge right now is that customers expect a shorter planning time. The battle is over price reductions. The long-term requirement is to defeat fossil fuels, and that will require a price reduction of 40 percent. Pressure from the APAC region represents a huge challenge for the future, and prices must go down”, the Siemens director stressed.

He underscored that Siemens does not see a new finance crisis on the horizon, but demands to subcontracts will increase.

“Of course we expect 100 percent quality. We are not the cheapest ourselves. Global presence is also necessary, and we expect delivery on time. At the same time, we expect flexibility, as we work in a field that is seasonally influenced. With these premises, it is clear that we depend on the best subcontractors, so it is important that we work well together. Let’s work together”, were the final words from the German wind turbine director of Siemens Wind Power.

Per Andersen, Manager of SCM Europe, Vestas Nacelles, took over and established, verbally and through a fast-paced film, that Vestas is the world leader in modern energy. Their demands of suppliers were no different from those of his German colleague. The benefits of working for Vestas were also outlined: The supplier can grow together with Vestas, which can offer long-term planning, long-term contracts and a good image from working with modern energy. With a sparkle in his eye, Per Andersen also stressed good payment performance.

“Yes, that is right, even though I know that some of you will question this”.

There is no reason to limit yourself as a supplier”, was the Vestas message to Hub North members. Last year, Vestas had 1700 subcontractors.

“There is plenty of opportunity, including for Danish subcontractors. Sometimes, they are also the best. There is room for everyone, both small and medium-sized. But it is important that they work together. It is important that subcontractors use each other instead of each one guarding its own area. And we need suppliers who can see things happen. We do not need to be told why things cannot be done”, says Per Andersen.
Dong Energy was present at the network meeting and it, too, announced stricter demands of subcontractors. But there were also optimistic messages from Keld Bennetsen, Manager of Concepts & Technology at Dong Energy:

“We may not always be the biggest at a global level, but we will continue to be the best. In the long term, we probably will not be the biggest. We are talking about investments corresponding to half a Great Belt Bridge every time we talk about establishing a wind turbine farm. But we are the best at seeing the whole chain. We are deeply dependent on subcontractors. To them, we can offer more stability. Our planning has become better. This means that the installation flow is more manageable, for instance, for a period of up to three years. We are not afraid to think broadly, and we are not as project-oriented as we once were”.

Members report

The Hub North business network now counts 46 members. Two of them, Liftra in Aalborg and Mekanord in Frederikshavn, spoke to their network colleagues about their companies and what they have to offer.

Liftra is specialised in lifting and transportation equipment for the wind turbine industry. Gantry cranes transport entire nacelles. Electrically-powered vehicles can operate in- and outdoors in production. They are noiseless and are more acceptable for driving into production. Manipulators are manufactured for work procedures where, e.g., it may be necessary to turn a hub or a gear. The services range from transportation, shipping, service to the dismounting phase. The company, which is based in Aalborg, currently employs 30 design engineers and uses English as its corporate language.

“We also do what we can to participate in standardisation work. Over the years, Liftra has carried out over 500 different projects for the wind turbine industry”, says Jens Mortensen, CEO and co-owner of Liftra.

The gearbox company Mekanord in Frederikshavn has been heavily restructured under the finance crisis and is once again experiencing busy schedules and growth in the company, which in its early years manufactured gearboxes for fishing vessels and has now also entered the wind turbine market.

“We have considerable experience in designing gearboxes, and we now service somewhat larger freight vessels such as towboats, freighters, ferries and sailing ships at the more exotic end. We also repair and upgrade gearboxes for wind turbines. We photo-document all parts, and we have references, e.g., at Vattenfall”, explained Morten Nielsen, Service Manager with Mekanord in Frederikshavn.

Application to Growth Forum

For Flemming Eriksen, consultant with Hub North, the reports from the heavy wind turbine players demonstrate the importance of having a business network.

”We have now reached 46 members. That is rather good, and I can only encourage even more companies to register for membership in Hub North. The numbers here demonstrate that it is a question of getting to know one another, working in a larger group, and in that way, becoming a kind of system supplier”, Eriksen said, as he rounded off the network meeting.

Kjeld Kærgaard Jensen, business consultant with the Commercial Section in Aalborg Municipality, announced that an application for an initial DKK 12.6 million had been sent to Growth Forum of North Jutland. This money is to cover part of the project expenses in the business network from 2011-2013. Funds will also be sought elsewhere, including the Danish Industry Foundation.