Construction in the wind power industry surged as a result of a modification of a federal renewable-energy tax credit that expired last year, according to industry members.
But as the industry enters its seventh month without the tax credit, uncertainty about another renewal of the incentive by Congress continues to weigh on companies, said executives at LM Wind Power during a tour Tuesday of the company's Little Rock plant.
"The stability of jobs has continued to be a question," said Frank Turk, LM Wind Power's operational sales and planning manager for the Americas in Little Rock.
In January 2013, lawmakers extended the tax credit of 2.2 cents per kilowatt-hour of renewable power for a year.
Wind manufacturers had seen slowing production that led to layoffs in 2012 because of the delayed approval of the federal Production Tax Credit. The credit expired at the end of 2013 and has yet to be renewed.
Nordex USA Inc. stopped production at its wind turbine facility in Jonesboro last year and laid off about 40 employees because of the credit's unclear future. The company moved its production operations to Germany, where its parent company, Nordex SE, is headquartered.
"Even companies that didn't go out of business entirely or move back overseas did experience layoffs," said Peter Kelley, spokesman for the American Wind Energy Association, in a phone interview.
LM Wind Power, one of the industry's leading wind turbine blade manufacturers, has seen its worker numbers fluctuate in response to the fate of the tax credit.
In July 2012, the Denmark-based company employed about 391 workers in Little Rock. By that fall, about 80 hourly employees and 14 salaried employees were laid off and another 140 temporary positions were also cut.
By the next summer, LM Wind Power had 137 employees at the Little Rock facility -- a downsizing that has been attributed to uncertainty regarding the tax credit.
LM Wind Power received $6.9 million from the Governor's Quick Action Closing Fund, which is tied to the number of employees at the Little Rock facility, said Scott Hardin, spokesman for the Arkansas Economic Development Commission.
There are clawbacks tied to the money if employment levels don't meet expectations in the agreement between the commission and LM Wind Power, he said. The first review of employment levels at the company is set for the end of this year.
When Congress extended the tax credit, it made an alteration to allow wind farm operators to qualify for the credit if their projects were started in 2013.
Business picked up as a result, Kelley said, adding, "That's why we're having the biggest construction boom in wind energy right now."
For LM Wind Power, the renewal of the tax credit meant hiring about 400 employees at its Little Rock plant.
The company previously said the new hires were part of more than 850 positions it was adding nationwide to handle the rise in orders it received after the tax credit was extended. There are now 530 workers at LM Wind Power's Little Rock plant.
However, the current impasse over the tax credit continues to make it difficult for companies to plan projects, said Bill Burga, head of operations for the Americas at LM Wind Power.
He said there needs to be a multiyear extension so "the industry can then plan around its inevitable demise."
Business on 07/02/2014