Week of April 29, 2002
Blockbuster Deal of the Week
from Site Selection's exclusive New Plant database
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Denmark's Vestas Blowing into Portland, Ore.,
Bringing 1,200 Jobs
By JACK LYNE, Site Selection Executive Editor of Interactive Publishing
U.S. Wind-Energy Sector SurgingRingkobing, Denmark-based Vestas' unveiled the Portland project during bullish business times for the wind-energy sector. Among the bullish signs was the industry's strong rebound last year in the American market. Some 1,700 megawatts in new generating capacity were installed in the United States in 2001 - more than double any previous year's U.S. total. Spurred by a strong state law encouraging renewable energy development, Texas alone last year installed enough new capacity - 915 MW - to single-handedly break the industry's previous U.S. record.
Vestas' American sales rose with that wave. The wind-powered turbine manufacturer's 2001 U.S. sales marked a sixfold increase over 2000.
"For the coming years, we have very positive expectations to the American market," said Johannes Poulsen, managing director of Vestas Wind Systems A/S. "Therefore, we have been investigating the possibilities for establishing local production."
Vestas' investigations included much of the U.S. West, Poulsen said. Portland became a major player in the picture in July of last year, when Vestas contacted the Oregon Economic and Community Development Dept. (OECDD at www.econ.state.or.us) and the Portland Development Commission (PDC at www.portlanddev.org). A site in Sacramento, Calif., also reportedly got serious consideration.
For Pueblo, Colo., though, Vestas' pick of Portland was more like Gone with the Wind. Two years earlier, the Danish windmill maker at a news conference in Pueblo announced that it was going to build a 600-employee manufacturing plant in the Colorado city. Obviously, those plans changed somewhere along the way. Vestas officials, however, refused to comment on the Pueblo pullout. Portland development officials weren't aware of the Pueblo project, they told The Portland Tribune. But they added that they were confident that Vestas would stay the course in its commitment to the Portland project.
"The placing in Portland is optimal for our activities in the Pacific Northwest region," he said. "As well, it has been important to us that the area is characterized by a good infrastructure and by having a skilled labor force available."
Vestas will build its manufacturing plant and North American headquarters on a 113-acre (45-hectare) site in the Port of Portland's Rivergate Industrial District.
The company picked the Rivergate site because of its size and its access to local transportation networks, as well as its proximity to the port's facilities and the region's labor market, Vestas officials explained. While Vestas will build its plant, it's leasing the land from the Port of Portland. Lease payments will run between US$1.7 million and $2 million a year, port officials estimated.
Locating in Portland also positioned Vestas near some of its biggest North American customers. One of those customers is FPL Energy. The Juno Beach, Fla.-based energy company developed the Stateline Wind-Generating Project, as well as the $35-million Vansycle Ridge Wind Farm near Pendleton, Ore. Vansycle Ridge ordered nearly 1,000 turbines from Vestas in 2001. FLP has agreed to buy 170 additional turbines during 2002-03, with an option to acquire as many as 650 more.
The surrounding region is also prime turf for green-energy providers. British Columbia, Oregon and Washington, for example, are collectively home to a $1.4-billion-a-year clean-energy business, according to figures from nonprofit Climate Solutions, an Olympia, Wash.-based environmental advocacy group.
Incentives Will Likely Top $11 MillionVestas will qualify for a number of incentives, state and local development officials said.
The company will get a five-year property-tax abatement by virtue of locating in a state Enterprise Zone, which will save Vestas between $7 million and $10 million, officials estimated. In addition, the OECDD is providing a $750,000 grant for work-force training.
Vestas may also qualify for an $800,000 reduction in permit and developments fees, according to the office of Portland Mayor Vera Katz. Other incentives likely to be part of the final package, development officials said, include a city loan for partial funding of plant and equipment; an Oregon Office of Energy loan for energy efficiency-related improvements, and business-energy, pollution-control and childcare tax credits.
But perhaps the biggest incentive came earlier in March, with federal approval of a wind-energy tax credit. The new legislation resurrected the 1.5-cent-per-kilowatt-hour credit that had expired on Dec. 31, 2001. The new law retroactively extends the credit for two years, ending Dec. 31, 2003.
Vestas expects the wind-energy tax credit to stimulate increased U.S. sales, Poulsen said. The company is projecting that the U.S. market will absorb all of the Portland plant's output. But the Oregon operation will remain in business even if the wind-energy credit fails to gain renewal in two years, Poulsen said. The plant's output can also supply markets in Asia, Canada, and Central and South America, he explained.
Making 300 Turbines a YearVestas will manufacture 300 turbines a year at its Portland plant, which is scheduled to open in the summer of 2003. The company's turbines are decidedly large, standing up to 242 feet (73.4 meters) tall and equipped with blades as long as 77 feet (23.3 meters).
More indefinite are the dimensions of Vestas' projected investment in its Portland operation. At the project announcement, the company said that it would invest $35 million in a 230,000-sq.-ft. (20,700-sq.-m.) operation. But state and local development officials said that project investment over the long term would total from $100 million to $150 million.
Portland-area hires will account for 1,000 of Vestas' projected jobs. Another 200 jobs will be relocated to Portland from Palm Springs, Calif., home to Vestas American Wind Technology's current North American headquarters.
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