A tough 2009 forced wind turbine component suppliers to become leaner, tighter, and more responsive. WindEnergyUpdate examines the survival strategies that have placed suppliers ahead of the game.

By Helen Campbell, UK correspondent

Prior to the downturn that hit many economies in 2008, a strong increase in turbine demand growth prompted major manufacturers to ramp up production capacity. The demand spike led to bottlenecks for certain components, such as bearings, which in turn led to project delays.

In response, key component suppliers followed turbine manufacturers in capacity expansion, building new facilities in Europe, China and the US. But when recession intensified, these same suppliers were caught out.

“In 2007 and 2008, the market for turbines was growing at a very accelerated pace and the supply chain was not able to keep pace, whether for gearboxes, generators or bearings or blades, and especially for larger turbines,” says Eduard Sala de Vedruna, wind power research director at Emerging Energy Research.

“Everyone increased capacity, but the market did not grow as much as it was hoped. A lot of companies experienced problems placing their turbines, and so there was a reduced demand for components. The recession took people by surprise.”

The worst of the recession shocks appear to have passed and over-capacity has since been addressed. But it has been a valuable lesson.

The forced reduction in newly-augmented capacity has made suppliers analyze and reassess their business operations and relationships.

Supply chain overhaul

Suppliers have employed a number of strategies to prepare for growing demand, including a call for larger and more efficient turbines sought by a sector faced with spatial and financial constraints and looking for greater unit efficiency.

The last year has been about component redesign, reconfiguration of component production lines, realignment of manufacturing locations and more conservative capacity addition.

“We have invested a lot in our global assembly and production lines,” says Stefan Tenbrock, CEO of Winergy, a leading supplier of gearboxes, generators and turbine couplings.

“The layout of our facilities is modular at all sites worldwide, allowing further extensions rapidly. We have targeted location of facilities to be in close proximity to our customers and furthermore, we have increased, and will further increase, our sales force in China to cater for the local Chinese’ and South Korean demand.”

LM GlasFiber, a leading blade manufacturer, has also taken steps to be better able to respond to customers. For example, the company, which was one of many that closed factories in Europe in 2009 while expanding in Asia, has reduced the number of suppliers it uses and centralised its own procurement, improving supplier relations and quality control.

“Direct materials for the end-product are 80-90% of the finished blade, so the sourcing of the raw material, the glass fibre we use, is crucial,” says the spokesperson.

“The overall challenge has been to secure a uniform high quality in all our materials, and we have established a central sourcing unit and categorised our suppliers. We have also introduced a standard modular practice for new facility construction, which means we can now build a new factory in less than six months,” added the spokesperson.        

LM GlasFiber has also been working on raising the capability and efficiency of its rotor blades by improving the aero-dynamics to increase efficiency, and introducing a degree of automation to its production line.

Automation is increasing gradually through the sector, says EER’s Sala de Vedruna, but challenges associated with quality warranty mean it is early days.

Another trend favours larger turbines. This implies heavier turbines, which introduces its own set of challenges. Bigger blades imply an increased surface area, which needs reinforcement to prevent breakdown.

"Bigger blades mean a need for reinforcement to prevent breakdown. We are seeing moves towards incorporating carbon fibre in blades but carbon fibre is very expensive, more than tenfold the cost of glass fibre, and there is a very limited number of suppliers,” says Sala de Vedruna.

Communication and coordination an imperative

Improved communication between component suppliers and their customers to facilitate better alignment between likely turbine demand and components, could further expedite component supply, says Winergy’s Tenbrock.

“Communication should be significantly improved to prevent the building-up of unnecessary stocks in all steps of the value chain. This should help members to work against the bullwhip-effect, which leads to waste,’ Tenbrock explains.

In this respect, suppliers should be considering options for new collaborative IT-approaches, such as standardized or open-standard enterprise resource planning (ERP)- systems for the supply chain.

“The better the first and second tier suppliers are informed about changes in demand, the better [they] can adapt,” says Tenbrock.

It has been a tough twelve months but a period from which the sector has learned.

The demand gap brought about by the financial crisis in demand has forced turbine components suppliers to downsize and refocus capacity. The upside is that suppliers are now better positioned to respond quickly to the market.

As Sala de Vedruna notes: “Overall, the market is better structured and more prepared for the new reality.”

To respond to this article, please write to:

Helen Campbell: cblhelen@yahoo.co.uk

Or write to the editor:

Rikki Stancich: rstancich@gmail.com