LITTLE ROCK — Mitsubishi Heavy Industries Ltd. announced Monday that it is indefinitely delaying the opening of a wind-turbine assembly plant in Fort Smith. The Japanese company had anticipated the creation of more than 300 jobs.
Mitsubishi’s board of directors last week reported a $241 million loss from its U.S. wind turbine business, according to Bloomberg News. The loss, which will be charged to the fiscal year that ended March 31, was a first for the division, said Sonia Williams, a spokesman for Mitsubishi Power Systems Americas Inc.
Mitsubishi employs a maintenance crew at the 200,000-square-foot plant now, said Paul Harvel, president of the Fort Smith Regional Chamber of Commerce.
Its “building is complete. They haven’t done any moving in of equipment,” he said.
Williams said that in addition to mothballing the Fort Smith property, Mitsubishi has suspended all new orders in the United States.
The future of Fort Smith’s $100 million plant now hinges on future demand from a fledgling wind industry that has come to depend on an expiring federal tax credit.
On Dec. 31, the production tax credit expires and “without the production tax credit, developers will place fewer orders,” Matt Kaplan, associate director for North American Wind Energy at IHS Emerging Energy Research in Cambridge, Mass .,said Monday.
Production for all U.S. wind turbine manufacturers is expected to fall off in 2013, Kaplan said.
Dan McDevitt, a Chicago-based vice president of operations with Nordex USA Inc., which is based in Germany, on Monday said he’s optimistic that his company will still be around by the time the industry turns around. Nordex employs about 70 people at an assembly plant in Jonesboro that opened in 2010.
“The market [for wind turbines] is still growing in Canada and Latin America,” he said.
McDevitt called the wind-turbine market very competitive and in the United States it’s dominated by the “big three” - General Electric Co., Vestas of the Netherlands and Siemens of Germany.
“There’s a lot of headwind and so it’s no surprise to hear a competitor say this is not the market for us,” he said.
Williams, of Mitsubishi, declined to comment on how the termination of the production tax credit would affect its U.S. business.
Instead, she pointed to an ongoing legal dispute with General Electric Co. as to what will affect the opening of its Arkansas facility.
Mitsubishi and GE have been engaged in a dispute since 2009. After Mitsubishi won a victory from the U.S. International Trade Commission on the issue of patent infringement, GE pursued litigation.
GE contends that Tokyo based Mitsubishi infringes on two of its patents for turbine designs. It is seeking to overturn a ruling from the commission, which declined GE’s request to block Mitsubishi from bringing its turbine parts into the U.S. because, the agency said, GE’s patent rights weren’t being violated, Bloomberg reported.
Mitsubishi has also initiated litigation in federal court. On Monday, both companies filed a status update in U.S. District Court for the Western District of Arkansas.
“We can’t manufacture a product we can’t sell,” Williams said of the broader disagreement.
The Arkansas plant would have represented Mitsubishi’s first wind turbine assembly plant anywhere. Mitsubishi will reconsider its U.S. wind turbine business when market conditions improve, she added.
The $100 million plant is located south of Fort Smith in Chaffee Crossing - a residential-commercial-industrial development located on about 7,000 acres that made up part of the U.S. Army’s Fort Chaffee military base. Several manufacturers including Mars Petcare have made a home there in recent years.
Wind turbine manufacturer LM Glasfiber of Denmark began manufacturing windmill blades in Little Rock in 2007. In 2010 Beckmann Volmer, which makes steel parts for wind turbines, said it plans to build a plant in Osceola.
Information for this article was contributed by Lisa Hammersly of the Arkansas Democrat-Gazette.
Front Section, Pages 1 on 04/03/2012