Clipper Windpower Laying Off 174 People Companywide
By Dave Dewitt and Dave Franzman, Reporters
CEDAR RAPIDS - The wind industry downturn hit home in Cedar Rapids Monday when Clipper Windpower laid off 174 employees company wide.
The company confirmed Monday that it is reducing its total work force 32 percent from 550 to 376.
Most of Clipper's employees — and layoffs — are believed to be in Cedar Rapids, where the company manufactures its Liberty wind turbines. The company declined top provide numbers specific to each of its locations.
Demand for wind turbines, blades, towers and other equipment has fallen steeply in recent months due to the low price of natural gas and the impending expiration of the Federal Renewable Energy Production Tax Credit at the end of this year.
The credit of 2.2 cents per kilowatt hour for the first 10 years of operation provides a major incentive to develop wind power, which is typically more expensive than power from more traditional sources. The price of natural gas, meanwhile, has plummeted in response to improved drilling technology.
The American Wind Energy Association said earlier this month that wind power installations have declined between 73 percent and 93 percent in the years after previous expirations of the production tax credit. Congress has restored the tax credit after previous expirations, but not before widespread industry layoffs.
“Today’s announcement serves as another stark reminder that Congress should not have gone on a five-week vacation at a time when Iowans, and folks across the nation, are demanding action on so many important issues, including extending the Production Tax Credit for wind energy. 7000 Iowans are employed because of the credit. This is their livelihood, not some political game. Congress needs to get back to business.
“While I have called on the leadership in the House to act to protect these high quality jobs on multiple occasions, it goes without saying that action should have already been taken," U.S. Rep. Dave Loebsack, D-Iowa, said Monday after learning of the cutbacks. "The bottom line is simple: the Production Tax Credit must be extended and it must be extended now. The uncertainty that this inaction has created is unnecessary and puts good paying Iowa jobs in jeopardy.”
U.S. Sen. Chuck Grassley said during in May that he expects the credit to be extended, but not soon enough to avoid a major slump in business for the industry.
Grassley told The Gazette he's had no trouble getting Democrats behind the tax credit extension, but many Republicans don't want to support it until they can find budget offsets to "pay for" it.
At around $4 billion to $5 billion, the production tax credit is one of the costlier ones that are about to expire, he said.
"We're going to do everything we can, as we have since the beginning of the year," Grassley said.
U.S. Rep. Bruce Braley, D-Iowa, has also voiced strong support for extending the tax credit.
Layoffs have mounted in the wind industry even though there are still four months to go before the credit expires.
During the first week of August alone, DMI Industries of Tulsa announced it would lay off 167 workers by November and LM Wind Power of Little Rock, Ark., said it planned lay off 94 full-time employees and 140 temporary workers and contractors. Trinity Structural Towers said it would shift resources in Dallas away from wind tower manufacturing.
Clipper did not refer specifically to the credit in a brief statement released Monday. It said only that it has been working on developing a "sustainable business model with an emphasis on its service business" in response to "continued challenges facing our industry and our company."
The company said it is not closing any of its locations and will continue operating its production and assembly facilities in Cedar Rapids.
Clipper Windpower was acquired this month by Platinum Equity of Los Angeles from United Technologies, a publicly traded high-technology manufacturing company based in Connecticut.
United Technologies bought a 49.5 percent stake in Clipper in December 2009 for $206 million, then paid another $222 million to buy the rest of the company in late 2010.
United Technologies announced in March that it planned to sell Clipper and other business units in order to raise $3 billion to buy aerospace parts manufacturer Goodrich Corp. The company told analysts that it bought Clipper expecting a federal renewable energy mandate that would generate huge demand for wind power, but there has not been one.
Platinum Equity is a private equity firm founded in 1995 by Tom Gores. While it provides "strategic oversight" to all its acquisition, the company's literature says that each acquired company operates independently.
In its 17-year history Platinum Equity has acquired more than 130 companies with combined assets of $30 billion.
The terms of the Clipper Windpower acquisition were not disclosed.
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