LITTLE ROCK, Ark. (AP) — A German wind turbine company that invested $40 million in a northeast Arkansas factory with plans to employ more than 700 people announced Friday it would end production.
The move means 40 people will lose their jobs starting in October, after current orders are filled. Germany-based Nordex SE, parent company of Nordex USA, said the firm had not received enough orders due to an uncertain U.S. market, overcapacity in the industry and an unstable outlook for a federal tax production credit.
Gov. Mike Beebe, a Democrat who has urged Congress to help the wind industry and has worked to recruit businesses in the sector to Arkansas, blamed a "dysfunctional Washington" for the company's pullout.
From the time the plant opened in 2010, Nordex USA President and CEO Ralf Sigrist said the company needed a tax credit to get customers to commit to developing wind farms. The tax credit is worth 2.2 cents per kilowatt-hour of energy generated by new wind farms but has only been enacted short-term.
"Nordex's departure is directly related to Congress' inability to follow through on an alternative-energy policy they started and now can't agree on," Beebe said in a prepared statement. "I have been saying for years that there must be stable tax policy with this kind of intense capital investment. Congress has totally failed to provide one, wavering year-to-year on the wind energy tax credit. This indecisiveness is costing Arkansas, and America, jobs."
The company will keep open its sales and service business in Jonesboro and Chicago. Peak employment reached about 100 workers in Arkansas.
Arkansas doesn't have enough consistent wind to foster much wind farm development, but it is an attractive supply point for wind farms operating in the Great Plains.
Beebe said he hopes the industry's fortunes improve.
"Fortunately for taxpayers, Nordex has been a model corporate citizen, and is repaying Arkansas incentives that the company received when operations began. Nordex is not completely leaving Jonesboro, and I hope future conditions will allow American production to resume," Beebe said.
Nordex received a pledge of $8 million from the Governor's Quick Action Closing Fund, with just under half of it for infrastructure, training and site preparation. The company was awarded $263,275 through a job creation program but returned the check to the state after expected growth failed to materialize.
Two state agencies have backed bonds totaling $11 million. Arkansas Economic Development Commission spokesman Joe Holmes said Nordex has made all payments on time and has said it will continue to do so. The company has a balance of $9.3 million.
"I am so fed up with Congress. I think the American people and Arkansans are fed up with them, too. This is just the most recent example of how dysfunctional Washington has become," Beebe said.
Just a few years ago, wind energy appeared to be an important sector for growth in the Arkansas economy. It began when LM Windpower, then known as LM Glassfiber, opened a windmill blade factory in Little Rock. But the company has had several rounds of layoffs since it opened, the most recent last summer when about 230 workers got pink slips.
Mitsubishi Power Systems America had to put on hold a $100 million wind turbine plant planned for Fort Smith due to a patent dispute with General Electric Corp.
Nordex had planned to open a windmill blade component manufacturing operation, but the market didn't grow enough to do so.
Germany-based Beckman Volmer North America LP opened a $12 million factory in Osceola, also in northeast Arkansas, in part to supply the Nordex plant with steel parts.
Nordex said it will provide turbines for North America and Latin America from its one remaining factory, which is in Rostock, Germany.
Nordex has offices and subsidiaries in 22 countries and employs more than 2,500 people globally.